The Defamation Trial of the Century Is Delayed
A last-minute push to avert a trial of the century
Monday was to be the start of the biggest defamation trial in recent American history — but opening proceedings in Dominion Voting Systems’ lawsuit against Fox News over on-air remarks about the 2020 election were delayed by a day.
The presiding judge is expected to make an announcement at 9 a.m. Eastern, but several news outlets reported that Fox was seeking an out-of-court settlement. Rupert Murdoch’s media colossus has good reason to do: The trial will air the private exchanges of executives and on-air hosts, among the most influential in television news — and there’s a lot of money on the line.
Fox made an 11th-hour push to reach a deal, according to reports, with both sides expected to meet on Monday to try to negotiate a last-minute truce. The companies had previously participated in mediation talks in December, to no avail.
Defamation cases rarely reach a jury: Just three did so in 2017, David Logan of the Roger Williams School of Law told The Times, compared with an average of 27 annually in the 1980s.
Fox has suffered an array of setbacks. The presiding judge in the case recently ruled that the network can’t contest that it had broadcast false statements about Dominion that were harmful to the voting machine maker — only whether it had knowingly made false statements or was reckless in deciding to air them, a standard known as actual malice.
The judge has also ruled that Murdoch and his son Lachlan, the C.E.O. of Fox Corp., could be compelled to testify live during the trial. Other likely witnesses include the Fox News hosts Maria Bartiromo, Tucker Carlson, Sean Hannity and Jeanine Pirro, as well as the former host Lou Dobbs (Fox News and Dobbs recently settled a separate defamation suit linked to voting-system fraud); the Fox executives Suzanne Scott and Viet Dinh; and Paul Ryan, the former House speaker and a current Fox board member.
Dominion still has a high legal bar to clear. Demonstrating actual malice will be difficult: While internal communications show that Fox executives and commentators dismissed the anti-Dominion claims being made on air, the network’s lawyers say broadcasts were protected by the First Amendment.
But while legal scholars generally side with media outlets in these kinds of cases, many say the evidence against Fox is unusually strong. “This is about as strong as a case you’re going to get on defamation,” John Culhane of the Delaware Law School at Widener University told The Times.
Fox could be on the hook for a lot of money if it loses, though perhaps not the full $1.6 billion that Dominion had once sought. The voting machine maker has signaled that it won’t seek claims for lost profits, which it had previously indicated were at least $600 million.
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HERE’S WHAT’S HAPPENING
Group of 7 countries agree to speed up the end of fossil-fuel use. Climate and energy ministers concluded two days of negotiations in Japan on Sunday, pledging to “accelerate the phaseout of unabated fossil fuels” to meet net-zero targets. But they didn’t act on a push by Canada to set a deadline for shutting down coal-fired power plants.
Fox News v. Dominion Voter Systems
Documents from a lawsuit filed by the voting machine maker Dominion against Fox News have shed light on the debate inside the network over false claims related to the 2020 election.
SpaceX prepares to test a rocket for the history books. Elon Musk’s company is set to launch a prototype of its Starship craft, the most powerful rocket ever, as soon as Monday morning. A lot is riding on the test: The 394-foot-tall rocket is expected to send NASA astronauts to the moon this decade, and eventually to Mars.
Executive pay rises at many U.S. companies despite falling share prices. Over a third of S&P 500 corporations — including Boeing, Marriott and Moderna — increased compensation for their leaders last year over 2021, despite disappointing shareholder returns, according to The Financial Times.
Netflix’s second foray into live programming suffers a delay. The streaming giant’s effort to air a live reunion episode of “Love Is Blind” was pushed back an hour — and was finally broadcast after being recorded — because of what the company said was “an issue with the livestream.” TV competitors snarked on the situation, as did Representative Alexandria Ocasio-Cortez.
Smaller banks in the spotlight
Friday’s blowout earnings by JPMorgan Chase and Wells Fargo were a welcome sign that America’s biggest banks appear to have emerged unscathed from the downfall of Silicon Valley Bank. But the real test starts this week with a bevy of smaller banks reporting results that are expected to give Wall Street and Washington key insights into whether the financial crisis is truly behind us.
M&T Bank was the first out of the gates on Monday morning, with the lender reporting a better than expected profit, pushing its share price up nearly 3 percent in premarket trading.
Regional banks remain under pressure. The good news: The exodus of deposits has been broadly contained. The bad: The stock prices of midsize lenders have tanked in the past month, and ratings agencies are on the watch. (Fitch cut PacWest to junk last week after it lost 20 percent of its deposits.) At the same time, banks are under pressure to offer bigger deposit rates to keep customers from fleeing.
