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Media veterans filed comments with the Federal Communications Commission (FCC), bringing the FCCs attention to four shareholder derivative lawsuits accusing Fox Corporation's (FOX) Board of Directors of breaching its fiduciary duty. The lawsuits allege that Rupert Murdoch, Lachlan Murdoch, and various officers and directors were complicit in decisions to disseminate false news and operate Fox News outside the bounds of First Amendment protections; and as a result, the company failed to safeguard shareholders from various journalistic integrity issues.

The Media and Democracy Project (MAD) filed a motion requesting the FCC to compel FOX to produce key nonpublic discovery from its various lawsuits to ensure full transparency and accountability for its actions. MADs motion seeks evidence from the Dominion and Smartmatic litigations, all documents reviewed in the four stockholder derivative lawsuits, and internal communications from FOX Corp-owned television station FOX 29 Philadelphia (WTXF).

Duggan-Kristol Derivative Filing

The comment submitted by former PBS President and FCC Commissioner Ervin S. Duggan and media veteran and former Weekly Standard Editor William Kristol advances as yet another damning argument in support of the Media and Democracy Projects (MAD) Petition to Deny the broadcast license renewal application for FOX Corp-owned television station FOX 29 Philadelphia (WTXF).

The pension funds' lawsuits address FOX leadership's willingness knowingly to lie about important matters, and go to the heart of the issue before the FCC, said William Kristol. These lawsuits paint the story of a corporation led by the Murdochs that lacks the character expected of a broadcast licensee.

Delaware law allows the plaintiffs to review nonpublic corporate information known as Section 220 material in preparation for drafting a complaint. This nonpublic information goes to the core questions before the commission. One lawsuit details how FOX scrapped processes in place at the Board of Directors level to monitor journalistic integrity issues in 2019. Those policies were only reconsidered in mid-2021 after the Dominion (and pending Smartmatic) litigation was filed, according to the complaint filed by Tredje AP-Fonden and other plaintiffs.

The same complaint also raises the issue of whether the Boards lack of journalistic integrity policies was related in some way to Rupert and Lachlan Murdochs desire to stem viewer defection to preserve their influence in conservative politics, which the complaint argues they prioritized above broadcasting the truth.

These lawsuits offer critical new evidence from Section 220 material and reflect that FOX shareholders are as troubled by the same core issues that should trouble the Commission.

The Duggan-Kristol filing ends by saying the FCC should notcannotdon blinders as to the implications that the questions being weighed in [the Delaware Court of Chancery] must have on its judgment as to whether FOX and its Controllers can be trusted to operate broadcast stations in the public interest.

These lawsuits show the parent corporation of the broadcast licensee showed poor judgment and questionable character in managing a business thatbut for FCC licensureis identical in core objectives and operation of its subsidiary broadcast station, said Ervin S. Duggan. We believe firmly that these nonpartisan lawsuits demonstrating bad judgment and suspect character should speak loudly to the Commission.

Two of the four lawsuits filed by pension funds representing workers in New York City, Oregon, Rhode Island, and the Swedish Government, cite MADs Petition to Deny as an outcome of the recklessness of the FOX Boards inability to reign senior leadership in, allowing them to continue to promote lies about the 2020 election.

From the Tredje AP-Fonden Complaint:

Defendants breaches of fiduciary duty have not only resulted in massive economic and reputational damages to the Company and caused untold societal harm, but they also threaten to deny Foxs ability to continue operating as a broadcast news media business, which is its core business. (paragraph 308)

From the New York City Complaint:

The Murdochs decision to embrace Trumps claims of a stolen election not only led to the $787.5 million settlement payment to Dominion, but also endangered Foxs broadcast licenses. (paragraph 211)

A copy of the filing from Duggan and Kristol can be found here.

Media and Democracy Project Motion for Documents

While a great deal of discovery evidence has been produced in the various FOX litigations, this evidence is only available to the FCC and MAD in snippets. The public interest imperative of this proceeding requires a full review of all the evidence to ensure a complete and transparent evaluation of the renewal application and the Commissions decision to designate a hearing.

MADs motion seeks the FCC to require FOX to produce a range of nonpublic documents, emails, and testimony related to the following areas:

  1. All documents and deposition transcripts submitted or provided in connection with the Dominion and Smartmatic litigations.
  2. All documents submitted in the four Delaware Chancery stockholder derivative lawsuits in response to any partys Delaware Section 220 demand for inspection of books and records.
  3. From January 2020 to the present, all documents and written communications between political advertisers, their representatives and advertising agencies concerning political advertising, lowest unit rate charges or requests to purchase advertising on station WTXF-TV.
  4. From January 2020 to the present, all written communications from any FOX, Fox Television Stations, LLC or WTXF-TV station employees indicating that the FCCs electronic filing system was malfunctioning or that an attempt was made to upload WTXF-TV political files but was unsuccessful due to the FCC database not operating properly.

A copy of the motion from MAD can be found here.

The Media and Democracy Project: MAD is a non-partisan, all-volunteer, grassroots civic membership organization fighting for a more informative and pro-democracy media operating in the public interest. MAD aims to improve our national discourse so that American voters can engage in informed decision-making. As part of that goal, MAD has an interest in the responsibility of journalists and media to report fully, accurately, and fairly on the electoral process and the outcome of elections. Additional information is available at www.MediaAndDemocracyProject.org.

Ervin S. Duggan is a veteran of the Lyndon Johnson White House, a former Commissioner of the Federal Communications Commission, and former President of PBS.

William Kristol is a veteran political analyst and commentator. He served in senior positions in the Ronald Reagan administration and the George H.W. Bush White House. For two decades, he edited The Weekly Standard magazine, and is now editor at large of The Bulwark and a director of the educational and advocacy group, Defending Democracy Together.

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