Fox Corporation is seeking the SEC’s green light to exclude a shareholder proposal regarding the differentiation between its news and opinion-based coverage.
The resolution, submitted by As You Sow on behalf of John Chevedden, asks that Fox’s board ‘prepare and publish a report… assessing the potential negative social impact and risks to the company from continuing to inadequately distinguish between [the company’s] on-air news content and its opinion content, and the viability and benefits of providing public differentiation between its news and the entertainment-based nature of its non-news shows.’
The proponent requests that the report include:
- ‘Analysis of risk mitigation from a third-party expert that includes legal, financial and reputational risk
- ‘Identification of likely strategies that increase the distinction between news and opinion content, such as replacing the on-screen ‘Fox News’ branding during opinion shows to highlight opinion content
- ‘Third-party testing of methods that communicate opinion content to independent viewers (such as the example of branding differentiation, provided below).’
The ‘example of branding differentiation’ is referred to in Fox’s no-action request as a ‘graphic.’ It includes an adapted Fox News logo in a screenshot from a network show.
The resolution request points to Fox Corporation’s $787.5 mn settlement last year with Dominion Voting Systems. That settlement was reached after Dominion sued over false statements made on Fox News alleging illegitimacy of the 2020 US election results as a result of Dominion’s systems.
The media company had argued that the statements were not defamatory in part because no reasonable viewer would construe the coverage and commentary as presenting information the company believed to be true, according to a filing from the judge in the case. It also argued that the statements were not actionable under the neutral report privilege, fair report privilege or opinion privilege.
‘The 2023 Dominion lawsuit highlights the risk of a news organization inadequately differentiating its news reporting from its opinion and entertainment programming,’ As You Sow writes.
‘Failure to differentiate between journalism and opinion also poses a clear threat to an informed electorate and a thriving American democracy… Blurred lines between opinion and journalism also introduce significant business risk from potential reputational damage.’
Fox’s arguments
Fox Corporation has asked the SEC for no-action relief if it excludes the proposal from its 2024 proxy materials on the grounds that, per Rule 14a-8(i)(3), the resolution includes a ‘materially false or misleading statement’ and/or that, per Rule 14a-8(i)(7), it seeks a report on matters that fall within the company’s ‘ordinary business’ and does not raise a significant social policy issue.
‘The graphic has nothing to do with the purpose of the proposal, which requests a report assessing whether public differentiation of content would mitigate risk,’ the company writes. ‘[It] is presumably meant to be an illustration of what ‘public differentiation’ could look like. The inclusion of the graphic, however, creates significant confusion, and would lead a reasonable stockholder to conclude that the proposal requires a vote on a specific alteration to the company’s on-screen logos or content, as opposed to the publication of a report.’
Fox Corporation also argues that terms used in the proponent’s filing are ‘vague and indefinite, and any interpretation of what content constitutes ‘news’ or ‘opinion’ or ‘actual journalism’ could be subject to differing interpretations.’
In addition, the company states that the resolution ‘seeks to insert stockholders directly into decisions about the content and presentation of the company’s programming, specifically how news and opinion content is presented on Fox News. Fox News’s programming is a key ordinary business matter of the company.’
A request for comment from Fox Corporation was not returned immediately.
The company held its 2023 AGM on November 17.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
