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Fox’s $787.5 million settlement gives PE company 1,500% profit


(Bloomberg) — The biggest winner of Fox News’ $787.5 million settlement with Dominion Voting Systems Inc. is a New York private equity firm that is leaving with a return on investment of more than 1,500%.

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Staple Street Capital LLC bought a roughly 76% stake in the voting tech company in 2018 for $38.8 million, unaware that Denver-based Dominion would become a household name in just a few days. year for all the wrong reasons – falsely accused by former President Donald Trump and his allies of rigging the 2020 election in favor of Joe Biden.

Dominion sued Fox for defamation, seeking $1.6 billion in damages, but settled about half that amount on Tuesday, just as opening statements were about to be presented at trial. During the pre-trial evidence exchange, Fox discovered what turned out to be a text message that a former employee had sent Dan Franklin, vice president at Staple Street, commenting on the Dominion lawsuit .

“It would be wild for you to expect your Dominion investment to grow 20x with these lawsuits,” the announcement said, quoted in court filings.

Estimates are pretty close. Staple Street’s payout, assuming they’ve made no more equity investments since 2018, would be $598.5 million, or 1.542% of what they paid for their shares. yourself in the company. According to its website, Staple Street has about $900 million under management.

Read more: Fox must pay $787.5 million to settle Dominion defamation lawsuit

Hootan Yaghoobzadeh, co-founder of Staple Street, said in a press conference on Tuesday: “It is not every day that an investment fund finds itself at the center of this type of dispute. “For us, this case has always been about exposing the truth and holding those who intentionally spread lies accountable.”

Yaghoobzadeh founded Staple Street in 2010 with Stephen D. Owens, a graduate of Harvard Business School, according to the company’s website. Owens was previously the chief executive officer of the Carlyle Group, where he focused on acquisitions in the United States. Prior to that, he worked at Lehman Brothers in New York and Hong Kong, focusing on commercial banking and M&A, according to a profile on the Staple Street website. Yaghoobzadeh is senior vice president of Cerberus Capital Management, focusing on struggling private equity and special situation investments. He was also part of the Carlyle acquisition team in the United States.

Fox said it acknowledged previous court rulings that “several statements” about Dominion were false. Trump’s allies have flooded conservatives with claims that Dominion used corrupt software and foreign hackers to ensure Trump lost the 2020 election.

Fox pointed to Dominion’s ownership by a private equity firm to make claims that the damages were inflated, arguing in recent months that the lawsuit “was little more than a money game.” to satisfy Staple Street.”

Fox has fiercely argued that Dominion’s damages are “exaggerated” and “outrageous”, in part because they are based on an unrealistic valuation for the company. The network said in a March court filing that documents it discovered showed Dominion was independently valued in September 2020 at $238.5 million, much lower than estimates $741.2 million that the company’s experts used to calculate the damage.

“To think that Dominion has grown nearly tenfold in that span in a highly regulated and competitive market is unthinkable,” Fox said in a court filing.

Staple Street may have many payday days ahead. Dominion is still pending lawsuits against other conservative media outlets NewsMax and One America News Network, as well as former New York City Mayor Rudy Guiliani and attorney Sydney Powell, both of which made false claims. that Dominion’s voting machine was rigged.

Staple Street’s investments include amusement park operator Six Flags and companies specializing in products and services that are even more obscure than voting machines: dental assistant services, flavoring and perfumery chemicals, dormant bulb distribution, aerospace and defense metal assemblies, and “aftermarket lifecycle solutions for electronics.”

(Updates with other Staple Street investments in last paragraph.)

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