This private equity firm is the biggest winner in the Dominion-Fox News settlement
Dominion Voting Systems won big in striking a historic $787 million settlement with Fox News over allegations the broadcaster had defamed the election equipment company. But the biggest financial winner is midsize private equity firm that turned a five-year-old investment in Dominion into a tenfold return.
The firm, Staple Street Capital, bought a controlling stake in Dominion for about $38 million, according to Reuters, Fortune and other media reports. The company's share of the settlement with Fox comes to more than 15 times its initial investment — a stunning 1,500% return in just five years, not counting any deductions for legal expenses.
The settlement is also multiple times Dominion's annual revenue, which was estimated at just under $100 million last year, according to data provider Pitchbook. Dominion's suit against Fox had sought damages of $1.6 billion.
"It's not every day that an investment fund finds itself at the center of this type of dispute," Staple Street co-founder Hootan Yaghoobzadeh told reporters on Tuesday shortly after the settlement was announced. He did not mention the financial settlement, saying that Staple Street's goal in the lawsuit was the pursuit of the truth.
"We are proud to have played whatever part we could in helping Dominion achieve these important goals," he added.
A spokesperson for Dominion declined to answer a question on how much of the settlement would go toward legal fees.
One trial attorney estimated Dominion's legal costs at "well over a million," which would give the company nearly all of the settlement. "Dominion is a large corporation and they hired very skilled lawyers," said Ryan Saba, a founding partner of Rosen Saba LLP.
"On a case like this, they've had up to 10 lawyers working on this, and it's not the only case they were [pursuing], so legal fees should be well over a million," he said.
Even before the settlement, Staple Street had done well with its Dominion investment, according to Reuters. The wire service reported that Dominion was valued at about $226 million in 2020, citing court filings. That's nearly three times the $80 million valuation Dominion had at the time of Staple Street's 2018 purchase, Reuters said.
The private equity firm previously owned Six Flags and currently has stakes in a flower bulb distributor, a payroll company and a self-storage service, according to its website. It has $900 million under management, making it a relatively small buyout firm compared with industry giants such as The Blackstone Group and KKR.
A former Staple Street employee foresaw the possibility of windfall emerging from Dominion's litigation against Fox, according to court filings. In December 2020, the person sent a Staple Street executive a text reading, "Would be pretty unreal if you guys like 20 [times] your Dominion investment with these lawsuits."
The Fox deal could boost Dominion in other litigation the company is pursuing against parties that allegedly made baseless accusations about its role in the 2020 presidential election. The voting machine company is also suing TV networks Newsmax and OAN for $1.6 billion each, and is asking for $1.2 billion in damages from MyPillow and CEO Mike Lindell in a separate lawsuit.
"Money is accountability, and we got that today from Fox," Dominion attorney Stephen Shackelford said Tuesday in wake of the settlement. "But we're not done yet. We've got some other people who have some accountability coming towards them."