When Disney reached a settlement last week with President-elect Donald J. Trump in his defamation case against ABC News, it led to accusations that the company had caved to him. Media law experts predicted the move would embolden Mr. Trump to file other lawsuits that could test the limits of the First Amendment.
Disney executives had anticipated the blowback. But they also determined that they had a flawed case — and that the company could risk damaging press protections for everyone by continuing to fight, as well as hurt the Disney brand.
Concern among Disney lawyers had been rising for months. In July, a federal judge in Florida, Cecilia M. Altonaga, denied the media giant’s motion to dismiss the suit, which Mr. Trump had filed in the spring. But more worrisome for Disney, ABC’s parent company, was her commentary.
In a 21-page order, Judge Altonaga, the chief judge in the Southern District of Florida, dismantled Disney’s three-pronged argument for tossing the case. Mr. Trump sued after George Stephanopoulos, the star ABC News anchor, said on the air that Mr. Trump had been found “liable for rape” in a New York civil trial. In fact, Mr. Trump had been found liable for sexual abuse, although the judge in that case later noted that New York has a narrow legal definition of rape.
“A reasonable jury could interpret Stephanopoulos’s statements as defamatory,” Judge Altonaga wrote, and then added an emphasis in italics. “Stephanopoulos stated ten times that a jury — or juries — had found plaintiff liable for rape.”
On Friday, Judge Altonaga dealt Disney another setback. She rejected requests to delay the case and ordered near-immediate depositions for Mr. Trump and Mr. Stephanopoulos. Moreover, Disney was also told to turn over “all remaining documents” related to the case — including pertinent emails and text messages sent by and to Mr. Stephanopoulos — by Sunday.
Disney responded by opening settlement talks. By Friday night, the two sides had reached a deal. The company agreed to donate $15 million to Mr. Trump’s future presidential foundation and museum. Mr. Stephanopoulos and ABC News published a statement saying they “regret” remarks made about Mr. Trump during the March broadcast. The news network also agreed to pay Mr. Trump an additional $1 million in legal fees.
The concerns about the case among Disney executives, and the eventual decision to settle, involved multiple considerations, according to three people inside the company with knowledge of the discussions, who spoke on the condition of anonymity to discuss a private matter. The settlement was recommended by Horacio Gutierrez, Disney’s general counsel, and approved by Robert A. Iger, Disney’s chief executive. It was not elevated to a company board vote.
The company was concerned that a jury in Florida — a deep-red state that Mr. Trump carried by 13 points in the election last month — would side with the president-elect and potentially award him a sizable sum exceeding what it would cost to settle.
Disney could have appealed, of course, and executives felt the law was on their side. But the appeals process also carried substantial risk, Disney lawyers concluded.
At a minimum, the $205 billion company would be litigating against a vindictive sitting president and risking harm to its brand. Disney wants its family-friendly movies, television shows and theme park rides to appeal to people of all political persuasions. The company recently endured a brutal legal fight with Gov. Ron DeSantis of Florida that made it a target of criticism — and boycotts — among Trump supporters and right-wing pundits.
Mr. Trump’s animus could also make it harder for ABC News to do its job. During the campaign, Mr. Trump denounced ABC as “terrible” for its handling of his sole debate against Vice President Kamala Harris and mused about stripping the network of its broadcasting license.
In the worst-cast scenario, Disney concluded, fighting the case could lead to the Supreme Court and become a vehicle for Mr. Trump and his allies to overturn the landmark First Amendment decision in New York Times v. Sullivan. That 1964 ruling, as well as a handful of subsequent cases, made it much harder for public figures like Mr. Trump to win libel lawsuits.
Disney’s legal team, headed by Mr. Gutierrez, ultimately decided that settling, even with the inevitable negative headlines, was the best outcome — that $16 million was a small price to pay for resolving a tricky case. (To compare, Disney recently agreed to pay $43.3 million to settle a pay equity case and $233 million to settle a class action case over back wages for Disneyland workers.)
A Disney spokesman declined to comment for this article. On Saturday, when the deal was made public in a court filing, ABC News and Disney declined to explain the decision, with ABC News saying only that it was “pleased” the lawsuit had been resolved. A lawyer and a spokesman for Mr. Trump both declined to comment.
The blowback has been swift and severe. In the eyes of many, Disney — which has waged many bloody legal battles — seemed to have bowed to the president-elect. Inside ABC News, employees were outraged.
Paul Farhi, a former media writer for The Washington Post, wrote on social media that the settlement was “an awful precedent and a huge sellout.” In a social media post of his own, Marc E. Elias, a top lawyer for the Democratic Party, wrote: “Knee bent. Ring kissed. Another legacy news outlet chooses obedience.”
Experts in media law expressed surprise, noting the high threshold required by the courts for a public figure like Mr. Trump to prove defamation. A plaintiff must show not only that a news outlet published false information, but that it did so knowing the information was false or with substantial doubts about its accuracy.
Mr. Trump’s previous lawsuits against news outlets have almost always ended in defeat, including cases against The New York Times, CNN and The Washington Post.
Experts wondered whether the settlement with Disney would encourage Mr. Trump to intensify his assault on the media, at a time when many news organizations are struggling with declining public trust and deteriorating finances.
On Monday, Mr. Trump sued The Des Moines Register for publishing a poll before the election that turned out to be wrong. A spokeswoman for the newspaper said it stood by its reporting and would defend itself in court.
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