Rupert Murdoch’s Fox News will pay $788m (£634m) to settle a blockbuster lawsuit that threatened to expose the inner workings of the organisation as it claimed the US presidential election was rigged.

Dominion Voting Systems launched a high-profile legal battle against Fox over accusations the network knowingly broadcast false claims that its technology was used to rig the 2020 election of Joe Biden. It was seeking damages of $1.6bn.

But a dramatic settlement was announced last night after a jury had been sworn in and with the two sides poised to give opening statements.

Returning to the packed courtroom after an unexplained delay, Eric Davis, Delaware Superior Court Judge, said: “The parties have resolved their case.”

Justin Nelson, a lawyer for Dominion, said the case was settled for $787.5m. He added: “The truth matters, lies have consequences.”

In a statement last night, Fox News said: “We are pleased to have reached a settlement of our dispute with Dominion Voting Systems.

“We acknowledge the court’s rulings finding certain claims about Dominion to be false. This statement reflects Fox’s continued commitment to the highest journalistic standards.

“We are hopeful that our decision to resolve this dispute with Dominion amicably, instead of the acrimony of a divisive trial, allows the country to move forward from these issues.”

The last-gasp deal spares Fox News from a potentially embarrassing trial that would have shed light on the heart of Mr Murdoch’s empire.

The 92-year-old was expected to take the stand, while Fox News chairman Suzanne Scott and presenters including Tucker Carlson were also set to testify.

In a further potential blow to Fox’s reputation, Judge Davis appointed special master John Elzufon to examine whether the channel complied with its obligations to disclose key evidence ahead of the trial, following complaints from Dominion’s lawyers.

Dominion had accused Fox of knowingly airing false claims that its products were used to rig votes in the 2020 US presidential election in favour of Joe Biden.

Fox argued that claims of vote rigging, propagated by Mr Trump and his lawyers, were inherently newsworthy and protected by legal doctrines concerning press freedom.

The trial, which would have been one of the biggest US defamation cases in decades, was about to begin on Tuesday after the judge ordered a one-day delay as the two sides tried to thrash out a settlement.

Lawyers representing the two sides selected 12 jurors and 12 alternates from a pool of 58 potential jurors, paving the way for opening arguments.

Fox had been preparing to use clips of Homer Simpson voting in presidential elections as part of its defence.

The company had included four scenes from the long-running animated sitcom among more than 5,000 exhibits submitted to the court.

They included an episode in which Homer attempts to cast a vote for Democrat President Barack Obama and another in which he votes for former Republican presidential nominee Mitt Romney.

A short film from 2016 depicts Russian President Vladimir Putin disguised as an American voter trying to convince Homer to vote for Donald Trump, while in a more recent clip Homer is unsure whether to vote for Putin or Trump.

It was not clear how Fox planned to use the clips in its defence. The Simpsons has aired on the Fox network since 1989, though the series was acquired by Disney as part of its 2019 takeover of Mr Murdoch’s 21st Century Fox.

Also among Fox’s exhibits was material from the 2020 HBO documentary Kill Chain: The Cyber War on America’s Elections, which examines the vulnerability of US voting systems to interference by hostile states.

Meanwhile, Dominion submitted more than 7,000 exhibits to the court, including videos and transcripts from Fox shows alongside emails and text messages exchanged between Mr Murdoch and other senior executives.

Court documents revealed earlier this year that some of Fox News’s stars and executives did not wholly believe the allegations that the election was stolen from Mr Trump, but continued to air them as they were concerned about losing viewers.

Judge Davis ruled in March that the statements aired on Fox were false.

However, the settlement does not mark the end of Fox’s legal woes, as the channel is facing a separate $2.7bn lawsuit filed by Smartmatic, another voting technology company.

Erik Connolly, a lawyer for Smartmatic, said: “Dominion’s litigation exposed some of the misconduct and damage caused by Fox’s disinformation campaign. Smartmatic will expose the rest.

“Smartmatic remains committed to clearing its name, recouping the significant damage done to the company, and holding Fox accountable for undermining democracy.”

Reuters reported that Staple Street Capital Group LLC, the small buyout firm that owns Dominion Voting Systems, has scored what is a $787.5m windfall.

The amount is equivalent to 20 times the $38.3m the New York-based private equity firm paid in 2018 to acquire a 76.2% stake in Dominion. Staple Street has $900m in assets under management, according to its website.

Dominion and Staple Street representatives did not respond to Reuters' requests for comment on how much Dominion stands to receive after legal expenses and taxes.