Fox Will Pay $787.5 Million to Settle Defamation Suit

Fox News abruptly agreed on Tuesday to pay $787.5 million to resolve a defamation suit filed by Dominion Voting Systems over the network’s promotion of misinformation about the 2020 election, averting a lengthy and embarrassing trial just as a packed courtroom was seated in anticipation of hearing opening statements.

The settlement, one of the largest ever in a defamation case, was the latest extraordinary twist in a case that has been full of remarkable disclosures that exposed the inner workings of the most powerful voice in conservative news.

In addition to the huge financial price, Dominion exacted a difficult admission from Fox News, which acknowledged in a statement that “certain claims” it made about Dominion were false.

“The truth matters. Lies have consequences,” Justin Nelson, a lawyer for Dominion, said outside Delaware Superior Court on Tuesday.

News of the 11th-hour agreement stunned the full courtroom in Wilmington, where the case was being heard. Gasps filled the air when Judge Eric M. Davis told the jury shortly before 4 p.m. that the two parties had resolved the matter. Lawyers for both sides had been preparing to speak to the jury for the first time, microphones clipped to their jacket lapels.

The settlement spares Fox a trial that would have gone on for weeks and put many of the company’s most prominent figures — from the media mogul Rupert Murdoch to hosts like Tucker Carlson and Maria Bartiromo — on the stand.

The case held the potential to make public a stream of damaging information about how the network told its audience a story of fraud and interference in the 2020 presidential election that many of its own executives and on-screen personalities did not believe. And the network was not forced to apologize — a concession that Dominion lawyers had sought, lawyers involved in the case said.

Dominion sued two years ago, after Fox aired false stories claiming that Dominion’s voting machines were susceptible to hacking and had flipped votes from President Donald J. Trump to Joseph R. Biden Jr. On Tuesday, the company expressed a sense of exoneration about the large financial cost that Fox will have to pay. While Dominion’s suit asked for damages of $1.6 billion, almost double the settlement figure, the company will avoid many years of appeals that could have trimmed or eliminated any payout from a trial.

“Over two years ago, a torrent of lies swept Dominion and election officials across America into an alternative universe of conspiracy theories causing grievous harm to Dominion and the country,” Mr. Nelson said. “Today’s settlement of $787.5 million represents vindication and accountability.”

The case and the expected trial were significant because they raised the prospect for an elusive judgment in the post-Trump era: Very few allies of the former president’s have been held legally accountable for their roles in spreading the falsehoods that undermined confidence in the country’s democratic process and cast Mr. Biden’s victory as illegitimate. Polls show that large numbers of Republicans still believe the 2020 election was tainted.

The size of the settlement, experts said, seems to have little precedent. RonNell Andersen Jones, a professor of law at the S.J. Quinney College of Law at the University of Utah, said she believed it was one of the largest settlements in a defamation case ever.

“This was unquestionably the strongest defamation case we’ve ever seen against a major media company,” Ms. Andersen Jones said. The case was even more unusual, she added, because media companies typically seek to settle well before so much damaging information about their internal workings is released.

A deal came together at the last possible minute, after months of almost no serious discussion between the two sides. As the case proceeded, Dominion divulged extraordinary details about the doubts that Fox employees expressed privately about voter fraud claims, even as they struck a different tone on the air.

“Settlement before this trove of evidence became public would of course have been in Fox’s best interest,” Ms. Andersen Jones said. “Waiting until the eve of trial, when the whole nation had a chance to focus on what Fox said internally about Trump, its sources and its own viewers, gave Dominion the extra layer of accountability it was seeking.”

It is uncommon for defamation suits to get to trial, in part because the bar for proving “actual malice” — the legal standard that requires plaintiffs to show that defendants knew what they were saying was a lie, or had a reckless disregard for the truth — is so high. It is rarer yet for one to feature the volume of evidence that Dominion had amassed against Fox.

In the run-up to trial, Dominion publicly released reams of internal communications among Fox executives, hosts and producers that revealed how the country’s most-watched cable news network set in motion a strategy to win back viewers who had tuned out after Mr. Trump’s loss. The messages tell the story of a frantic scramble inside Fox as it started losing audience share to competitors, like Newsmax, that were more willing to report on and endorse false claims about a plot involving Dominion machines to steal the election from Mr. Trump.

Producers referred to pro-Trump guests like Sidney Powell and Rudolph W. Giuliani as “gold” for ratings and acknowledged that the audience didn’t want to hear about subjects like the possibility of a peaceful transition from a Trump administration to a Biden administration.

Those communications have shown how employees at Fox expressed serious doubts about and, at times, were scornful of Mr. Trump and his allies as they spread lies about voter fraud, questioning the legitimacy of Mr. Biden’s election. Some at Fox mocked Mr. Trump and his lawyers as “crazy” and under the influence of drugs like L.S.D. and magic mushrooms.

Some Fox hosts privately described their colleagues as “reckless” for endorsing Mr. Trump’s false claims, acknowledging that there was “no evidence” to back them up. Yet for weeks, Fox continued to give a platform to election deniers, despite doubts about their credibility. Dominion challenged statements made on multiple programs on multiple nights. Typically, defamation cases involve only a single disputed statement.

The trial would have been a spectacle. Mr. Murdoch, whose family controls the Fox media empire, was slated to be one of Dominion’s first witnesses this week. Star anchors including Sean Hannity, Mr. Carlson and Ms. Bartiromo were likely to be called at other points.

Even the most blockbuster media trials of the last generation — Ariel Sharon’s suit against Time and Gen. William C. Westmoreland’s against CBS, both in the 1980s — lacked the most explosive elements of this case, which raised weighty questions about the protections the First Amendment affords the media and whether one of the most influential forces in conservative politics would have to pay a price for amplifying misinformation.

Both of those cases were settled out of court, too.

In recent days, Fox raised questions about Dominion’s claims of damages. On Monday, it disputed Dominion’s worth, pointing to a recent legal filing in which the company lowered part of its request for compensation. Fox lawyers also raised doubts about the harm that Dominion had suffered, saying the company acknowledged that it had turned a profit in recent years.

But the potential pitfalls for proceeding with a trial were real for Fox. Some of the revelations from the depositions that Dominion had conducted offered a preview of how damaging a trial could be. Mr. Murdoch acknowledged during his deposition that some Fox hosts had “endorsed” Mr. Trump’s lies, an admission that undercut Fox’s defense that it was merely reporting on — not amplifying — the former president’s claims.

After the deposition concluded, the general counsel of Fox Corporation, Viet Dinh, tried to reassure Mr. Murdoch that he had done well.

“I’m just going to say it. They didn’t lay a finger on you,” Mr. Dinh said.

Mr. Murdoch disagreed, according to a person who witnessed the exchange. He pointed a finger at the lawyer who had questioned him for Dominion, Mr. Nelson, and said, “I think he would strongly disagree with that.”

To which Mr. Nelson replied, “Indeed, I do.”