In his 71 years as a media executive, Rupert Murdoch has proved himself to be a grand master in the arts of survival. He has weathered bruising battles with British trade unions, the phone hacking scandal, countless ratings wars and a volatile private life, all the while growing his News Corp empire into global colossus.

It was against this seven-decade backdrop of seeming invincibility that news of Murdoch’s deposition in the $1.6bn Dominion Voting Systems lawsuit against Fox News Networks and its parent company Fox Corp dropped like a bomb. Not only did he admit that he knew that Fox News hosts spread lies about the 2020 presidential election being stolen from Donald Trump, but he confessed that he had allowed them to keep on doing so on air to millions of viewers.

To say that the 91-year-old’s statement astounded close Murdoch watchers would be an understatement. “I was shocked,” said Angelo Carusone, president of the watchdog Media Matters for America. “It is stunning, as it not only exposes a lot about how Fox works, it opens them up to potentially cascading litigation and liability.”

Fox News and its parent company now face escalating damage on two fronts: to its reputation as a journalism outlet that ostensibly pays lip service to truth and accuracy – and to the financial health of the operation. Media and legal experts told the Guardian that, partly as a result of his stunning testimony, Murdoch can now expect potentially severe injury to both.

A former Republican strategist who co-founded the anti-Donald Trump Lincoln Project, Rick Wilson, said that the reputational damage was self-evident. “This is so profoundly cynical, and deeply corrosive to the role of the largest cable news network in the country,” Wilson remarked. “They admittedly engaged in fraud and lied to their audience.”

Wilson predicted that there would be fallout for Fox News in terms of defections from viewers angered by the admission as much as the substance of it. He said: “There’s been worry at Fox for some time now that they’re losing their iron grip on their audience. We are going to see a migration now of Fox News viewers to even further-right outlets like Newsmax and OANN.”

Brian Stelter, the former anchor of CNN’s media show Reliable Sources who is now a media and democracy fellow at Harvard’s Shorenstein Center, told the Guardian that Fox News would be cushioned by its financial success. “It’s a license to print money,” he said. “It is facing large potential damages which may be a major blow, but not a death blow.”

What would hurt most, Stelter suggested, would be the realization among the Fox News base that they had been served a dishonesty. “The most damning headlines to come so far are about the gap between what Fox News hosts say in public and private,” he said. “Even if a little of that seeps into the Fox bloodstream, it still has an impact.”

In his deposition, Murdoch – whose newspaper holdings include the Sun in the UK and the Wall Street Journal – made an admission that could have dire consequences, not only reputationally but also to the Dominion lawsuit on which a lot of money is riding.

Under heavy pressure from Dominion’s lawyers, he admitted that several Fox News hosts – Lou Dobbs, Maria Bartiromo, Jeanine Pirro and Sean Hannity – had endorsed the lie that the 2020 presidential election was stolen from Trump and handed to Joe Biden.

“Some of our commentators were endorsing it,” he said. “Yes. They endorsed.”

Murdoch tried to make a distinction between the hosts – “commentators” he called them – who were making false claims of election fraud and Fox itself. But in other parts of his devastating testimony, he admitted that he chose not to keep election deniers such as Rudy Giuliani off the air even though he had the power to do so.

He also tried to justify allowing Mike Lindell, an avid conspiracy theorist, to run MyPillow ads on the network as a purely financial decision. “It is not red or blue, it is green,” he said.

In a statement, Fox accused Dominion of attempting to “publicly smear Fox for covering and commenting on allegations by a sitting president of the United States”.

The company called the argument put forward in the lawsuit a “blatant violation of the first amendment” right to free speech and said it represented “an extreme, unsupported view of defamation law that would prevent journalists from basic reporting”.

The word “endorsed” in Murdoch’s deposition could be critical. Under the first amendment’s protection of free speech, Dominion would have to prove “actual malice” in its defamation case against Fox. “It has to show they not only knew these claims were false, but continued to push them with a reckless disregard for the truth,” Carusone said. “‘Endorsement’ neutralizes one of the most important defenses Fox could have used.”

The Media Matters president added that, in his view, Murdoch’s extraordinary deposition – so out of kilter with his previous consummate survivor’s record – could be put down largely to hubris. “I think it was hubris,” Carusone said. “He thought he was untouchable.”

Carusone pointed to another potential devastating part of the newly released depositions – the testimony of the Republican former US House speaker Paul Ryan. The depositions revealed that Ryan had implored Murdoch to “move on from Donald Trump and stop spouting election lies”.

Ryan now sits on the Fox Corp board of directors. “This is catastrophic, frankly,” Carusone said. “It opens the door to litigation from shareholders, given that their own board member tried to stop this.”

RonNell Andersen Jones, a media law professor at the University of Utah, said that the deposition could prove highly damaging in the ongoing Dominion case. She said: “It adds some key factual support for the narrative that Fox made a conscious decision to tell a knowing lie and that it did so to win back viewers who were defecting.”

She predicted that the revelations would spur “much larger conversations about the stolen election lie and the role Fox and Murdoch played in perpetuating it”.

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