Happily for Fox News and Rupert Murdoch, the election tech company Dominion has settled its defamation lawsuit for $787.5 million. But the damage to Murdoch’s legacy and his heir apparent—Lachlan—may already be done.
Editor’s note: This is the second part of a series looking at Dominion’s defamation lawsuit against Fox News—which was expected to be the biggest free speech case in decades. Part one looked at the lawsuit and its implications for defamation law.
The lawsuit: A quick update
First, some context: Dominion is one of the largest providers of election technology in the US—offering voting machines, software for election databases. Soon after the election of Joe Biden in 2020, Fox Show hosts and guests accused Dominion of rigging votes to steal the election from Donald Trump. Dominion sued Fox News, seeking $1.6 billion in damages.
The filing: Dominion filed a trove of private emails and messages of Fox news execs and hosts—which made it clear that none of them believed the election was stolen. But they “intentionally and falsely” promoted the theory on-air because they were terrified of losing their viewers to more rightwing sites and channels.
The settlement: The six-week trial was scheduled to begin Monday but was delayed amid rumours of a settlement—which turned out to be true. Yesterday, the two sides reached an agreement that includes a $787.5 million payout—without any admission of wrongdoing on Fox’s part. Dominion refused to answer questions about whether Fox will issue a retraction or a formal apology. OTOH, the network said the settlement reflects its “continued commitment to the highest journalistic standards.”
But, but, but: Fox is not out of the woods as yet. It still has to resolve a separate defamation lawsuit filed by Smartmatic—which makes voting machines—and is suing for $2.7 billion. Also this: Rupert and Lachlan Murdoch and some board members are being sued by a shareholder. He claims they violated their fiduciary duty to the company by allowing these lies to be aired. The damning material submitted by Dominion in court is likely to spur other lawsuits, as well.
What does any of this have to do with the Murdochs?
Because Fox News lies at the heart of a great divide between the two sons: Lachlan and James—who are at loggerheads over its extreme right politics. The lawsuit comes just as the matter of who will succeed Rupert is coming to a head.
Old man Murdoch: Let’s start with the fact that Rupert is getting very old—despite his conviction of his “immortality.” The 92-year old has also suffered a series of medical emergencies—apart from a serious bout of Covid. These include seizures, two bouts of pneumonia, atrial fibrillation, a torn Achilles tendon and broken back—which almost killed him.
More worryingly: Rupert is also becoming increasingly erratic. The latest escapade included abruptly leaving his fourth wife Jerry Hall—and rushing into a two-week engagement to a rightwing conspiracy theorist—who thinks Fox News host Tucker Carlson is a “messenger of God.”
The family trust: Understandably, Rupert is more eager than ever to ensure that his chosen heir Lachlan takes over the reins. But Lachlan’s future is held not by Rupert but the family trust—Cruden Financial Services. Its assets are the Cruden family farm near Melbourne, Rupert’s art collection and shares in Murdoch-holding companies—including various newspapers, Dow Jones, Fox News and the book publisher HarperCollins. In other words, the person who controls the trust, controls the Murdoch empire.
The voting rights: When Rupert left his second wife Anna in 1999, she made an unusual demand. Rather than ask for a big payout for herself, she demanded that Murdoch’s assets be put in a trust for her children—Lachlan, Liz and James—and Prudence, Rupert’s kid from his first marriage. Today, each of them has one vote on the board. Rupert and his representatives control the other four. The board votes by majority on how to handle the Murdoch media empire—which includes News Corp and Fox News. When Rupert dies, the four kids will determine the future of these companies.
Lachlan vs James: Until 2015, James was slated to be Rupert’s heir—but proved too liberal for his father’s taste. Lachlan—who is a MAGA supporter and more rightwing than his father—was summoned to take over. In 2020, James walked away from the family business. He later criticised “insidious forces” behind the Capitol attack—blaming “outlets that propagate lies to their audience.” James’ company Lupa has since put its money into a series of liberal-leaning companies.
Side point to note: James set up an investment company with former Disney India chief Uday Shankar—Bodhi Tree Systems—which has a 13.08% stake in the Ambani-controlled Viacom18.
A titanic battle: James’ sister Elizabeth shares his liberal views—though they don’t seem to have a warm relationship. OTOH, step-sister Prue is more like “Switzerland.” But most observers expect the three siblings to gang up against Lachlan—to kick him out the moment his father passes away: “Lachlan will be out, it is as simple as that.”
And it may also spell the end of Fox News as we know it:
Two people close to James told me he is biding his time until he and his sisters can wrest control from Lachlan after Rupert is gone. “James, Liz, and Prudence will join forces and take over the company,” a former Fox executive said. Some think James would purge Fox News and transform the network into a centre-right alternative to CNN. Others think James would opt to sell Fox News to a private equity firm just so he could be rid of a toxic asset. Inside the network, there’s a visceral fear of what a James-led future would mean. “James sees destroying Fox News as his mission in life,” a senior Fox staffer told me.
But, but, but: Not everyone thinks the sisters will play ball. Liz remains close to Lachlan unlike James. And Prue remains a wild card. The other scenario could be a deadlock: ”If two siblings join forces in opposition to Lachlan, they could leave the trust unable to exercise its voting rights within News Corp and Fox altogether.” At the very least, the ideological battle between the two estranged brothers will shape the future of Fox and News Corp—since James has no intention of selling his share.
A badly timed lawsuit: While Fox has enough money in the bank to settle all its lawsuits, the real damage has been to Rupert’s reputation and legacy. And that threat remains:
A shareholder suit filed directly against Murdoch and his son Lachlan alleges that their failure to act on “red flags” exposed the company to the defamation suits in the first place, highlighting the risk of personal liability for the family… “The cash by itself is not so much an issue, but it may raise questions about the management decision-making and compliance,” the industry source says.
The bottomline: is best summed up by this Vanity Fair essay by Gabriel Sherman:
There is an irony to Murdoch’s current woes. He monetized outrage and grievance to build a conservative media empire that influenced politics on three continents for the last half century. Now these same forces are threatening to destroy his legacy, his still-vast media empire, and the family that stands to inherit it.
Reading list
This Vanity Fair deep dive is the best (and most colourful) read on the Murdoch succession-style drama. Other two good pieces are in Financial Times and The Telegraph UK—which are paywalled. The Guardian looks at a new book that predicts the end of Lachlan’s reign. Bloomberg News looks at what’s next for Fox—while Poynter reports on the channel’s loss of public reputation. The Atlantic takes a contrarian view and says the settlement is a big win for Fox.
