Fox Directors Face Trial Risk as Delaware Court Opens Murdoch Files

WILMINGTON, Del. — Delaware Court of Chancery Vice Chancellor Bonnie David has ordered Fox Corp. to hand over a vast trove of internal files covering how its board handled—or failed to handle—decades of costly editorial and legal scandals. Fox Corp. did not offer a public comment regarding the court’s decision.

The shareholder lawsuit, initiated three years ago, centers on Jacques Nasser, the former chief executive officer of Ford Motor Company. Nasser served as an independent director on various Murdoch-controlled boards for more than 20 years and became Fox Corp.’s lead independent director before stepping down in 2023.

The plaintiffs argue that Nasser’s personal and professional ties to the Murdochs compromised his independence. They say he failed to act as a counterweight to Rupert Murdoch and his eldest son, Lachlan, who is Fox’s executive chairman and CEO. If their attorneys use the newly ordered documents to prove Nasser was not independent, they will establish that a majority of Fox’s board was conflicted, allowing the derivative lawsuit to proceed toward a trial.

Under Delaware law, boards generally receive wide latitude to run companies through the business judgment rule. Directors can face personal liability for failing to prevent systemic corporate harm if shareholders prove that most of the board lacked true independence from a controlling stockholder. David rejected Fox’s efforts to shield hundreds of sensitive documents, including a complete list of email addresses used by Nasser and Rupert Murdoch, years of board meeting minutes, and messages from Nasser’s former corporate accounts at Ford.

The discovery also covers about 700 internal documents containing the phrase “phone hacking.” The reference is to the 2011 British tabloid scandal that shook News Corp., Fox’s sister company, after journalists hacked the voicemails of crime victims, celebrities, and members of the royal family. The scandal led to the closure of the *News of the World* newspaper and cost the Murdoch empire an estimated $1.5 billion in legal settlements and damages.

Nasser’s record at British Sky Broadcasting is also under examination. During his decade on the BSkyB board, court documents say he supported the Murdochs’ corporate agenda, including Rupert Murdoch’s appointment of his younger son, James, as BSkyB’s chief executive officer. Nasser also defended the family during the phone-hacking inquiries and backed a major stock buyback program that consolidated the Murdoch family’s voting power.

Both Nasser and Rupert Murdoch have long been prominent figures in the American Australian Association, which was founded by Murdoch’s father, Sir Keith Murdoch. Shareholder attorneys say that connection further complicates the defense’s claims that Nasser was strictly independent.

The corporate structure changed after the British scandal. In 2013, the Murdoch empire separated its publishing business, News Corp, from its entertainment and broadcasting division, 21st Century Fox, in an effort to shield lucrative American television licenses from the fallout. Most of 21st Century Fox was later sold to The Walt Disney Company for $71.3 billion in 2019. The remaining broadcasting assets, including Fox News Channel and the Fox broadcast network, became the current Fox Corp.

The current shareholder case followed Fox Corp.’s historic $787.5 million defamation settlement with Dominion Voting Systems in April 2023. Dominion accused Fox News of knowingly broadcasting false conspiracy theories that its voting machines had rigged the 2020 U.S. presidential election. The plaintiffs also cite an undisclosed settlement with the family of Seth Rich, a former Democratic National Committee staffer. Fox News published and later retracted a story falsely linking Rich to the leak of DNC emails during the 2016 presidential campaign.

The Delaware litigation also concerns possible destruction of evidence, legally known as spoliation. Plaintiffs’ lawyers will receive sealed documents from Smartmatic USA’s ongoing $2.7 billion defamation lawsuit against Fox. Smartmatic, another voting technology company, has accused Fox and the elder Murdoch of intentionally deleting relevant communications.

During those proceedings, Fox’s legal team acknowledged that Rupert Murdoch’s mobile phone was configured to automatically delete text messages. The practice continued until April 2022, well after Dominion had filed its defamation suit. Fox attorney Anitha Reddy said in court that any suggestion documents were deleted “wholesale” was incorrect. She argued that Murdoch primarily communicates through email rather than text messages, while conceding that his texts were not retained for a period.

Unpreserved evidence has also featured in the legal fallout from Fox’s 2020 election coverage. In the Dominion case, attorneys repeatedly raised concerns that key Fox executives and on-air personalities had failed to preserve emails and text messages. Dominion’s legal team flagged former Fox host Pete Hegseth, who now serves as the U.S. Secretary of Defense. Fox’s attorneys have denied the allegations, accused Smartmatic and Dominion of destroying evidence, and sought court-ordered sanctions.

The plaintiffs will now review the newly unsealed board minutes, emails, and phone-hacking records. The documents are expected to outline the boundaries of Murdoch’s corporate control and determine whether Fox’s directors face a full trial over their oversight of the network’s business practices.