The idea that Donald Trump was denied victory in the 2020 presidential election by conspirators determined to fiddle with the electoral system was never more than a fiction dreamed up by a frustrated losing candidate. At such times, the role of the media is crucial. If there were genuine evidence of vote-rigging then it should of course be investigated. But to amplify conspiracy theories for the sake of ratings could have grave consequences.

The editorial decision to try to give legs to the stolen election claim is now costing Fox News dearly. This week the company reached a $788 million settlement with Dominion, a company which supplies vote-counting technology for US elections and had been accused of involvement in rigging the election. The staggering sums and reputational damage represent one of the deepest setbacks of Rupert Murdoch’s career.

It’s not just the size of the Dominion payout that matters, but the sense that, as with phone hacking, more payments are coming. Dominion wanted $1.6 billion, and settled for about half that. Another legal case beckons with a second company, Smartmatic, which is claiming $2.7 billion in damages. The first case was made worse by Fox News’s bung-ling of it – in particular the failure to disclose until the last moment that Murdoch was personally involved, as executive chairman of Fox News. That the judge threatened to call him to the witness stand as a result of this omission may well explain why Fox News decided to settle the case.

Fox News’s credibility is under the microscope. There is also the threat of legal action from shareholders appalled at the way that Fox’s against-the-grain culture failed to distinguish legitimate concerns from conspiracy theories. Murdoch himself now accepts that the network perpetuated a false election narrative, saying that he ‘would have liked us to be stronger in denouncing it, in hindsight’. This is going to be hard to reconcile with the official Fox News response that it was just reporting newsworthy allegations.

Murdoch launched Fox News at a time when the overwhelming consensus was that there was no space in the American market for a new TV news channel. The network won its audience not by making rapid attacks on the left, as Murdoch’s critics attest, but by producing high-quality news and commentary that demurred from a stale consensus. Variety was brought to a news market that badly needed it, and it’s hard to think who else could have accomplished this.

Indeed Murdoch’s whole career has been one of defying the odds and (usually) winning. He bought the Sun at a time when radio and television had already bitten heavily into the circulation of popular newspapers. The Times was dying on its feet when he bought it in 1981, having been out of print for nearly a year due to an industrial dispute. For more than a decade, Murdoch endured heavy losses there, but has now turned a £73 million profit – charging for news that for years other papers thought they had to provide for free.

Some on the left in Britain will never forgive Murdoch for defeating the print unions in the 1980s, seeing it as an ideological battle against organised labour. Yet in essence it was simply about the right of a newspaper company to use new technology and survive. Where he led, other papers followed, prolonging the life of an industry that had threatened to become chronically unprofitable.

With satellite TV, too, many expected him to fail. He asked householders to pay for an expensive satellite dish plus a subscription – all in competition with the BBC and ITV which could be viewed for no payment beyond the TV licence. Yet Sky TV prospered, transforming not only television but also sport.

Yet battles against malpractice in his organisations are proving harder to win. The hacking scandal closed the News of the World. To avoid more court cases, News Group Newspapers has kept settling with claimants year after year: its last accounts showed £100 million expended in a single year. One analysis calculates that the damages and costs amount to over a billion pounds so far.

The Fox News election debacle may end up costing even more than the hacking, given the other impending claims. This is a showdown with global relevance: telling a heavily partisan audience what it wanted to hear provided too big a temptation for the channel. It fell short of the standards that Murdoch himself has imposed, as he openly accepts. The cost of this now threatens the whole economic viability of Fox News.

Fox News is hardly the only partisan news organisation in the US, of course. America’s increasingly polarised society has spouted plenty of left-leaning channels and publications whose spin is often at odds with reality (as the New York Times’s coverage of Britain regularly shows). But the legal risks are of a magnitude never before seen in the industry. There are plenty of shareholders who would be more comfortable if Murdoch sold all of his news interests, to minimise this liability.

At 92, Murdoch is well beyond the age at which most moguls have retired to the golf course. That’s why the later part of his career has been dogged by the question of succession: is there anyone within his family, or indeed outside, who would have taken the risks that he did to bring diversity to readers and viewers? Just as he sold Sky News and closed the News of the World, there will be huge pressure on him now to drop his UK newspaper interests and retreat to safer territory. He may do so. We may then find out that the only thing worse than a media landscape with Rupert Murdoch is one without him.