In the ad, Wallace addresses Blunt and says, "You just said a moment ago that you have to show that you’re the party of reform but some question whether you are the man to do that. In 2002, you tried to insert language into the Homeland Security Act to help Phillip Morris tobacco [company] while you were dating that company’s lobbyist. And your campaign committee’s paid $485,000 to a firm linked to lobbyist Jack Abramoff.”
Wallace then asks Blunt, "Are you the one to clean up the house?"
Sounds like a pretty routine campaign attack ad, doesn't it? Your opponent gets tossed a tough question from a journalist, and you take advantage.
The basis of the lawsuit, though, is that the interview was not an attempt to publicly disseminate information, but was instead proprietary programming no different than a clip from the Simpsons:
Fox News claims that the "verbatim reproduction" of the interview without consent "(1) allows Defendant to profit commercially without paying the traditional price; (2) causes substantial harm to the value of the FNS Interview, and (3) was based upon the unique expressive content of the FNS Interview."
Notice how none of that makes any sense at all in this context, if Fox is in fact a news organization. Winning a Senate seat is not a for-profit commercial enterprise; an interview by a news organization that gains a reputation as having been a tough one enhances, not damages, the value of that interview; and news is not "expressive content" in the legal sense.
However, if Fox is assumed not to be a news organization, the basis for the suit becomes clearer. The first point still makes no sense (unless, of course, Fox believes running for office is a commercial venture), but if Fox is just a right-wing propaganda arm then having a Democrat use one of their interviews to help their campaign would cause substantial harm to the value of the interview, and as a creative work (rather than a public transmission of fact) the "expressive content" argument would be much stronger.
So go ahead, Fox, pursue this lawsuit. Prove to the world that the aim of your organization is not to provide objective facts to the American public. It won't really be news.