Fox Shareholders Aren’t Shaken by the Dominion Lawsuit Drama

Fox shareholders don't seem to care about the revelations in the Dominion case, including Rupert Murdoch admitting he didn't stop election lies.

A person walks past the Fox News Headquarters at the News Corporation building. A sign reads, "How do you Fox News?"
Fox prepares for trial. AFP via Getty Images

The scandals with FOX (FOXA) Corporation keep coming, but shareholders don’t seem to care.

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A producer on Tucker Carlson’s show yesterday (March 20) filed two lawsuits against the company for allegedly coercing her into giving misleading testimony in the defamation lawsuit filed by Dominion Voting Systems. She also accused the company of rampant misogyny and discrimination, which is not the first time Fox has had to defend itself against these claims. Since the announcement and its widespread coverage, Fox’s stock price hasn’t fallen and in fact rose less than 1 percent.

Negative press coverage typically results in shareholders selling their stock and the share price falling. Shareholders might fear how the news will impact company performance in the future or disagree with the company’s stance on an issue. But despite the Dominion’s lawsuit—a rare high-profile defamation case against a major media outlet with a reasonable chance of success—the major developments in the case don’t seem to be impacting Fox’s stock price or the company’s outlook from analysts.

The suit accuses Fox of defaming Dominion, a company that sells electronic voting machines, through the network’s coverage of the 2020 election. Fox’s on-air anchors and the guests they brought on their shows broadcast false information about Dominion to 3.5 million primetime evening news viewers and 2 million daytime viewers, the suit said. Fox guests claimed the voting machine company rigged the election by manipulating vote counts and paid kickbacks to government officials, which Fox knew were lies, according to the lawsuit. Fox then republished the information on its website and social media, which reached millions more viewers, it said. The outcome of the trial could not only be a huge embarrassment and financial blow to Fox, but it could change the legal precedent for protecting journalism.

Equity analysts have largely ignored the case, despite the escalated press coverage as the trial nears. The absence suggests financial analysts don’t expect the trial, and the drama leading up to it, having a significant impact on Fox’s shareholders. Instead, they have focused on Fox turning down offers for its streaming platform Tubi, the loss of Thursday Night Football to Amazon and the now-failed merger with NewsCorp would impact shareholders.

Why Fox investors don’t care about the Dominion case

Shareholders might not be concerned with Fox’s revenues because, from their perspective, it doesn’t matter if Fox wins the case, said Matthew Haertzen, a senior finance lecturer at the University of Arizona who spent 25 years in the investment industry.

“Shareholders, from a purely mathematical perspective, are looking at what this is doing to their viewership, and their viewership rates are strong,” he said. “If anything (the Dominion case) is likely driving up viewership for Fox. If they still get the advertising revenue coming in, whatever they’d lose to Dominion isn’t that significant.”

Dominion filed the lawsuit against Fox in March 2021. In the five days following the announcement, Fox’s shares fell 9.7 percent to $36.11 per share, before rebounding within the next month.

On Feb. 27, the New York Times reported Rupert Murdoch, Fox chairman, acknowledged in a deposition he knew Fox anchors promoted the lie that the 2020 election was stolen from Donald Trump, and he did not stop it. Many publications picked up the news the same day, including Reuters, the Guardian and Bloomberg. The stock fell less than 2 percent that day to $35.70. It fell a total of 3.6 percent over five days.

In another scandal related to the Dominion case, text messages leaked from Fox hosts Tucker Carlson, Sean Hannity and Laura Ingraham on March 7. The texts revealed their personal feelings towards the former president differed from what they preached in their shows. Carlson wrote, “I hate him passionately,” referring to Trump. He also wrote to a producer that Newsmax, an alt-right network, could “be devastating” to Fox if it doesn’t appease its audience. The texts spread through traditional media as well as on TikTok, where videos related to the leak have more than 600 million views. Still, Fox’s stock fell less than 1 percent that day, and 5.23 percent to $33.17 over the next four days.

Fox Shareholders Aren’t Shaken by the Dominion Lawsuit Drama