Fox’s Costs From Defamation Suit Lead to a Quarterly Net Loss

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Fox’s Costs From Defamation Suit Lead to a Quarterly Net Loss

Lachlan Murdoch, the executive chairman of the Fox Corporation, conceded on Tuesday that a Delaware judge’s pretrial rulings against the company “severely limited our defense at trial” and contributed to his decision to settle the landmark defamation case brought by Dominion Voting Systems.

Mr. Murdoch, on a call with investors and analysts, called the $787.5 million settlement — believed to be the largest in the history of defamation law — “a decision clearly in the best interest of the company and its shareholders.”

In a remark that echoed the trademark defiance of his father, Rupert Murdoch, he also defended the conduct of Fox News personnel, saying the settlement “in no way alters Fox’s commitment to the highest journalistic standards across our networks, or our passion for unabashedly reporting the news of the day.”

His remarks came after Fox revealed a real-world consequence of the landmark settlement: The company swung to a net loss in the first three months of the year, its quarterly revenue erased — and then some — by payments associated with resolving the lawsuit with Dominion, an election technology firm.

Fox swung to a net loss of $50 million for the quarter, compared with earnings of $290 million during the same period last year. The loss came despite revenue increasing 18 percent, to $4.08 billion.

Lachlan Murdoch did not directly address his reasons for taking Tucker Carlson, Fox News’s top-rated prime time anchor, off the air shortly after the settlement was announced. The sidelining of Mr. Carlson, who is negotiating an exit from the company that would allow him to work elsewhere, has placed Fox News in the cross hairs of some conservatives who accuse the network of placating to liberal critics.

“There’s no change to our programming strategy at Fox News,” Mr. Murdoch said. “It’s obviously a successful strategy, and as always, we are adjusting our programming and our lineup, and that’s what we continue to do.”

Fox agreed to settle on the eve of a sensational public trial that would have exposed Rupert Murdoch and several star Fox anchors to harsh questioning on the stand. Anchors like Lou Dobbs and Maria Bartiromo had amplified baseless assertions by former President Donald J. Trump that Dominion rigged the 2020 presidential race in favor of his Democratic opponent, Joseph R. Biden Jr. The case also turned up evidence showing Fox executives rebuking their own journalists who attempted to fact-check Mr. Trump’s false claims.

Mr. Murdoch said he was pleased with advertiser demand in prime time, and a Fox executive told Variety on Monday that more than 40 new advertisers had begun paying for airtime at 8 p.m. since Mr. Carlson departed the time slot.

The network’s ratings, however, have significantly dropped. On Friday, for instance, Fox News finished last among cable news networks at 8 p.m. in a coveted advertising demographic, the kind of defeat to MSNBC and CNN that has rarely occurred in recent years.

On the Dominion case, Mr. Murdoch said that he remained confident in Fox’s legal position that its broadcast of the false claims against Dominion were protected by the First Amendment. “We always acted as a news organization reporting on the newsworthy events of the day, which certainly included allegations made by the sitting president,” Mr. Murdoch said.

That argument was rejected by Judge Eric M. Davis of Delaware Superior Court days before the Dominion trial was set to begin. Judge Davis said the claims against Dominion by Mr. Trump and his lawyers were clearly false.

Fox faces another major defamation suit from another election technology firm, Smartmatic. Mr. Murdoch called that lawsuit “a fundamentally different case” than the Dominion litigation and asserted that “our full complement of First Amendment defenses remain.”

Fox said its advertising revenue for the first quarter of the year was up 43 percent from a year prior, attributing the increase to Super Bowl LVII, additional N.F.L. games and growth at an ad-supporting streaming service, Tubi.

“Our journalists bring compelling news home to our viewers every day,” Mr. Murdoch said in his introductory remarks, adding: “As we look ahead, we are confident in the strength of the Fox brand.”

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