Inside Dominion’s playbook

The defamation fight of the century is over, after Fox agreed to pay $787.5 million to settle a lawsuit by the voting machine maker Dominion over false election claims that Fox News aired.

It’s one of the largest defamation settlements in history — and one of Dominion’s owners laid out on Wednesday how his team got Rupert Murdoch to agree to it.

The game plan revolved around getting damaging evidence out in public, Hootan Yaghoobzadeh of Staple Street Capital, which owns Dominion, said on CNBC today. That contributed heavily to what was a stacked deck against Fox News, with the broadcaster facing what one legal expert told The New York Times was “unquestionably the strongest defamation case we’ve ever seen against a major media company.”

Mr. Yaghoobzadeh said that $787.5 million was the highest settlement amount that Fox had offered, and that it was also important for Fox News to admit to having aired false claims.

Staple Street may be the biggest winner. The private equity firm, which currently manages some $900 million, bought a majority stake in the company for just $38.3 million in 2018.

It’s unclear how big Staple Street’s cut of the settlement will be, but it will almost certainly lead to a home-run return for the firm and its limited partners. “We are very pleased with the outcome and think that Staple Street has handled the situation very well on behalf of their investors,” one of those investors told Reuters.

Is Fox going to change its ways? Potentially not. The settlement is far from an existential financial threat: Mr. Murdoch’s media empire had $4 billion in cash as of February, while its cable network division alone — which includes Fox News — reported $2.9 billion in pro forma earnings last year. Fox probably also has substantial insurance that would cover at least some of the payout.

(The phone-hacking scandal in Britain arguably cost the Murdochs more, including the closure of the News of the World tabloid and, by some calculations, some $800 million in damages.)

Consider also that Fox News didn’t have to issue any sort of on-air apology, and avoided having its top hosts and Mr. Murdoch testify in court. On Tuesday, the network devoted just six minutes to covering the settlement.

Fox isn’t done with courtrooms yet. Smartmatic, another election technology company, is pressing ahead with a $2.7 billion defamation lawsuit that a judge ruled can go to trial. Meanwhile, a former Fox News producer has sued her former employer, accusing it of pushing her to give misleading testimony in the Dominion case.

A potentially thornier courtroom fight may come from Fox investors. Reuters reports that some shareholders are seeking internal corporate documents that would reveal whether Fox’s board and leadership properly oversaw coverage of Donald Trump’s baseless election-rigging assertions.

Will heads roll, and when? Given that there are more legal fights ahead, Fox may not drop the ax on anyone yet. (Some media watchers have wondered about the fate of Suzanne Scott, Fox News’s C.E.O.) But if the company faces another enormous settlement, it could feel pressure to have someone take the fall.

Mr. Murdoch himself probably won’t suffer any big blowback, according to no less than Barry Diller. Speaking to Semafor before Tuesday’s news, the media mogul said of any settlement, “What is it going to do? Is it going to worsen Rupert Murdoch’s reputation? I mean, good luck to you.”

HERE’S WHAT’S HAPPENING

India overtakes China as the world’s most populous country, according to United Nations data. The population surpassed 1.4286 billion, slightly higher than its neighbor’s 1.4257 billion. India has long spoken of reaping a “demographic dividend” but questions persist about whether its economy can overtake China’s, too.

More job cuts are reportedly coming at Meta and Disney. The tech company will begin its latest round of layoffs today, in its Facebook, WhatsApp, Instagram and Reality Labs units, according to Vox, with up to 4,000 positions possibly set to go. Disney will cut thousands of jobs next week, as part of the C.E.O. Bob Iger’s strategy to trim $5.5 billion in costs, according to Bloomberg.

Goldman Sachs shrinks its consumer lending arm. The Wall Street bank said on Tuesday that it had sold some loans from its Marcus digital consumer bank and put others up for sale, prompting a nearly $500 million loss, while confirming it was weighing a sale of the lender GreenSky. Commentators and investors said the moves were a long-awaited recognition that Goldman should focus on its strengths.

Reddit plans to charge for access to its content, with A.I. in mind. The online chatboard company told The Times that it would start making others pay to use its application programming interface, the method that allows outside entities to download its vast offering of user discussions. Steve Huffman, Reddit’s C.E.O., singled out A.I. projects by tech giants — which must be trained on huge amounts of data — as a reason for the move.

The S.E.C.’s chairman defends the agency’s crackdown on crypto. In four hours of testimony before combative House Republicans, Gary Gensler, the agency’s chief, said that the regulator would “continue to pursue” cryptocurrency companies to make them comply with U.S. securities laws. Meanwhile, the C.E.O. of Coinbase, Brian Armstrong, told CNBC that he was prepared to fight the S.E.C. in court for years.

