July 16, 2024

AP Photo/Ted Shaffrey

Pre-trial, Dominion Voting Systems has scored victory after victory in its $1.6 billion lawsuit against Fox News. Fox has been sanctioned for withholding evidence. 92-year-old Rupert Murdoch will have to testify live during the upcoming trial. And Judge Eric Davis has already ruled that 20 statements made on Fox News Channel and Fox Business Network constituted false assertions of fact.

But even if a jury is similarly unsympathetic to Fox’s arguments on the merits, it may decide that Dominion’s damages claims are too high and award the plaintiff an amount significantly less staggering than what it’s asking for.

According to Fox, the $1.6 billion number was reached based on a pair of flawed assumptions: That Dominion was worth more than it actually was prior to the incidents of alleged defamation and that those incidents set the company on a course for ruin.

In 2018, a majority stake in Dominion was purchased by Staple Street Capital, a hedge fund that placed a valuation of $80 million on the firm. Shortly before the election, Staple Street told investors that after applying a “conservatism discount” it valued Dominion at $69 million, according to documents obtained by Fox’s lawyers in discovery.

These valuations undermine that first assumption, which is exemplified by Dominion’s evaluation of its worth at $741 million before the alleged defamation. That figure was determined by an analysis performed by CPA Mark Hosfield, who will testify as an expert witness at trial for Dominion.

Dominion’s lawyers are submitting that the company was purchased by Staple at a discount, but as Scott Ahmad, an attorney representing Fox argued during a special master hearing in March, “a discount doesn’t mean seven times less” than it’s worth.

Ahmad was similarly apoplectic about about the gap between the September 2020 valuation, which was performed by a third-party firm, and $741 million valuation a few months later.

“This is a sophisticated hedge fund based in New York,” asserted Ahmad during the hearing. “They have to report to their investors. They have to report to their auditors about how much Dominion is worth. When they do that, they have to tell their investors the truth.”

The Hosfield valuation itself was based upon what Fox is characterizing as overestimations of revenue projections between approximately 60% and nearly 120% higher than Dominion’s own projections between 2021 and 2024. As of September 2020, for example, Dominion expected to earn revenues of $71 million in 2023. Hosfield projected they’d pull in $155 million, according to Ahmad.

Ahmad has argued that those projections are the cause of “the bloat in the $741 million” valuation.

On the other side of the ledger, Fox is arguing that there’s little evidence to support Dominion’s assumption that the damages incurred as a result of the alleged defamation  will cause Dominion to go out of business by 2031.

In fact, according to internal documents, Dominion’s revenues reached were the second highest that they’ve ever been in 2022, outstripping even their own pre-2020 election projection. Moreover, Dominion has not indicated to investors that the the company will be defunct within the decade because, Fox argues, it does not actually believe that it will be.

“That’s not in their audit reports that they expect to go out of business by 2031. They haven’t told any investors that they are going to be out of business by 2031,” said Ahmad. “All the things that you would see if a company was on fire, and on a path to be out of business by 2031, you would be seeing the signs of those.”

Ahmad argued Hosfield’s assumptions were “unreliable and unreasonable,” and Fox’s legal team filed a motion to keep Hosfield and his estimations out of the trial. That motion was denied by the special master, who nevertheless characterized Ahmad’s argument as “well put together” and “thoroughly thought out.”

Dominion offered the following statement in reply to these arguments against its hefty ask:

The evidence will show that Dominion was a valuable, rapidly growing business that was executing on its plan to expand prior to the time that Fox began endorsing baseless lies about Dominion voting machines. Following Fox’s defamatory statements, Dominion’s business suffered enormously, and its claim for compensatory damages is based on industry-standard valuation metrics and conservative methodologies. We look forward to proving this aspect of our case at trial.

Dominion’s claim to having suffered reputational damage would appear to have the upper hand going into the first day of the trial on Monday. Its claims to having been poised for exponential growth and having suffered catastrophic damage from which it could not possibly recover after the 2020 election is less convincing.

This is an opinion piece. The views expressed in this article are those of just the author.