“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
― Sun Tzu, The Art of War
Minutes before the dirty laundry was about to be aired in court, Fox News gave in and settled with Dominion for a reported $785 million. Why would America’s #1 news network (their words, not mine) settle for a suite? The settlement itself is 37X larger than Dominion’s annual revenue. While Newscorp (parent company of Fox News) is large, this is still a hefty sum.
However, this isn’t the defeat for Newscorp that it looks like on the surface. I take no pleasure in writing this, but it might end up securing their market position.
Background
In 2020, Trump launched his crusade against the US election system, ending with an embarrassing siege of the nation’s capitol in an attempt to stop the electoral college count. This failed for many reasons — the Vice President didn’t have the power to stop the count, there was no merit to stopping it, and the electoral votes themselves were not Marvel movie MacGuffins.
Fox News however quickly saw an existential threat as it started losing market share to right-wing media networks willing to air blatant lies about the election. Their key demographic, it turned out, was not loyal to them. And it hit them where it hurts, in the wallet:
Relative to its record-setting 2020 ratings performance, Fox News shed -34% in total prime time viewers, -41% of its primetime demo audience, -29% in total viewers across the 24-hour day, and -35% among adults 25–54 across the 24-hour day. 2020 featured early coverage of the coronavirus pandemic, and a historic presidential election campaign. A ratings decline in 2021 was expected, yet Fox dominated its competition once again.
As a result, Fox News pivoted to air the same content to recapture market share, lending their network’s legitimacy to the cause. The problem was that they named names, accusing voting machine companies such as Dominion and Smartmatic of fabricating election results. As these were heavy claims that went to the core of their business, they started libel suites against Newscorp.
However in the short term Fox’s strategy worked, it stemmed the bleeding and kept them #1 in cable news ratings for the year. But, the libel suites marched on and picked up steam. Leading anchors like Tucker Carlson and Laura Ingraham would privately tell each other that Trump was blatantly lying, and then endorse his lies on TV. This helped Dominion establish that they knew they were lying, and thus opened debate as to whether those lies were malicious (and thus illegal). And they’ve got a point — Fox News has a large platform — can it use that platform to lie and defame companies to bankruptcy based on politics alone? Obviously Fox News has First Amendment protections to speech, but have they hit one of the few limits to that right?
The point
But we’re not talking principles here, we are talking power. The threat to Fox News is not Dominion or its peer companies — the settlement against Fox may be large, but Fox is much larger than these damages.
In the second Punic War, the Carthaginian general Hannibal descended from the Alps into the Po valley and wrecked havoc on Rome’s armies as revenge against the treatment of the Carthaginian’s in general and his father in particular. He killed/captured 20,000 Roman soldiers in Trebia in 218 B.C., another 25,000 at Lake Trasimine the next year, and a stupefying 67,500 at Cannae one year later. At Cannae, Hannibal enveloped the numerically superior Romans the same way PacMan eats ghosts in the classic arcade game, and simply mowed them down. The unfortunate Romans in the middle of the pack had to cower as the Carthaginian’s systematically mowed through each line of defense, knowing their turn was coming. But the more remarkable thing about these battles was that Rome kept fielding a new giant army after the previous had been defeated. Hannibal was a far more brilliant general, but the Romans had more men than he had spears and they weren’t shy to use them.
The Roman general Fabius recognized this, and rather than try to be the general who beat Hannibal on the battlefield, he resorted to simply denying him victory. The Romans, merely by existing, could simply retreat from Hannibal’s army and force him to expend resources and stretch his ground lines of communication. The Fabian strategy, as it came to be called, was famously used by George Washington in the American Revolutionary War. If you have a home field advantage, you can attack (or not attack) the enemy as you see fit.
Fox News’s battlefield isn’t land, it’s money. The payment to Dominion is 1/14th of last year’s revenue. Newsmax, a competitor that Fox News was frightened of losing viewers to in 2021, only brought in $94 million and that’s at its best. OANN is smaller still at an estimated $16 million. Comparable damages paid to Dominion from them would bankrupt them. And that’s before Smartmatic gets its turn.
In a perverse way, it is in Fox News’ interest for the Dominion and Smartmatic suites to be successful because it can take the punch, its competitors can’t. Rome could lose many times to Hannibal, but Hannibal could only lose once to Rome. I’m sure Newscorp would very much prefer not to lose a year’s worth of profits, but to do so to eliminate smaller competitors? That is a no brainer trade for any company looking forward to long-term dominance in their sector.
I suspect Dominion and/or Smartmatic will have a more challenging time claiming damages from Newsmax and OANN because a compelling case can be made that they believe their own lies. And what matters legally is whether the lies are knowing and malicious. Anything Fox News can do to increase the chances that the Dominion & Smartmatic suites are successful against its competitors will reduce the need of Fox News to panic like they did in 2020/2021. Their viewers may be fickle, but Newscorp may have a strategy to clear the field.
