If you read the decision, it becomes obvious what this lawsuit was about. Sullivan wasn't named in the offending advertisement, and in fact never showed any personal damages that resulted from it. He claimed, however, that as a County Commissioner, references to the "police" who were accused, in a few cases inaccurately, libelled him personally. An Alabama court upheld him -- Alabama courts of that time were an arm of the racist cabal which controlled all political life in the state.
Sullivan was acting to intimidate pro-integration advocates from using the public prints to denounce their tormentors. In the process of cataloging the violence against civil rights advocates, rhetoric trumped facts in a few isolated instances but never in any way that did violence to the essentials of the situation. No, Sullivan wasn't personally involved in bombing Martin Luther King's house twice (and the ad didn't say that, either). But his soul brothers in the southern resistance to integration did, and everyone in the country knew it.
The point of the decision is that it stripped away the power of governments and individuals to silence critics by threat of libel suits. Some imbecile out there is thinking "well, just be careful to tell the truth and you're OK," but in point of fact that's never sufficient. If the TIMES were forced to pay a stiff fine for having libelled someone in an ad which never mentioned that person, either implicitly or explicitly, it would surely stop accepting such ads entirely. You will see, in its pages, paid ads from right-wing foundations denouncing liberals for harrassing innocent businessmen and from unions denouncing corporations against whom they are striking. All of this disappears in Sullivan v. US is reversed.
The Supreme Court, therefore, issued a decision that dealt with the politics of the situation in the only tolerable way. It said that as long as the TIMES didn't publish the article to deliberately harm Sullivan (which it clearly did not), freedom of speech protected it. I'm not a lawyer but as a believer in the importance of free speech, this decision could not have done any other way.
Scalia knows this, of course, but his masters want silence, not protest, when their cheap overseas products turn out to be dangerous; when workers try to unionize; when incompetent leaders get the country into hopeless wars. It would be nice, they think, if they could silence what remains of the non-government-controlled media (as opposed to FOX News, which operates as an arm of the Republican Party), and libel suits would certainly do the trick. This is what the Roberts Court will be about, and it may well turn out to be the toughest of all the opponents of a free America.