Is it legal to lie on the news?

This might sound like a dull question, but the answer is actually - YES!

Journalists working for Fox news tried to expose the dangers of Monsanto’s genetically modified milk, but they had to face both corporate giants and a flawed justice system.

The attorneys for Fox, owned by media baron Rupert Murdoch, argued the First Amendment gives broadcasters the right to lie or deliberately distort news reports on the public airwaves.
The position implies that First Amendment rights belong to the employers – in this case the five power media groups. And when convenient, the First Amendment becomes a broad shield to hide behind. Let’s not forget, however; the airwaves belong to the people. Is there no public interest left-while these media giants make their private fortunes using the public airwaves? Can corporations have the power to influence the media reporting, even at the expense of the truth? Apparently so.

In its six-page written decision, the Court of Appeals held that the Federal Communications Commission position against news distortion is only a "policy," not a promulgated law, rule, or regulation. Fox aired a report after the ruling saying it was "totally vindicated" by the verdict.

Source:  http://www.projectcensored.org/top-stories/articles/11-the-media-can-legally-lie/
Source: http://www.ceasespin.org/ceasespin_blog/ceasespin_blogger_files/fox_news_gets_okay_to_misinform_public.htm