Late last week, Lachlan Murdoch dropped his defamation claim against key figures behind online publication Crikey.

Murdoch had a strong case. So why would he choose to drop it?

The facts of the case

For those under a rock: Lachlan Murdoch is the son of Rupert. He is an Aussie-American-Brit leading News Corp and Fox Corporation. His empire includes Fox News in the US and Sky News in Australia.

Mr Murdoch was suing over a June 2022 article on the subject of the January 6 insurrection at the US Capitol.

The piece called Donald Trump a “traitor”, and Lachlan Murdoch Trump’s “unindicted co-conspirator” – a reference to Richard Nixon’s treatment by a grand jury with respect to the Watergate scandal.

The underlying allegation was that Fox News had supported Trump’s “Big Lie” that the 2020 US presidential election was stolen, which led to the insurrection; and that Lachlan Murdoch was responsible for Fox’s role in spreading the Big Lie.

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After the article was published, Mr Murdoch sent the publishers of Crikey a “concerns notice”, essentially threatening to sue them.

In response, the publishers almost dared Lachlan Murdoch to sue. They even took out an ad in The New York Times.

According to Mr Murdoch, those behind Crikey used his defamation threat as part of a marketing campaign to drive subscriptions.

Challenging a billionaire to a defamation fight may not have been the smartest move. In September 2022, Mr Murdoch commenced proceedings in the Federal Court of Australia. He sued the company publisher of Crikey, its editor, and the article’s author. Later, he also sued the chair and chief executive of that company.

Crikey’s defences may have failed

The Crikey respondents were defending the case on a number of bases. Each of these defences relies on legal principles that excuse the publication of content that is defamatory for the sake of other important interests.

Perhaps their strongest defence was a new one – a statutory defence of “publication of matter in the public interest”. The defence became law in 2021. It means a defamatory publication is defensible if two conditions are met.

First, the publication must concern an “issue of public interest”, which the Crikey article clearly did. Second, the publishers must have “reasonably believed” that the publication of the matter (the article) was in the public interest.

The case may have turned on this second element of the new defence. What did the publishers believe? Was their belief about the public interest, or driving subscriptions for Crikey? There was a decent risk a court would have gone with the second option, and the defence would have failed.

If the defences had failed, Mr Murdoch would have won. So why would he choose to discontinue his case?

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The Dominion case

Just days ago, Mr Murdoch’s Fox settled what would have been one of the biggest defamation cases of all time.

Dominion Voting Systems sued Fox in the US, and sought a whopping $US1.6 billion ($2.39 billion) damages.

It is extremely difficult to succeed in a defamation case against a media company under US law. But if ever there was a case where it could happen, this was it.

Through pre-trial procedures, Dominion had uncovered a treasure trove of evidence from people at Fox – including from the likes of Tucker Carlson and Rupert Murdoch.

There was plenty of ammunition for Dominion to argue Fox was deliberately spreading lies about Dominion, which would have been required for Dominion to succeed.

Just before the trial was about to start, Dominion agreed to put an end to the case in exchange for a $US787.5 million payment ($1.178 billion) from Fox.

This was a steep price for Fox to pay, but a loss would have cost substantially more in damages. And it would have cost more than money.

If the case had proceeded to trial, it would have caused tremendous damage to the Fox brand and that of its talking heads, further alienating the audience on which they depend.

The evidence already uncovered was ugly, but it was about to get even uglier.

A sound decision

If Lachlan Murdoch continued the Crikey case, then all of the dirty laundry that was to be aired in the Dominion case could have been aired in Australia.

According to the principle of open justice, that evidence would have been heard in an open court, with the global media watching.

Fox’s key benefit of the Dominion settlement – making the story go away, and not having to uncover further evidence – would have been destroyed. It would have been a massive own goal.

It’s likely Lachlan Murdoch would have been cross-examined.

Other reasons to end the case

Say the case continued, and Lachlan Murdoch won. This would mean the Crikey respondents failed in their reliance on the statutory defence of “publication of matter in the public interest”.

The resulting judgment could set a precedent undermining the value of the new defence.

It is in Lachlan Murdoch’s ultimate interest that the defence remains strong; it will protect News Corp rags from publishing defamatory articles, which they are prone to do. Laying down his weapons now avoids that scenario.

And there is the reason Lachlan Murdoch has given for ending his case – he does not want to give Crikey any more ammunition for a marketing campaign to attract subscribers.

Mr Murdoch insists he was confident that he would have won his case. He may have won defamation damages, but he could have lost far more.

Mr Murdoch may end up having to pay the legal costs of the Crikey respondents. But this case was never really about money. As the judge said a few weeks ago, it was more about “ego and hubris”. Many defamation cases are.

Michael Douglas, senior lecturer in law, The University of Western Australia

This article is republished from The Conversation under a Creative Commons licence. Read the original article.