Mistakes and miscalculations: How the Murdochs and Fox got it so wrong

It was only in February that Murdoch and his son with whom he runs the company, Lachlan Murdoch, began seriously considering settling. Yet they made no major attempt to do so until the eve of the trial in April, after still more damaging public disclosures.

At the centre of the action was Dinh and his overly rosy scenario.

Dinh, a high-level Justice Department official under President George W. Bush, declined several requests for comment, and the company declined to respond to questions about his performance or his legal decisions. “Discussions of specific legal strategy are privileged and confidential,” a company representative said in a statement.

The second half of 2020 brought Fox News to a crisis point. The Fox audience had come to expect favourable news about Trump. But Fox could not provide that on election night, when its decision desk team was first to declare that Trump had lost the critical state of Arizona.

In the days after, Trump’s fans switched off in droves.

The Fox host who was the first to find a way to draw the audience back was Maria Bartiromo. Five days after the election, she invited a guest, Trump-aligned lawyer Sidney Powell, to share details about the false accusations that Dominion, an elections technology company, had switched votes from Trump to Joe Biden.

Soon, wild claims about Dominion appeared elsewhere on Fox, including references to the election company’s supposed (but imagined) ties to the Smartmatic election software company; Hugo Chávez, the Venezuelan dictator who died in 2013; George Soros, the billionaire investor and Democratic donor; and China.

‘Fox News did its job, and this is what the First Amendment protects. I’m not at all concerned about such lawsuits, real or imagined.’

Fox’s chief legal officer Viet Dinh

On November 12, a Dominion spokesperson complained to Fox News Media chief executive Suzanne Scott and Fox News Media executive editor Jay Wallace, begging them to make it stop. “We really weren’t thinking about building a litigation record as much as we were trying to stop the bleeding,” said Thomas A. Clare, one of Dominion’s lawyers.

As Fox noted in its court papers, its hosts did begin including company denials. But as they continued to give oxygen to the false allegations, Dominion sent a letter to Fox News general counsel Lily Fu Claffee, demanding that Fox cease and correct the record. “Dominion is prepared to do what is necessary to protect its reputation and the safety of its employees,” the letter warned.

Fox, however, did not respond to the Dominion letter or comply with its requests — now a key issue in a shareholder suit filed in April, which maintains that doing so would have “materially mitigated” Fox’s legal exposure.

Three months after the election, another voting technology company tied to the Dominion conspiracy, Smartmatic, filed its own defamation suit against Fox, seeking $US2.7 billion in damages. Dominion told reporters that it was preparing to file one, too.

Dinh was publicly dismissive.

“The newsworthy nature of the contested presidential election deserved full and fair coverage from all journalists. Fox News did its job, and this is what the First Amendment protects,” Dinh said at the time. “I’m not at all concerned about such lawsuits, real or imagined.”

The Fox legal team based much of the defence on a doctrine known as the neutral reportage privilege. It holds that news organisations cannot be held financially liable for damages when reporting on false allegations made by major public figures as long as they don’t embrace or endorse them.

An early warning came in late 2021. The judge in the case, Eric M. Davis, rejected Fox’s attempt to use the neutral reportage defence to get the suit thrown out, determining that it was not recognised under New York law, which he was applying to the case. Even if it was recognised, Fox would have to show it reported on the allegations “accurately and dispassionately”, and Dominion had made a strong argument that Fox’s reporting was neither, the judge wrote in a ruling.

That ruling meant that Dominion could have access to Fox’s internal communications in discovery.

That was a natural time to settle. But Fox stuck with its defence and its plan.

Treasure trove

At nearly every step, the court overruled Fox’s attempts to limit Dominion’s access to private communications exchanged among hosts, producers and executives. The biggest blow came mid-last year, after a ruling stating that Dominion could review messages from the personal phones of Fox employees, including both Murdochs.

The result was a treasure trove of evidence for Dominion: text messages and emails that revealed the doubts that Rupert Murdoch had about the coverage airing on his network, and assertions by many inside Fox, including Carlson, that fraud could not have made a material difference in the election.

The messages led to even more damaging revelations during depositions. After Dominion’s lawyers confronted Rupert Murdoch with his own messages showing he knew Trump’s stolen election claims were false, he admitted that some Fox hosts appeared to have endorsed stolen election claims.

During Carlson’s deposition last year, Dominion’s lawyers asked about his use of a crude word to describe women — including a ranking Fox executive. They also mentioned a text in which he discussed watching a group of men, who he said were Trump supporters, attack “an Antifa kid”. He lamented in the text, “It’s not how white men fight,” and shared a momentary wish that the group would kill the person. He then said he regretted that instinct.

There is no indication that Carlson’s texts tripped alarms at the top of Fox at that point.

The alarms rang in February, when reams of other internal Fox communications became public. The public’s reaction was so negative that some people at the company believed that a jury could award Dominion more than $US1 billion. Yet the company made no serious bid to settle.

All along, the Fox board had been taking a wait-and-see approach.

But the judge’s pretrial decisions began to change the board’s thinking. Also, in those final days before the trial, Fox was hit with new lawsuits. One, from former Fox producer Abby Grossberg, accused Carlson of promoting a hostile work environment. Another, filed by a shareholder, accused the Murdochs and several directors of failing to stop the practices that made Fox vulnerable to legal claims.

The weekend before the trial was to begin, the board asked Fox to see the internal Fox communications that were not yet public but that could still come out in the courtroom.

The board learned for the first time of the Carlson text that referred to “how white men fight”. Dinh did not know about the message until that weekend, according to two people familiar with the matter.

By the time the board learned of the message, the Murdochs had already determined that a trial loss could be far more damaging than they were initially told to expect. A substantial jury award could weigh on the company’s stock for years as the appeals process played out.

“The distraction to our company, the distraction to our growth plans — our management — would have been extraordinarily costly, which is why we decided to settle,” Lachlan Murdoch said at an investment conference this month.

The text also helped lead to the Murdochs’ decision to abruptly pull Carlson off the air. Their view had hardened that their top-rated star wasn’t worth all the downsides he brought with him.

Still pending is the Smartmatic suit. In April, Fox agreed to hand over additional internal documents relating to several executives, including the Murdochs and Dinh. In a statement reminiscent of Dinh’s early view of the Dominion case, the network said that Fox was protected by the First Amendment.

“We will be ready to defend this case surrounding extremely newsworthy events when it goes to trial, likely in 2025,” the statement said.

This article originally appeared in The New York Times.

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