New York City’s pension funds and the state of Oregon sued Fox Corp. for Breach of Fiduciary Duty on Sept. 12.
The lawsuit claimed that their substantial investments in the corporation were not appropriately safeguarded and that Fox exposed itself to preventable defamation lawsuits through inept journalism.
All five of New York’s pension funds, Teachers’ Retirement System of the City of New York, the NYC Employees’ Retirement System, the NYC Employees’ Retirement System, the NYC Police Pension Fund, the NYC Fire Pension Fund, the NYC Board of Education Retirement System along with the Oregon Public Employee Retirement Fund, are long-term shareholders of Fox.
New York’s collective funds have approximately 572,946 shares of Fox Class A stock and 285,338 shares of Fox Class B stock valued at $27.7 million as of Aug. 31. Additionally, the Oregon Public Employee Retirement Fund held around 226,000 Class A and Class B shares of Fox worth a total of $5.2 million as of Aug. 31.
The lawsuit was filed under the Delaware Court of Chancery and is the latest charge against Fox following the defamation lawsuit from the election technology company Dominion Voting Systems Corp. The broadcasting network paid $787.5 million in settlement to Dominion.
Fox upheld its controversial reporting on the U.S. presidential elections despite the legal consequences, according to the suit. The network currently faces another significant defamation charge of $2.7 billion from voting system company Smartmatic Corp.
The charge by the funds alleged that Fox implemented a business model of appeasing viewers and practiced this model during the reporting of 2020 election results. The details of the lawsuit, shared in The New York Times, stated Fox magnified fallacious claims by former President Donald Trump and instigated conspiracies of a rigged voting system.
New York City Comptroller Brad Lander, overseer of the pension funds representing 800,000 current and retired NYC workers, released a statement on Sept. 13 regarding shareholder action taken against the board of directors and executives of Fox Corporation.
The press release from the comptroller emphasized that the lawsuit sought to recover damages Fox’s misconduct caused the company to incur, including the settlements and legal fees arising from lawsuits from Dominion and Smartmatic.
“A lack of journalistic standards and a proper strategy to mitigate defamation has clearly harmed Fox’s reputation and threatens their bottom line and long-term profitability,” Lander said. “Clear governance systems are absolutely necessary for the long-term health of a company.”
Stock prices of Fox are being negatively affected by the corporation’s legal troubles. Dominion’s lawsuit caused low earnings for the third quarter of 2023. Fox lost 10 cents per share, about $54 million, compared to its Q3 last year. On April 24, Tucker Carlson, known as Fox News’ prime-time host, was dismissed in connection to the lawsuits by Dominion. That same day, Fox Class A shares fell as much as 5.4%. It sunk about $800 million in value immediately after losing Carlson and his 3.7 million-strong audience.
Media mogul Rupert Murdoch and his son Lachlan Murdoch, CEO of the company, were accused of not taking good-faith measures to mitigate defamation risk while running the network. Viewers have yet to see if the business can withstand the Smartmatic case trial, set to be heard in 2025.
