Democracy Lost: Dominion v. Fox

Both parties to the litigation won.

Staple Street Capital, a New York-based private-equity firm, is in the business of maximizing the return on its clients' investments. In 2018, it bought a 76% interest in Dominion Voting Systems for $38.3 million. Five years later, Fox's $787.5 million payout represented a staggering gain.

Fox News makes money by telling its audience what it wants to hear, even if Fox knows it's a lie. The settlement preserves its lucrative business model.

Democracy lost.

Panic at the Top

In the run-up to the election, Fox enjoyed historic ratings and revenues. But a momentous election night decision put everything at risk. A small sample of Fox's internal communications tells the story–and the public probably hasn't seen the most damning ones.

November 3, 2020, 11:20 pm: Foxbecame the first network to announce that Joe Biden had won Arizona–a disastrous development for Donald Trump's re-election prospects. The Trump campaign was livid. On behalf of Bill Sammon's Decision Desk team, Fox News politics editor Chris Stirewalt went on live television, defending the call to skeptical on-air hosts Tucker Carlson and Bret Baier.

Fox soon began hemorrhaging viewers in the far-right audience it had cultivated for decades.

November 11: Raj Shah, Fox Corp.'s senior vice president and Trump's former White House deputy press secretary, warned company leaders that "bold, clear, and decisive action is needed for us to begin to regain the trust that we're losing with our core audience." Two days later, he wrote to Rupert Murdoch's son, Lachlan, that "Fox News is facing a brand crisis" and "open revolt… precipitous decline in Fox's favorability among our core audience… poses lasting damage to the Fox News brand unless effectively addressed soon."

In another email, Shah told colleagues that the network's brand was "under heavy fire from our customer base." In yet another, he wrote, "We are not concerned with losing market share to CNN or MSNBC right now. Our concern is Newsmax and One America News Network …."

Lying as a Corporate Strategy

November 12: Fox reporter Jacqui Heinrich fact-checked a Trump tweet that referred to Fox's broadcasts. She said that there was no evidence of voter fraud from Dominion voting machines. In a text chain with Fox hosts Sean Hannity and Laura Ingraham, Tucker Carlson wrote, "Please get her fired. It needs to stop immediately, like tonight. It's measurably hurting the company. The stock price is down. Not a joke."

November 13: The "Brain Room"–Fox's fact-checking and research division–concluded that claims about Dominion voting machines were "100% false. Dominion systems continue to reliably and accurately count ballots, and state and local election authorities, as well [as] fact-checkers, have publicly confirmed the integrity of the process."

Fox on-air hosts ignored it.

November 16: In a Zoom meeting, Fox News CEO Suzanne Scott said, "Listen, it's one of the sad realities: If we hadn't called Arizona those three or four days following Election Day, our ratings would have been bigger. The mystery would have been still hanging out there."

Fox could not afford a similar misstep in the upcoming Georgia runoff for control of the U.S. Senate. Scott decided to push out Sammon and Stirewalt.

Elevating Lies and Eliminating Truth-Tellers

November 18: In an email exchange with Laura Ingraham, Tucker Carlson complained about Trump attorney Sidney Powell, whose on-air election lies had pervadedFox programs since November 8:

"Sidney Powell is lying by the way," Carlson wrote. "I caught her. It's insane."

"Sidney is a complete nut," Ingraham answered. "No one will work with her. Ditto with Rudy."

"Our viewers are good people and they believe it," Carlson said, making clear that he did not.

But Fox hosts did continue working with Powell and Rudy, promoting repeatedly what the judge in the Dominion case later ruled were "CRYSTAL clear" lies.

November 19: Giuliani held his infamous "dripping hair dye" press conference. Internally, Rupert Murdoch called it "Really crazy stuff. And damaging." And he told Suzanne Scott, "Terrible stuff damaging everybody, I fear. Probably hurting us too." Likewise, Shah texted that Giuliani sounded "SO F*CKING CRAZY."

But when Fox News White House correspondent, Kristin Fisher, fact-checked Giuliani on-air immediately following the conference, her boss complained:

"He expressed his great unhappiness with my live shot. He emphasized that higher-ups at Fox News were also unhappy with it. And he told me that I needed to do a better job of respect—this is a quote—'respecting our audience.'" Fisher thought she had respected the audience by telling it truth.

Likewise, Shah recoiled at Fisher's fact-checking: "This is the kinda shit that will kill us. We cover it wall to wall and then we burn that down with all the skepticism."

