This week’s giant settlement between Fox Corp and Dominion Voting Systems brings up questions about ethics and corporate reputation. The last-minute agreement headed off what one law professor described as the “the strongest defamation case we’ve ever seen against a major media company” that would have brought a mountain of potentially damaging evidence into the public eye. Can a company settle its way out of a reckoning? And how does Dominion, who claims serious reputational damage and has several other suits pending, go forward in the aftermath?
In other news, Reserve Bank splits its board in two; three ways to prepare for upcoming SEC cyber rules; and LGBTQ-inclusive board policies are on the rise with the proposed Nasdaq board diversity rule.
In the Spotlight
Fox Corp settles with Dominion Voting Systems for $787.5 Million
Fox avoids highly public and potentially damaging trial in 11th-hour agreement.
“In addition to the huge financial price, Dominion exacted a difficult admission from Fox News, which acknowledged in a statement that “certain claims” it made about Dominion were false…The settlement spares Fox a trial that would have gone on for weeks and put many of the company’s most prominent figures — from the media mogul Rupert Murdoch to hosts like Tucker Carlson and Maria Bartiromo — on the stand…A deal came together at the last possible minute, after months of almost no serious discussion between the two sides. As the case proceeded, Dominion divulged extraordinary details about the doubts that Fox employees expressed privately about voter fraud claims, even as they struck a different tone on the air.” THE NEW YORK TIMES
What the Settlement Could Mean for Dominion
The company has several other defamation suits pending.
“Legal experts say the settlement with Fox News, one of the largest defamation payouts in American history, could embolden Dominion as it continues to defend its reputation, which it says was savaged by conspiracy theories about vote fraud during the 2020 election. The company has several cases pending against public figures including Mike Lindell, the MyPillow executive, and news outlets such as Newsmax…Dominion is the second-largest election technology company operating in the United States, where there are few other major players. The company, whose majority owner is the private equity firm Staple Street Capital, was made “toxic” by the false fraud narratives in 2020, one of Staple Street’s founders said in court documents. At one point, Dominion estimated that misinformation had cost it $600 million in profits…Fox said in its court filings that Dominion did not have to lay off employees, close offices or default on any debts, nor did it suffer any canceled business contracts as a result of the news network’s coverage. Fox said in one filing that Dominion had projected $98 million in revenue for 2022, which would make Tuesday’s settlement the equivalent of eight years of sales.” THE NEW YORK TIMES
Settlement a Big Win for the Owners of Dominion
Private equity firm Staple Street bought a stake in Dominion for $38.3 million in 2018.
“The amount is equivalent to 20 times the $38.3 million the New York-based private equity firm paid in 2018 to acquire a 76.2% stake in Dominion…Investors in the $265 million private equity fund that Staple Street was using for investments when it acquired Dominion include the University of Arizona's endowment, Travelers Insurance and fund-of-funds manager Hauser Private Equity, according to data provider Pitchbook.” REUTERS
On the Distant Horizon: Another Legal Challenge for Fox
Smartmatic Corp., a voting software company, is suing Fox for $2.7 billion
“In a nearly 300-page complaint filed in New York State Supreme Court in February 2021, Smartmatic alleges that Fox News knowingly made “over 100 false statements and implications” about the company, amplifying false information from former president Donald Trump and his allies that Smartmatic played a role in his election loss. In February, a New York appeals court ruled that the case be allowed to proceed…The Smartmatic case has lagged behind Dominion’s lawsuit and is still at the discovery stage, with a long way to go before a potential trial…Smartmatic’s lawsuit against Newsmax is being handled by Delaware Superior Court Judge Eric M. Davis, who oversaw Dominion’s lawsuit against Fox.” THE WASHINGTON POST
From Boardspan this Week:
Cultivating Trust Is Critical—and Surprisingly Complex
Trust can be broken down into three components that board members need to keep in mind.
"Trust is the basis for every business exchange and all consumer behavior. But as important as it is for leaders, organizations, and brands, the fundamental concept is surprisingly hard to pin down…A long history of research demonstrates that trust can be broken down into three components: competence, honesty, and benevolence. To trust someone’s competence is simply to believe that the person or entity you deal with has the ability to do the job—to provide you with Internet service, for example. Honesty—or integrity—refers to your sense that your Internet service provider keeps its promises and is not telling lies about your connection speed or hiding fees. Benevolence is the belief that your Internet provider has your best interests at heart and cares about you as a customer.” KELLOGG INSIGHT via BOARDSPAN
