Fox’s legal defeat should serve as a cautionary tale

In board meetings there is normally a part of the agenda that covers potential and existing lawsuits, either by or against the company.

The legal director runs through them, providing progress reports. This section of the meeting can become extremely tense. There’s an awkwardness, heads are looking down, as thoughts are whirring as to how did we get to this, who is to blame, could it have been avoided, who will our management witness, will any of us be called?

I am trying to picture the scene as the Fox directors debated the claim brought against their company by voting machine-maker Dominion. It was for defamation, alleging that Dominion was falsely accused by Fox News of using its machines to rig the 2020 US election. Dominion was seeking $1.6bn (£1.3bn) in damages and accepted $787.5m.

There might be those on the Fox side tempted to hail the fact that Dominion agreed to less than half as a good result. But the amount is eye-watering and everyone knows that the first demand in a legal claim is usually an opening gambit, and they will be prepared to settle for less.

No. However it’s cut, a figure of that size hurts terribly. Not only that, to concede in such a high-profile case over an accusation of that sort is embarrassing and shaming.

In the chair at the Fox board would have been Rupert Murdoch, 92. It was his family money that was being spent; his family company’s reputation being trashed. That must have been especially painful.

There are two lessons to be drawn from the episode – well three, the third one is not to spread conspiratorial hokum in the first place.

The first is, if you’re the claimant, make it clear that the chair of the company you’re accusing will be required to take the stand. Do everything you can to make the connection between what happened and the structure of the business to ensure the person at the very top is obliged to appear and undergo cross-examination.

I saw this at close quarters in 1993, when Richard Branson’s Virgin Atlantic sued British Airways for what it said was a “dirty tricks” campaign waged against Virgin, to poach customers and smear the fledgling competitor.

The litigation was sensational. It had everything: private detectives, computer hacking, document shredding. It was the establishment in the shape of the mighty BA, the national flag-carrier, against the alternative, hippy upstart in Virgin. Goliath and David. The two bosses could not have been more different: BA’s pinstripe suit-wearing, growly business titan, the late Lord King, and the bearded, long-haired, baggy jumper-favouring Branson.

The latter, though, for all his casual appearance, was no fool. He knew how to go for the jugular, to find the sweet spot: King. He was a grand, imposing figure for whom the idea of giving evidence under oath in public would have been anathema and nerve-shredding. He was the one who usually asked the questions, here he would be forced to answer them.

BA threw everything at trying to make Virgin back down. Branson stuck to his guns and made it plain that King would be called.

Sure enough, as the date neared for King to appear, so the angst on the BA side grew. Branson held his nerve and BA caved in. The Virgin founder accepted £610,00 in libel damages and BA agreed to pay Virgin’s costs, estimated to have been £3m, and gave an unreserved apology.

BA insiders said it was the prospect of being quizzed about the campaign, of having to face Branson, who King not only could not abide but could not understand (he would rage against the fact that Branson eschewed traditional business attire) that tipped the BA chair over the edge.

So, with Murdoch. The most powerful media magnate on earth seems unlikely to relish taking the stand, and Dominion was insisting on his interrogation. The judge was making it clear that Murdoch’s company had knowingly spread lies. It would be in public, in the eyes of the world. If you’re Murdoch, it’s not something you do, that you’re used to.

When he appeared before the Commons Select Committee investigating phone hacking in 2011, Murdoch’s performance was hesitant and unconvincing. It was duly followed by a report from the cross-party body saying he was “not fit” to lead a major international company.

Lesson number two. If Murdoch had been publicly questioned it might have highlighted a gap between the image of the mogul as carefully painted by his PR managers and the reality. We never see Murdoch except on his and their terms. This would have been very different.

If the reports are to be believed he is increasingly frail (who wouldn’t be at his age), more so that he is said to have sustained two bad physical falls. Recently, he’s undergone a third divorce, ended a proposed fourth marriage and ditched a planned merger between Fox, his broadcast network and his News Corp publishing group.

The disconnect between what is recognised as sound business practice, of a chief retiring and having a succession plan in place and following it, versus an empire and its head that appear to be in denial about the advancement of time, could have been stark.

Dominion’s payment should mark a watershed for Fox and its veteran chair, and serve as a cautionary tale for others.