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Next Chapter in the Newsmax Success Story? An IPO

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(Patrick T. Fallon/AFP via Getty Images)

Dennis Kneale By Monday, 17 June 2024 01:40 PM EDT Current | Bio | Archive

Would you buy a preferred stock from this man? Full disclosure up front: I just did.

Chris Ruddy founded Newsmax as a digital media company way back in 1998, and it has survived the internet crash, the Great Meltdown of 2008, and the Obama era, launching as a cable channel in 2014.

Since the 2020 election, Newsmax has grown faster than any other major cable news channel, in part by luring new viewers who felt Fox News had betrayed President Trump.

Now Ruddy, 59, wants this little-engine-that-could to go public on the Nasdaq or the New York Stock Exchange.

Newsmax has filed for a private stock offering of preferred shares to raise $150 million to $225 million, which could lead to an Initial Public Offering (IPO) of common stock by early next year, raising up to $75 million more.

This plan comes amid rising turmoil in the media business.

Cable-TV subscribing homes are down to less than 50% from almost 90% in 2010.

The rise of streaming has broken apart old cable channel packages. As well, meme stocks with loyal fan followings have jarred the markets lately, including DJT (Trump Media) and GME (GameStop).

Newsmax could become a media meme stock for conservative investors, although Ruddy hopes otherwise, as he tells me on my podcast, "What’s Bugging Me."

"I hope it’s a true financial investment play. I wouldn’t want people to invest just on emotion, even though they might feel good about us," he says.

"Our revenues are up over 300% since 2019."

He attributes this to "the public voting in favor of media like Newsmax that is not just the drivel they’re getting from the Big Media."

"There used to be a semblance of media balance," he continues.

But the Associated Press has gone "completely woke" in the past decade, and the New York Times used to be liberal but "a bit" fair, and now "You don’t get that anymore. The Washington Post is completely — well, nobody’s even subscribing to it anymore."

"It’s a dangerous development in the country because the left is in such a stranglehold on the media," Ruddy offers.

In crisis lurks opportunity.

While the broad S&P 500 stock index is up 45% in two years, media stocks are up 80%, based on the S&P 500 Media & Entertainment Industry Index. Fox Inc., parent of Fox News, is up only 4% in the same period.

In 2023, Newsmax was the only news net to gain viewers in every part of the day, up 42% in prime time, 16% in daytime, and up 69% in total day among people ages 35 to 64.

The cable network reaches 50 million homes, and Ruddy argues a lot of growth still can be had, even as he prepares for cable’s decline.

"Cable is a diminishing business, but we still think there’s a lot of room when you see that Fox News has traditionally had half the cable news market. We’re taking a big chunk of that from them that we have room to grow in that universe."

Meanwhile, Newsmax has launched N2, a second, separate news channel that bypasses local cable systems to go directly to TVs via the internet, giving it a potential reach of 100 million homes.

This lets Newsmax reach customers of Roku, Samsung TVs, Vizio, Pluto, and more.

"Our approach as a media company — Newsmax’s vision — is we’re on everything," the CEO says. "I even have a print magazine that’s pretty profitable.

"We have 16 million social media followers. We have text messages and push notifications on your phone to alert you to news, so there’s a lot under the hood with Newsmax right now.

"It’s a big deal."

He looked at the value that Wall Street has bestowed on Trump Media: $6.5 billion currently, despite revenue of just $4 million last year and a loss of $53 million.

The private stock offering for Newsmax, with revenue more than 30 times as large, would value the company at $1.5 billion to $1.8 billion, which sounds like it might leave room for growth.

"We’re not endorsed by Trump per se as a business, although he likes the network, and he’s spoken in praise of it," Chris Ruddy says.

"So, I think that, you know, maybe some of the charm will rub off."

Dennis Kneale is a writer and media strategist in New York and host of the podcast, "What's Bugging Me." Previously, he was an anchor at CNBC and at Fox Business Network, after serving as a senior editor at The Wall Street Journal and managing editor of Forbes. Read Dennis Kneale's reports — More Here.

© 2024 Newsmax. All rights reserved.

Chris Ruddy founded Newsmax as a digital media company in 1998, it has survived the internet crash, the Great Meltdown of 2008, and the Obama era. Since the 2020 election, Newsmax has grown faster than any other major cable news channel.
ipo, preferred, stock
Monday, 17 June 2024 01:40 PM
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