"What I see us doing is losing the silent majority of viewers as we chase the nuts off a cliff."

November 20: Rupert Murdoch emailed Suzanne Scott, "Maybe best to let Bill [Sammon] go right away and make acting appointment. Also the other guy… be a big message with Trump people."

"We were going to do Stirewalt next," Scott responded.

Early December: "This has to stop now," Scott wrote in an email to a network vice-president, referring to anchor Eric Shawn's fact-checking of Trump's bogus voter-fraud claim. "This is bad business and there clearly is a lack of understanding what is happening in these shows. The audience is furious and we are just feeding them material. Bad for business."

December 2: Bill Sammon wrote to Chris Stirewalt: "More than 20 minutes into our flagship evening news broadcast and we're still focused solely on supposed election fraud—a month after the election. It's remarkable how weak ratings makes good journalists do bad things. In my 22 years affiliated with Fox, this is the closest thing I've seen to an existential crisis—at least journalistically."

Stirewalt responded: "What I see us doing is losing the silent majority of viewers as we chase the nuts off a cliff."

January 2021: Sammon announced his retirement. Foxlaid off Stirewalt in what it called a "post-election restructuring."

Protecting Rupert Murdoch

Less than two weeks before trial, the judge in the case ruled that Dominion could force Rupert Murdoch to testify at trial. Dominion planned to call him as its second witness. His internal communications about Giuliani, as well as Sammon and Stirewalt, were devastating.

But there were more:

January 12, 2021: In an email exchange with Fox board member and former House Speaker Paul Ryan (R-Wis.), Murdoch said that the January 6 insurrection was a "[w]ake up call for Hannity, who has been privately disgusted by Trump for weeks, but was scared to lose viewers!"

"Trump insisting on the election being stolen and convincing 25% of Americans was a huge disservice to the country. Pretty much a crime."

January 20: Murdoch mused about the impact of Trump's lying: "The more I think about McConnell's remarks or complaint, the more I agree. Trump insisting on the election being stolen and convincing 25% of Americans was a huge disservice to the country. Pretty much a crime. Inevitable it blew up January 6th."

January 21: Murdoch sent a message to Suzanne Scott: "Is it 'unarguable that high profile Fox voices fed the story that the election was stolen and that January 6 an important chance to have the result overturned'? Maybe Sean [Hannity] and Laura [Ingraham] went too far… All very well for Sean to tell you he was in despair about Trump … but what did he tell his viewers?"

Fox executives responded with 50 examples of the "high profile Fox voices" that had fed Trump's Big Lie.

Fox's Predicament Worsened

A week after Murdoch was ordered to testify at trial, Fox had a new problem. Its attorneys had repeatedly misrepresented his status. They had told the court that he was not an officer of Fox News when, in fact, he was its executive chairman. The judge said that he would sanction Fox News and launch an investigation into what other material it had failed to disclose.

Now Fox's lawyers had skin in the game too.

What had Fox withheld? We'll never know. But during Dominion's opening statement to the jury, it planned to present additional internal Fox communications publicly for the first time.

Dominion Won Too

As discovery in Dominion's defamation case against Fox proceeded, its claims became surprisingly strong, but significant obstacles to any recovery remained. Juries can produce unexpected results; damages are always a question mark; appeals can drag on for years. Declining a certain $787.5 million would have been like trading a winning Powerball ticket worth the sixth largest jackpot in history for a future one that might be worthless.

Democracy Lost

Dominion's attorney suggested that the settlement benefited the public: "Trust matters. Lies have consequences… Today's settlement of $787.5 million represents vindication and accountability."

Then Fox issued a public statement that proved him wrong. It sounded like doublespeak from George Orwell's 1984: "This settlement reflects Fox's continued commitment to the highest journalistic standards."

The only lesson Fox learned is that when it knowingly pushes lies, their employees shouldn't create an electronic trail proving it. The settlement is just another cost of doing business–less than 20% of Fox Corp.'s cash on hand and less than half of its net income for 2022. And it's tax-deductible! Fox plans a massive increase in cable and satellite provider fees that will more than offset the payment.

In 1789, Thomas Jefferson wrote that "wherever the people are well informed they can be trusted with their own government."

Fox's business model is antithetical to Jefferson's vision. It makes billions by challenging the nation with an existential question:

Can democracy die from too many lies?