Who’s Paying Fox’s $787.5 Million Settlement With Dominion? You Are!

If you pay for cable or satellite TV, you’re subsidizing Fox News, whether you watch it or not.

The American and Fox flags fly outside the News Corp. Building and Fox News Headquarters, Wednesday, April 19, 2023, in New York. Fox News’ nearly $800 million settlement of a voting machine company's defamation lawsuit marks the first milestone in a larger legal strategy designed to combat the false claims and conspiracy theories about elections that have rippled through the United States for nearly three years. (AP Photo/Mary Altaffer)
An American flag flies next to a flag reading “Fox” outside the News Corp. Building and Fox News headquarters in New York City on April 19, 2023. Photo: Mary Altaffer/AP

Fox News just agreed to settle Dominion’s defamation lawsuit against it for $787.5 million. That sounds like a lot of money until you understand Fox’s principal source of revenue: tens of millions of people who rarely or never watch it but are forced to pay a lot of money for it anyway.

Understanding this requires a quick look at the economics of cable TV news.

Before cable, we got TV news from the news divisions of the entertainment channels CBS, NBC, and ABC. They put on a few hours of news at most per day, their 30-minute broadcasts each night plus maybe “Nightline” or something like that. Those shows had ads, but they generally didn’t cover the cost of production, so the ad revenue from the networks’ sitcoms and other shows had to subsidize the programming about reality.

Cable and satellite TV made possible the advent of 24-hour news channels, and while they made money from advertising, they also received what are called carriage fees from each subscriber. Cable or satellite providers — such as Comcast, Spectrum, DirecTV, or Verizon — negotiate the carriage fees every few years with the channels they want to offer to their subscribers.

As of 2022, the top cable and satellite providers served about 76 million households. Importantly, their customers can’t order individual channels à la carte. Instead, customers have to choose from a small number of plans offered by Comcast or whoever is their provider and pay for all the channels that are part of the plan they’ve selected, whether they want all the channels or not.

For instance, I see that where I live, Optimum cable has four choices, in order of cost: Basic, Core, Select, and Premium. All of them except Basic include CNN, MSNBC, and Fox, while Basic doesn’t include any of them. So if I want CNN, I have to pay for one of the non-Basic packages that also gives me Fox and MSNBC (or vice versa). The money I’m paying for the package goes to all three of those news channels, even though I may only want and watch one of them.

Fox News has always been especially aggressive on carriage fees. As of 2020, it charged providers about $2 per month per subscriber. By contrast, CNN (including CNN’s HLN) costs between $0.70 and $0.90, and MSNBC was just $0.33. The carriage fees for Fox News appear to be the second highest of any channel, behind only ESPN.

It’s true that some of the Fox premium is justified, given that Fox News has bigger audiences than its competitors. But that’s not the whole story. Fox averaged 2.26 million viewers in prime time for February, while MSNBC had just over half that, at 1.17 million. Yet Fox gets nearly seven times as much subscriber revenue as MSNBC.

And these carriage fees are more important for Fox News than for CNN and MSNBC because many major advertisers have fled Fox. It needs the higher fees to offset its lower advertising revenues.

The upshot here is that cable and satellite subscribers who don’t watch Fox News are nonetheless forced to provide it with huge subsidies. This is due to the willingness of the providers to pay inflated fees to Fox, and this is likely due to the fervency of the Fox audience because the providers are frightened of a Fox-generated backlash if they don’t fork over what Fox demands. (This dynamic was illustrated when Spectrum planned to drop Corncob TV and its hit show “Coffin Flop.”)


Dominion Was Never Going to Save Our Democracy From Fox News

So when your credit card is automatically billed by your cable provider this month, you’ll now know that a few bucks are going directly to Fox News. Together with all of America’s other powerless pay-TV subscribers, you’re making it possible for Fox to just write a check for over three-quarters of a billion dollars for its election lies, whether you’ve ever watched a minute of it or not.

You can try to fight back, of course. Some of the data in this article was obtained from Media Matters for America, the liberal media monitoring organization that is a fierce, longtime critic of Fox News. Media Matters for America is currently running a campaign called “Don’t Let Fox Raise My Bill,” which organizes subscribers to tell their providers not to agree to higher Fox News carriage fees in current negotiations.

Meanwhile, Fox’s stock price took a brief 3 percent dip when the settlement was announced on Tuesday. Within 24 hours, it was back to where it had been beforehand and indeed was trading at almost exactly where it had been on Election Day 2020.

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