Fox’s Proposes $5+ million Settlement For Publishers Class Action Lawsuit

Came across this in the WSJ last week. In a nutshell the group of former publishers have been offered a $5+ million settlement from Scout’s legal team. Bucknuts was one and the first of many publishers to leave the Fox owned Scout with a laundry list of legal gripes stemming from their network publisher agreement . Bucknuts and other sites aligned their efforts in a class action law suit hoping to recoup unpaid revenue from subscription and advertising in addition to damages in a myriad of other gripes that fall under into the bucket of general breach of contract. Below is the advertisement announcing the proposed settlement

Even though this took years of legal posturing, this is a pretty substantial win for the publishers. Since it is a class action lawsuit, other publishers can participate in the settlement but since many of the publishers effected are still part of Scout, they would likely jeopardize their relationship if they were to ask for their piece of the pie.

Putting aside my Bucknuts bias, its pretty clear the publishers had a strong case if an already negative cash flow Scout was willing to part with $5 million in this bad economy. This combined with the fact that publishers across the country took place in the lawsuit all harping on the same issues leads me to believe the boys up in Seattle weren’t acting in good faith.

Also keep in mind that this is a pretty strong admission of some level of guilt by Scout and the majority of time frame from this lawsuit dates before the Fox acquisition. That being said, you can imagine Fox must be really steamed at the Scout leadership team for having faulty numbers when they agreed to buy the network for $50 million.

Coupled with the fact that there is just persistent buzz in the online sports media world (from multiple sources) that Scout is a train wreck as a company and as an investment for Fox, this may serve as a death blow to the sports network.

I actually wrote a handful of articles for Scout when the Bucknuts team of writers left the stable. I would have stayed as a writer, but it wasn’t clear who was really running the show so I opted to join Bucknuts and have not looked back.

In the past couple of years, Fox has really swung and miss in terms of harnessing interest in college football. They bought Scout for a whopping $50 million in addition to buying College Football News for an undisclosed amount. Fox also owns about 50% of the Big Ten Network and has had a very public failure of broadcasting the BCS bowl series (Fox has no football games on the network but somehow has the bowl games, which is a recipe for disaster).

With no real growth, functionality improvements, or cool integrations with Scout and CFN, the BTN’s distribution plateauing off, BCS bowl games leaving the network to the delight of college football fans, falling adverting rates and subscriptions, the growth of blogs and other sports networks. and now a multi million dollar settlement, Fox is most likely having a very difficult moment of truth:

We spent a lot of money, we lost a lot of money, our strategy to monetize interest in college football didn’t really make any sense, this economy is going to break the camels back, and we should get our resumes ready.

However imo, its very unlikely that their will be any public funerals for Fox. The company has too much cash in the bank and more importantly pride, to just shutter Scout.

Most likely they will do some dramatic cost cutting (as if the message boards and UI wasn’t terrible enough), and bunker down during this economic atomic winter while upstart blogs and competing networks nibble on their market share.

Or they could hire me ofcourse.

About Ben Koo

Owner and editor of @AwfulAnnouncing. Recovering Silicon Valley startup guy. Fan of Buckeyes, A's, dogs, naps, tacos. and the old AOL dialup sounds