Netflix will finally crack the whip

Assuming you do not live in Madrid, Toronto or Auckland, New Zealand, you might be able to get away with using a friend’s Netflix password for a little bit longer. In a letter to shareholders on Tuesday, the streaming company, which reported quarterly results on Tuesday, said it would start cracking down more broadly on password sharing, including in the United States, this quarter — later than planned.

The effort could be a big moneymaker and is part of a wider rethink after the company said last year that it had lost subscribers for the first time in a decade. For every million freeloaders it converts into a subscriber in the United States and Canada, the company would add $80 million annually in revenues, Jessica Reif Ehrlich, a media and entertainment analyst at BofA Securities, wrote in a recent investor note. “For the rest of the world,” she added, there’s “$420 million in additional annual revenue, with upside potential due to higher pricing.”

Netflix estimates that more than 100 million households share accounts. But on an analyst call, the company would not pin down how many might be ripe for conversion.

Revenues and subscriber numbers fell short of expectations despite Netflix launching a lower-cost, advertising-supported tier after years of saying it would not. The company said the new service did not cannibalize its higher-fee platform, but it does not break out the number of subscribers on its ad-supported tier.

Overall revenues rose 4 percent from a year earlier to $8.1 billion, and the company added 1.75 million subscribers. “These are worrying signs for a business that, despite still being a market leader, is struggling to get its mojo back,” Paul Verna, a principal analyst at Insider Intelligence, told The New York Times.

One place Netflix will not be looking for its mojo: Its DVD-by-mail business, which will be shut down on Sept. 29.

Investors were reassured. The share price fell as much as 12.5 percent after the closing bell on Tuesday before recouping nearly all of those losses after the analyst call.

10.1 percent

— Consumer prices cooled in Britain last month, but still came in above expectations. Inflation there continues to run hotter than in many European countries and in the U.S., prompting some analysts to speculate that the Bank of England will raise interest rates next month to help bring prices under control.

Tesla keeps on cutting

Tesla reduced prices on some of its best-selling electric vehicle models in the United States for the sixth time this year, once again showing a willingness to put building market share ahead of profit margin.

The move comes just hours before Tesla is set to release quarterly results. Analysts expect the E.V. market leader to reveal a big drop in profit as competition intensifies in its core markets of China, Europe and the United States, and the company invests heavily to build a battery factory in Shanghai and expand its Texas gigafactory.

Expect tough questions about the price cuts and delivery goals. Discounts helped Tesla achieve record deliveries last quarter, but it is still falling short of a target set by its C.E.O., Elon Musk, to deliver two million new models by the end of the year.

Tesla is banking that the latest reductions, which would bring the Model 3 down to $39,900 and chop another $3,000 off the Model Y price tag, will lift sales. The company has cut prices in Europe and Asia in recent days, too.

“I would say they are super concerned about sticking to the growth narrative and building scale,” Matthias Schmidt, an independent auto analyst, told DealBook. “They are ignoring slowing economic growth and are pushing like hell. The question is how deep they can lower their price point to stay profitable.”

Evaporating tax credits and rising interest rates are pushing up financing costs for buyers. Some European countries, including Germany, have begun to cut generous consumer incentives. Even in the United States, which is trying to bolster E.V. sales (especially for U.S. carmakers), the incentives do not always go that far for Tesla. The Treasury said this week that the least expensive Model 3 version would qualify for only a partial tax credit because its battery is made in China.

At 8 a.m. Eastern, shares of Tesla were down nearly 2.2 percent in premarket trading.

THE SPEED READ

Deals

Policy

• The European Union has agreed to a $47 billion subsidy plan to bolster chip making in the bloc. (CNBC)

• The Senate Budget Committee accused Credit Suisse of not being fully transparent about the scale of its historical assistance to Nazis. (NYT)

• The dispute between Gov. Ron DeSantis of Florida and Disney over the land that houses the entertainment giant’s theme parks is drawing criticism from congressional Democrats and Republican presidential hopefuls. (Insider, Politico)

Best of the rest

• A judge ordered Jamie Dimon, JPMorgan Chase’s C.E.O., to set aside two days for depositions about what he knew about the bank’s relationship with Jeffrey Epstein. (Reuters)

• Taylor Swift was one of the only celebrities to do due diligence on FTX, said a lawyer suing the bankrupt crypto exchange’s celebrity endorsers. (The Block)

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