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Fox faces an 'existential threat' from its multibillion-dollar defamation cases

New York

Fox Chairman Rupert Murdoch said under oath that he made a business decision when allowing a conspiracy theorist to promote election lies on Fox News.

“It is not red or blue; it is green,” he told lawyers in a deposition made public Monday.

But spreading falsehoods about the 2020 presidential election for the money may prove extremely costly for Fox.

The network faces two separate defamation lawsuits from voting technology companies that collectively seek $4.3 billion in damages. Fox Corporation, the right-wing news outlet’s owner, has an estimated $4 billion in cash on hand, according to its latest earnings statement.

“When damages get into the billions, with a B, that can be an existential threat to a journalistic organization — even one as lucrative as as Fox,” said Lyrissa Lidsky, a constitutional law professor at the University of Florida.

Even if the damages are exaggerated, Lidsky said, a verdict against Fox in either case would be “a terrible reputational black eye.”

Murdoch’s bombshell deposition — in which he acknowledged that some Fox hosts endorsed false claims that the 2020 election was stolen — could be a game-changer for Dominion’s case, which hinges on meeting a high legal bar known as “actual malice.” To meet that standard, a plaintiff has to show that the defendant made defamatory statements with knowledge that it was false or with reckless disregard for the truth.

“This is one of the most devastating depositions that I’ve ever seen,” CNN legal analyst Norm Eisen said Monday. “When you go beyond reporting and your chairman admits there was endorsement, then that opens you up to liability under the actual malice standard.”

If Fox were to lose either case, it’s not guaranteed that it would have to pay the full amount if a jury decides the damages were excessive.

On the other hand, Eisen noted, a jury could also increase the award.

“If the jury decides that it was bad enough conduct, they can double or triple that $1.6 billion or go even higher,” Eisen told CNN’s Wolf Blitzer.

Dominion Voting Systems is suing Fox News and Fox Corporation for $1.6 billion, accusing the network of spreading false claims that its technology enabled election fraud. A trial is set for April.

A separate, similar case brought by voting technology firm Smartmatic is seeking $2.7 billion in damages.

Media companies typically have insurance that would cover defamation payouts, though details of Fox’s coverage aren’t known.

Defamation is notoriously difficult to prove in the United States, which grants news organizations and entertainment companies wide berth under the First Amendment. Fox has repeatedly stressed that airing the fraud claims was newsworthy and protected under the Constitution.

But Dominion’s case is unusually strong, legal experts say.

“The evidence that’s been put into the public sphere so far looks like strong evidence that Fox knew the truth and decided to go with an alternate narrative,” Lidsky says.

Legal filings from Dominion have shown behind-the-scenes messages showing Fox’s stars — including Tucker Carlson, Sean Hannity, and Laura Ingraham — mock the lies being pushed by the former president Trump’s camp asserting that the election was rigged. It also illustrated instances of Fox actively pushing back on fact-checks that undermined the election lies being peddled by supporters of former President Donald Trump.

Murdoch, meanwhile, conceded that Sean Hannity, Jeanine Pirro, Maria Bartiromo, and former host Lou Dobbs promoted falsehoods about the presidential contest being stolen.

“Some of our commentators were endorsing it,,” Murdoch said, according to the filing, when asked about the hosts’ on-air positions about the election. “I would have liked us to be stronger in denouncing it, in hindsight,” he added.

The filing also revealed that Murdoch referred to some of Trump’s 2020 election lies as “bulls**t and damaging.”

In a statement, Fox pushed back against Dominion’s legal standing, saying the company’s lawsuit “has always been more about what will generate headlines than what can withstand legal and factual scrutiny.”

—CNN’s Oliver Darcy contributed to this article.