Proposals targeting Fox News are sure to backfire

Seth Stern

Director of Advocacy

Fox News owner Rupert Murdoch.

Hudson Institute, via Flickr, CC BY 2.0.

It remains to be seen whether Fox News’ $787 million defamation settlement with Dominion Voting Systems — and the embarrassing revelations that preceded it — will lead the network to rethink its journalistic standards. But in the meantime, the case has prompted politicians and others to take shortsighted shots at Fox at the expense of the First Amendment.

Case in point, a new bill prompted by the settlement would stop corporations from claiming tax deductions on defamation settlements and judgments. “Taxpayers shouldn’t have to foot the bill for multi-billion-dollar companies like Fox News when they get caught selling malicious lies that are damaging our democracy,” said Sen. Sheldon Whitehouse to The Lever, after introducing the Denying Expenditures for False Accusations with Malicious Effect (DEFAME) Act.

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Sounds reasonable, at first glance. And we’re certainly not here to defend Fox’s election coverage or shed any tears for Rupert Murdoch. But then again, all lawsuits allege that the defendant did bad things. Why should cases involving speech — especially political commentary by the press — be singled out from those involving fraud, employment discrimination, product liability, and dozens of other kinds of legal claims that corporations pay to resolve every day?

Maybe no corporate legal payments should be tax deductible. Some may argue deductions incentivize companies to settle cases so victims can be compensated. Others may say they reward bad corporate behavior. That’s a fair debate. If Congress eliminated all deductions for payments to resolve lawsuits, we wouldn’t ask to exempt the press.

But, as long as payments to resolve nonspeech-related claims against nonmedia companies are deductible, it’s constitutionally problematic to treat defamation payments by the press differently. The First Amendment requires limitation, not expansion, of punishment for speech — even false speech. Fox may have drawn Whitehouse’s ire this time around, but what disfavored speaker will the next lawmaker target?

It’s particularly disturbing that Whitehouse readily admits his bill is aimed squarely at Fox. Bills targeting specific people or companies for punishment are unconstitutional bills of attainder. And, under the First Amendment, the constitutional problem is compounded when the victim is the press because of its political commentary. It’s the role of the courts to dole out consequences for past bad acts. When Congress gets involved, politicization is inevitable.

The “good” part of the bill’s targeting of Fox is that it’s unlikely to actually affect anyone else. It’s limited to settlements over $500 million by companies with over $10 billion in revenue. Not many will satisfy those criteria. But once we crack open the door to singling out disfavored speakers it’s a matter of time before it's kicked down. And the slippery slope isn’t just hypothetical — there’s already a House bill, the No Taxpayer Bailout for Defamation Act, introduced by Rep. Brandan Boyle, that does not include the same limits and would affect your community's struggling local paper just the same as cable news behemoths.

Unfortunately, the DEFAME Act and its nonacronymized House counterpart are not the only recent attacks against Fox that are sure to backfire. A former commissioner at the Federal Communications Commission, joined by media professionals who should know better, objected to the renewal of a local TV station’s license because it’s under the same ownership as the Fox News cable network. One of them argued that the station’s license shouldn’t be renewed because “the adjudication of the Dominion case unequivocally established that Fox News Channel repeatedly disseminated false news.”

The Philadelphia station, WTXF-TV, is not accused of doing anything itself that would warrant revocation of its license. But since the FCC has no authority to kick cable news networks off the airwaves for their content, the objectors are going after Fox-owned local affiliates instead. It’s a tactic that the FCC rightly rejected when former President Donald Trump threatened to revoke NBC’s licenses (held by its local affiliates) because he didn’t like its reporting. We opposed it then and we oppose it now.

Outrage over Fox’s 2020 election coverage is understandable, but it shouldn’t be weaponized to score political points. If the objectors succeed in canceling a local broadcaster’s licenses to retaliate against Fox News, surely one day the shoe will be back on the other foot. And if future lawmakers believe they have the power to legislate punishments against speakers they don’t like, they’re unlikely to be “fair and balanced” in administering retribution.

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