One wrinkle: even if an insurance company pays a substantial part of the settlement, there could be an annual aggregate limit of liability, which could mean that insurers wouldn’t cover another big-money settlement.Īnd media companies and insurers don’t always agree on who should cover what, since there are caveats written into contracts that allow insurers to avoid paying under certain circumstances. However, the deductible incudes attorney fees, which in a high-profile case like Fox-Dominion could be tens of millions of dollars or higher, so the deductible could be swallowed up just by attorney fees. Usually, there’s a certain amount a media company has to pay, which could be in the millions, before insurance kicks in. “It’s not hard to stack up $100 million but as you go higher than that, it gets harder and harder,” Milton said. Chad Milton, a partner at Media Risk Consultants, said a large media company such as Fox could have anywhere between $100 million to $500 million in coverage, including media liability insurance and other types of insurance. Big banks such as Bank of America and JPMorgan Chase reportedly also deducted portions of their settlements of charges tied the financial crisis of 2008.Īlso, if Fox is insured, insurance is likely to cover some of the settlement. “The key is that if the payments are being made to private parties and not at the behest of the government then you can pretty much conclude without any fear of contradiction that the payment will be deductible,” he said.Ī study by the Government Accountability Office in 2005 found that of 34 settlements totaling over $1 billion, 20 companies reported deducting some portion or all of their settlement payments. Robert Willens, a tax professor at the Columbia University School of Business, estimates that after the tax write-off, Fox will incur about three-fourths of the settlement amount, about $590 million. Payments that are seen as restitution or compensation can be deducted, while payments made to the government or at the direction of a government are usually not deductible. Big companies often deduct large settlements to help offset some of the cost, but since settlement amounts are usually confidential, it’s difficult to pin down exactly how much they benefit.
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