Could Fox legal problems impact its broadcast stations in Minnesota?

Washington – For Fox News and Fox Corp. However, the $787.5 million that Dominion Voting Systems agreed to settle a defamation lawsuit is just the beginning of legal troubles that could have a ripple effect on its broadcast stations, including Twin. KMSP-TV Cities.

The amount that Fox Corp. will pay. An eventual settlement of Dominion’s claims is unclear because there are ways it can cut back on expenses, both with its insurance coverage and the ability to deduct the expense when filing its taxes.

“It appears to me that Fox Corp.’s $787.5 million settlement with Dominion is tax deductible, which could result in a $100 or $200 million reduction in the amount,” said Scott Robson, a senior research analyst at S&P Global Market Intelligence who covers television networks. . Moreover, Fox is insured against these types of lawsuits, which could reduce its cost by another $100 million.

Fox Corp also reported plenty of cash — about $4 billion — through the end of the year in its most recent quarterly filing with the Securities and Exchange Commission, even after it spent $1 billion on stock buybacks last year.

“They are financially equipped to handle the settlement,” Robson said.

Fox Corp. also says it is financially strong.

However, the settlement — and the other costs of litigation involving the company — as well as the impact of popular host Tucker Carlson’s firing have put Fox’s lucrative and far-reaching empire at some risk.

The company cited its legal troubles that exposed it to some weaknesses in its most recent quarterly report, filed with the Securities and Exchange Commission before the Dominion settlement.

“Any fees, expenses, fines, penalties, judgments or settlements that the company may incur in connection with various (legal) procedures could affect the company’s results of operations and financial condition,” Fox Corp said.

On Fox’s recent headline-grabbing news, Matthew Tuttle, CEO of Capital Management, an investment firm, said, “The impact is massive.”

“At the end of the day, business is advertisers,” Tuttle said. “Advertisers love lots of viewers and there’s no controversy. Dominion equals controversy. Tucker’s departure equals fewer viewers. All in all, a really bad mix.”

Dominion’s lawsuit centered on baseless allegations broadcast by Fox News that the company’s voting machines were rigged against former President Trump in 2020.

Other lawsuits are pending, including one for defamation from Smartmatic, a manufacturer of electronic voting systems whose integrity has also been attacked on Fox News programming, as well as those by several Fox shareholders. Additionally, there are allegations of sexual harassment and discrimination based on gender and race, including allegations involving Carlson, pending against the company. However, Douglas Arthur of Huber Research Partners remains optimistic.

Fox Corp stock has fallen last year — in large part because of Dominion’s pending lawsuit. But the stock has recovered somewhat and is now heading at around $30 a share. After Dominion’s settlement was reached, Arthur lowered his price target for the stock from $40 to $38.

But he said in an investor report that firing Carlson would likely help bring in “big corporate” advertisers from Fox News that would boost revenue. Carlson’s show was largely curated by Michael Lindell of My Pillow.

“A shift away from bigoted conspiracy content, and less ‘my pillows’ material, may start to re-attract big advertisers,” said Arthur.

He also predicted that “it’s possible that Carlson’s blood won’t be the last spilled here”, as the network looks to increase advertising revenue. The analyst also predicted that Smartmatic’s lawsuit would be settled for significantly less money than Dominion’s.

Meanwhile, Jeffrey Sonnenfeld, senior associate dean of the Yale School of Management, said shareholder lawsuits against Fox News could be more devastating than the defamation lawsuits brought by Dominion and Smartmatic.

There are 11 defamation lawsuits, based on the company’s “recklessness” and the conduct of its hosts and management that were revealed during the Dominion lawsuit discovery process.

“Any one of these (shareholders’) lawsuits alone could be devastating,” Sonnefeld said.

Fox has 18 wholly owned-and-operated broadcast stations, plus dozens of paying affiliate stations to air Fox content, including KQDS-TV in Duluth.

Some wholly owned stations could be at risk if Fox Corp hemorrhages money due to litigation. But this is not likely to happen anytime soon.

“They’re not there yet,” Sonnenfeld said.

The Smartmatic case is scheduled to go to trial in 2025, though Sonnenfeld said that could happen a little sooner because the Dominion case allows the discovery process to short circuit. The shareholder cases, of which only two have been filed, will take some time.

Meanwhile, Fox’s television stations have been very profitable, and its cable network fees to cable and satellite providers give the company a steady source of income when advertising dollars and viewership are in flux.

“We don’t expect significant operating impacts or changes to our business given our cash flow, strong balance sheet and the health of our business,” said a Fox spokesperson.