Dominion lawsuit is just the start as Fox faces losing friends – and viewers

The $1.6bn lawsuit brought by voting company Dominion against Fox News has done more than threaten the rightwing channel with a historic financial penalty.

In recent weeks Fox News has also found itself thoroughly, and publicly, embarrassed, as internal messages have revealed not just the extent to which the organization attempted to ignore the actual news in its coverage of the 2020 election, but also the contempt many people within the organization have for Fox News viewers.

Related: Is Fox News finally falling out of love with Trump? It’s complicated

But whether Fox News wins or loses the defamation lawsuit brought by Dominion – a court hearing is set for 21 March, and a trial is scheduled to start on 17 April – more suffering is likely to come, on multiple fronts.

There’s some evidence that Fox News’s legendary hold over the Republican party is on the wane, and even speculation that the Murdoch family’s position atop the Fox conglomerate could be at risk.

The channel, which was founded by Rupert Murdoch in 1996, has become arguably the most influential media operation in American political history, holding huge sway over the Republican party while maintaining a reputation as a news organization.

But the disclosures released as part of Dominion’s suit have put that balance at risk. Dominion lawyers allege Fox News went out of its way to prop up false allegations of fraud, in what appears to have been a concerted effort to prop up the Republican party at the expense of reporting facts.

Messages from the likes of Sean Hannity and Tucker Carlson, Fox News’s two biggest stars, showed that many within Fox News did not believe Donald Trump’s claims of election fraud in the 2020 election, even as people on the channel continued to cast doubt on the legitimacy of the result.

Rupert Murdoch himself, in a deposition as part of the lawsuit, admitted that several Fox News hosts, including Hannity and Jeanine Pirro, “were endorsing” the lie that the election was stolen from Trump, in spite of all evidence to the contrary.

“What we’ve seen is a keyhole view into how Fox operates,” said Angelo Carusone, president of Media Matters, a watchdog group.

“What makes all of this so disturbing is that this is about power,” he said. “And Fox News at its core is actually a political operation that is designed to give power to the Murdochs.”

The exposure of Fox News’s internal workings will weaken its reputation as a news organization, Carusone said, and should the channel and its owner, Fox Corporation, lose the Dominion case, there could be immediate financial consequences.

“If they lose the case I think it’s going to be really significant. One, it makes shareholder litigation a certainty. Two, it puts Murdoch control of the company in jeopardy.”

Some law firms are already approaching Fox corporation shareholders about litigation.

At least four firms, including Kehoe, which has previously involved in a lawsuit against Bank of America, and Scott+Scott, which was part of a $310m settlement from Google’s parent company Alphabet in 2020, have made public appeals for shareholders to approach them to potentially sue Fox Corporation directors and officers for allegedly breaching “their fiduciary duties to Fox and its shareholders”.

Related: ‘Lachlan’s in the mire’: Fox News case spells trouble for Murdoch heir

Rupert Murdoch currently serves as chair of the Fox Corporation board, with his son Lachlan Murdoch as executive chair. Amid the current scandal, however, Carusone said it is possible there could be “a couple of runs at Murdoch control of the company” from aggrieved shareholders.

Fox News could also face problems when it comes to renewing its contracts with cable companies, Carusone said. Cable companies in the US pay individual channels, like Fox News, for the right to include them in their cable packages. Fox News is currently the second most expensive channel, behind ESPN.

Fox News has been able to demand such fees by touting its loyal audience. But messages released as part of the Dominion case have laid bare the contempt some at Fox News have for both their viewers and for Donald Trump, a hero to many in the Fox News audience.

“Like negotiating with terrorists,” Alex Pfeiffer, then a producer on Tucker Carlson’s nightly show, said of the line Fox News had to tread between reporting the news and feeding its audience the conspiracy theories they crave.

“But especially dumb ones. Cousin-fucking types, not Saudi royalty.”

In January 2021, in the lead up to the January 6 insurrection, Carlson texted a colleague expressing his views on Trump.

“I hate him passionately,” Carlson said. In another text Fox News’s most-watched host added: “We are very, very close to being able to ignore Trump most nights. I truly can’t wait.”