Interest rates are driving up the cost of capital. Meanwhile, President Biden is urging smaller banks to keep more cash and long-term debt on their balance sheets. Such a move could cause lenders to flood the public market with efforts to raise more debt, and jack up debt prices even higher. Such a cycle of rising debt costs is a big point of stress for the banks, DealBook hears.
A continuing standoff is stifling deals. With equity at rock bottom, banks are wary of raising money or selling. On the other end, prospective buyers are unwilling to swallow a huge loss, absent either a huge price cut or a government-brokered arrangement on sharing losses. Banks may be wary of selling for other reasons, particularly in cases where management owns a large amount of depressed stock, and/or it has taken out loans against that stock when it was worth much more.
DealBook was told to expect that banks will try to work a range of deals, including offloading assets and raising debt. There could be movement on the latter once they have announced their latest financial results. Also, if a big merger happens without government support, expect others to follow suit.
Beware the fault lines. The uncertainty of the commercial real estate market is a big worry for Wall Street. Shares of First Republic, a major lender, are down roughly 90 percent this year. First Republic, which has been largely mum since the country’s largest banks announced an emergency effort to prop it up, reports earnings on April 24.
How Google is rethinking search
ChatGPT and other chatbots pose the biggest threat to Google’s dominant search business, worth $162 billion last year, in more than two decades. But that became more alarming to the company in March, when Samsung began weighing replacing Google as the default search engine on its devices with Microsoft’s Bing, putting a contract worth an estimated $3 billion annually at risk.
The Times’s Nico Grant reports on how more than 160 Google employees are working to revamp the tech titan’s chief moneymaker in an age of A.I. tools, under the project name Magi:
The system would learn what users want to know based on what they’re searching when they begin using it. And it would offer lists of preselected options for objects to buy, information to research and other information. It would also be more conversational — a bit like chatting with a helpful person. …
Magi would keep ads in the mix of search results. Search queries that could lead to a financial transaction, such as buying shoes or booking a flight, for example, would still feature ads on their results pages.
Google plans to start rolling out Magi features next month to a select few users in the U.S. and up to 30 million people by the end of the year.
“Watching wages to predict inflation is like looking for lightning when you hear the thunder.”
— Austan Goolsbee, the Chicago Fed president, in a tweet warning that wages aren’t a good indicator for inflation as their gains tend to lag price rises.
The week ahead
Earnings will dominate the agenda this week. Here’s what to watch:
Monday: Charles Schwab, whose stock has tumbled more than 30 percent since early March, will deliver first-quarter results.
Tuesday (U.S. tax day!): Apple’s C.E.O., Tim Cook, will be in Mumbai for the opening of the first Apple store in India; the country has become an important manufacturing hub for the iPhone maker, and sales just set a record there. Elsewhere, China reports first-quarter G.D.P., with analysts predicting that the economy, fully reopened from Covid lockdowns, will continue to show signs of a rebound.
On the earnings front: Bank of America, Goldman Sachs and Netflix.
Wednesday: Morgan Stanley and Tesla report results. Analysts will be angling for details on whether the electric-car maker is on track to hit Elon Musk’s full-year delivery target of 2 million vehicles, and whether profit margins are holding up as it continues to cut prices.
Thursday: First Financial and Independent Bancorp report.
THE SPEED READ
Merck agreed to buy Prometheus Biosciences, a specialist in treating autoimmune diseases, for $11 billion. (CNBC)
Saudi Arabia transferred nearly $78 billion worth of shares in Aramco, the state-owned oil giant, to its sovereign wealth fund. (FT)
How KKR’s co-C. E.O.s are trying to grow the investment giant beyond its roots in “Barbarians at the Gate”-style leveraged buyouts. (WSJ)
Sega said it plans to buy Rovio, the maker of the hit mobile game Angry Birds, for $776 million. (CNBC)
Companies have pledged over $200 billion in manufacturing commitments in the U.S. since the passage of the Inflation Reduction Act, double what they announced in 2021. (FT)
The billionaire Thomas Peterffy said he was rethinking plans to back Gov. Ron DeSantis of Florida for the Republican presidential nomination, citing his extreme stance on social issues such as abortion. (FT)
“Clarence Thomas has for years claimed income from a defunct real estate firm.” (WaPo)
Best of the rest
How weight-loss drugs like Ozempic are at the heart of WeightWatchers’ strategic overhaul. (WSJ)
Boston Marathon organizers have set up the Tumbleator, a zippy treadmill, to test whether fans can keep up with the pace of Eliud Kipchoge, the world-record holder. (NYT)
In its final week of a three-decade run, “Phantom of the Opera” raked in $3.6 million in ticket sales — with some seats going for $4,000. (CNBC)
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