Fox News may claim a tax break on the $787.5 million settlement it reached with Dominion Voting Systems last week, experts say.
The network last week agreed to pay the voting machine company the largest known sum to settle a defamation case in history after acknowledging it aired false claims alleging Dominion rigged the election against former President Donald Trump.
Despite the big payout, the overall cost the conservative media company will actually need to fork over itself will likely be far smaller. Experts told The Associated Press that the lawsuit's actual cost remains murky because of ways Fox can offset the financial hit, specifically through insurance and tax deductions.
A tax write-off could potentially save Fox News millions, The New York Times reported, as U.S. law permits companies to deduct at least some amount of settlement fees "as the cost of doing business."
Robert Willens, a tax professor at Columbia Business School, estimates that once is all said and done, Fox will be on the hook for approximately $590 million.
"The key is that if the payments are being made to private parties and not at the behest of the government then you can pretty much conclude without any fear of contradiction that the payment will be deductible," Willens told the outlet.
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Chad Milton, a partner at Media Risk Consultants, pointed out that a media conglomerate like Fox is likely to be well-insured — somewhere between $100 and $500 million in coverage — meaning that insurance will also likely cover a portion of the settlement.
"It's not hard to stack up $100 million but as you go higher than that, it gets harder and harder," he said.
Following the settlement, Fox stated that it does not expect the Dominion settlement to affect its business.
"We don't expect significant operational effects or changes to our business given our cash flow, strong balance sheet and the health of our business," the company said.
However, if Fox's insurance company bails them out this time, an annual aggregate of liability could prevent them from receiving insurer assistance in any future multi-million dollar settlements — which could be significant given that Fox remains embroiled in another big-money lawsuit with voting technology company, Smartmatic. The company is demanding $2.7 billion in restitution from Fox, arguing that the 2020 election conspiracies "decimated" its business.
Smartmatic lawyer Erik J. Connolly last week released a statement asserting that the company "remains committed" to seeing Fox be held accountable.
"Dominion's litigation exposed some of the misconduct and damage caused by Fox's disinformation campaign. Smartmatic will expose the rest," Connolly said. "Smartmatic remains committed to clearing its name, recouping the significant damage done to the company, and holding Fox accountable for undermining democracy."
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