Given Fox News audience has a long-standing paranoia that it is being talked down to and misled by “media elites”, could these disclosures fracture the relationship between the channel and its viewers?

“Potentially,” said Nicole Hemmer, a political historian at Vanderbilt University and author of Messengers of the Right: Conservative Media and the Transformation of American Politics.

“Because first of all media consumers have so many more options now than they used to. They have Fox News, of course, but they can maybe tab over to Fox News to watch Tucker Carlson and then they can move over to Newsmax to watch their offerings. There are all sorts of online streaming outlets, podcasts, all kinds of things.”

Hemmer added: “And there will be other conservative media outlets that will continuously remind their audiences that Fox News hosts have said this about them, and [allege] that Fox News is just another part of the corporate elite media that doesn’t like you.”

Fox News has weathered upsetting its audience before, however. After the channel – correctly – called Arizona for Joe Biden in the 2020 election, there was an anti-Fox News movement among the far right which saw Newsmax and One America News, two more extreme channels, drag viewers away from Fox News.

But since then, Newsmax and OAN have gone into decline, and viewers have returned to Fox News, tempted by conspiracy theory-laden offerings like Carlson’s widely condemned Patriot Purge documentary on the Capitol insurrection.

“Fox News has really leaned into anti-Biden, pro-Trumpism, even sort of occasionally pro-insurrection messaging, and that has helped to bind that audience back,” Hemmer said.

Hemmer said a larger consequence could be a loss of Fox News’s political influence.

Related: Is Dominion’s $1.6bn defamation lawsuit a death blow for Murdoch and Fox News?

“One of the big things that we’ve learned about Fox News is that the tension that it has embodied from its very earliest days of both wanting to be respected as a news organization, and also serving the conservative movement in the United States, that tension has more or less been resolved in favor of serving the conservative movement,” she said.

“It’s not going to have that same agenda-setting power, because it’s just not going to be treated as a serious news outlet by other news organizations.”

Fox News, meanwhile, has accused Dominion of attempting to “publicly smear Fox for covering and commenting on allegations by a sitting president of the United States”.

“Fox News Media has increased its investment in journalism by more than 50%, further expanding our newsgathering footprint both domestically and abroad while providing state-of-the-art resources to enhance our coverage,” Fox News and Fox Corporation said in a statement.

“We are incredibly proud of our team of journalists who continue to deliver breaking news from around the world and will continue to fight for the preservation of the first amendment as Dominion attempts to suppress basic rights protected by our constitution.”

Eric Deggans, a TV critic for NPR and author of Race-Baiter: How the Media Wields Dangerous Words to Divide a Nation, said a pressing issue for Fox is that a win for Dominion would open the door for other lawsuits.

“Looking at their quarterly reports, $1.6bn is close to the revenue they take in in a quarter. So even a judgment that large wouldn’t necessarily be a death blow for the company.

“But the risk they run is that if they lose the case in open court, then there’s going to be other voting machine systems lined up behind Dominion to sue them and other people and institutions lined up behind to sue them. Because Dominion is not the only company or individual that Fox has done this to.”

Smartmatic has already filed a $2.7bn defamation lawsuit against Fox News, the Fox Business host Maria Bartiromo, the former business anchor Lou Dobbs and Trump’s former lawyer Rudy Giuliani, and earlier this month the New York state supreme court allowed it to proceed.

The texts and emails exposed so far have shown the conflict within Fox News between the commentary wing of Carlson and Hannity and the alleged straight news reporters who provide some of Fox News’s coverage. Irrespective of Fox’s financial woes, Deggans said that battle will be something to watch in the coming months.

“What’s obvious from the evidence that’s made it to the public sphere is that [Fox News’s] ratings success is tied up in pandering to the conspiracy theories that its audience believes,” Deggans said.

“It already was riding this fine line between trying to remain reality-based enough that it would be considered a news organization, and it could still have a reporter in the White House press corps and have access to all the protections and the access that mainstream journalists have, but also cultivate this audience by presenting these outlandish conspiracy theories as fact.

“No matter what happens with Dominion it’s going to be harder for them to walk that tightrope.”