Bulwark Takes - This Newsmax IPO is Actually Insane

Episode Date: April 1, 2025

JVL and Tim Miller are losing their minds over Newsmax’s absurd IPO explosion. How in the hell is a fringe cable channel worth billions? And who is actually getting rich from this?

Hey, everybody, welcome back to the Bulwark. I'm Tim Miller here with JVL, author of our Triad newsletter and, you know, all around content creation machine. We're here to talk about Newsmax, how capitalism simply doesn't work, and the latest insanity from Maga World. Make sure to subscribe to the feed. JVL, I guess we should start by explaining, because many of our viewers, who are the types of people who live on planet Earth, who consume news based on what the facts are and what actually happens in the world, might not even be familiar with Newsmax, since it's channeled 892 on DirecTV. So maybe share with our viewers what Newsmax is before we get into their IPO. Newsmax is a conservative infotainment company, which has existed for many, many, many years and had its own, it was like sort of cable access. It had a magazine for a while. It was a website for a while. And then it became sort of a TV network.

Not really. I would say it is three steps above Wayne's World. Three steps? Three steps above Wayne's World. Two and a half. It is owned by an impresario, Christopher Ruddy, who is sort of just going back to the Clinton days and the Arkansas Project and all that insanity. The Pittsburgh Tribune Review was owned by this guy, Richard Mellon Scafie. Yes.

Who owned a bunch of right-wing anti-Clinton stuff. And he took Ruddy under his wing, I guess. Correct. He was kind of a media magnate in pushing the Clintons accidentally killed Vince Foster kind of stuff. That's where he came from. Yes. And during the Obama years. Not accidentally. I'm sorry.

The Clintons purposely killed Vince Foster. Purposely killed Vince Foster. As they would tell you in their fantasy. Rolled the body up in an Oriental rug that they carried out of the Rose Law Firm. Again, you've got to be an old person to understand all these jokes. And what they, the obama years they stood this up as an actual real kind of cable access network and then yesterday they did an ip i need to pause before you do the ipo because there's one other key inflection point for newsmax sure

which was when donald trump started to say that he had actually won the 2020 election and not lost it and fox was doing the thing that it was like yeah you know he's making some points here but on the other hand you know i'm not sure newsmax went full state tv like went fully to the mattresses mr trump was the winner chinese bamboo ballots and the death of Hugo Chavez. They bought every conspiracy, the stupidest conspiracies under the sun. And their rating is 10x. Yes. And so, yes, over the course of that little period, their audience share grew significantly.

And still way less than Fox and the regular main cable networks. But it was that that convinced fox to change course yeah yeah and become more full unapologetically right pro-trump maga and and you know ended up getting them in trouble with dominion etc so in a way you could say that newsmax's ratings during that like 10 day period when that happened cost fox 800800 million. Right. Yeah. Is that an unfair way to put it, Tim? No, because they felt like they had to compete,

and then they started dabbling more in the election conspiracy, and then they end up losing the lawsuit to Dominion. Okay. So that's the Newsmax backstory. Ruddy. I've had brunch with Ruddy, so we'll talk about this. I know this man a little bit. It's pretty intriguing what has happened to him. Yesterday, they do an IPO. Get us a picture. $10 a share.

$10. Tim, you understand that when companies do IPOs, the goal of the IPO is to price it at about where the market wants it to be. Yeah. Maybe a little under. Gain a little. Get a little show, a little momentum, but in the ballpark. I remember when Facebook IPO-ed at like $35, I think, and it shot up to $70. And people thought that was crazy. I mean, Facebook underpriced. They 2X'd.

Well, yesterday, Timothy, they IPO-ed at $10 and went to $85? $90, I think. And today, as we sit taping, the market has corrected. So the good news is the market realized that it made a terrible mistake with Newsmax yesterday. The bad news is that the market decided that it undervalued Newsmax by half yesterday. And so Newsmax has shot up another 100 points today. Get me a DSA t-shirt. Get me a DSA.

This is not capitalism. What is happening? They're at 210. Like, they've gone up 2,000%. And this guy Ruddy owns like 80% of the stock. Ruddy owns 80% of the stock. I want to, I want to just put some,

some financials behind this. So, so that we understand Newsmax operates at a scale as a business that is much closer to the bulwark than it is to Fox news. Okay. Wait, wait. So you're telling me maybe we should IPO.

I'm, I'm just, I'm not saying it. This is not financial advice, Tim. Okay. But Newsmax's 2024 revenue for the first half was up by a third. And their total revenue was still only under $80 million for the first. So they're about $150 million in revenue a year. Okay. Which if you are a sub stack is amazing mood,

they'd be the biggest sub stack in the, on the, in the planet. If they were a YouTube channel, they wouldn't be the biggest YouTube channel, but they'd be a very big YouTube channel. Good for them. They aren't profitable though.

That's the other thing. I thought you said they made $150 million. $150 million in revenue. What was the expenses? Net, they still seem to be about minus $100 million a year. So, you know, you've got to spend money to lose money. So they're lost. This is what they all say in business.

You've got to spend money to lose money so they're lost that's that's what they all say in business you got to spend money to lose money so newsmax is losing so they actually aren't that really comparable to the blork they're they're really more comparable because we're making ico yeah much closer actually they're much closer to truth social yeah true social except that they're now valued at many multiples of truth social even. But here's why I want to point out the insanity. Because oftentimes when you see a stock pop like this, especially in tech, it isn't because the company is profitable, but because their growth potential is enormous. And this is typically seen through revenue, right? They're just dealing with enormous amounts of revenue.

And even if their expenses are high, well, then so be it. They'll figure out a way, right? This is famously Amazon. Amazon lost money and lost money and lost money. But the total amount of revenue they were bringing in was so huge that people realized, well, eventually they'll figure this out. They'll hit economies of scale. Or there'll be some other kind of growth thing that's going to come where they're a new enter to a market. They're going to start a new market. I don't want to reveal anything, but my husband worked for a food tech company. There was a moment where there was a big excitement around this. Like, oh, the future of food is going to be totally different.

People are going to – and one of the competitor companies in the space was like one of the first ones to IPO. And they shot up – not News, not, not Newsmax numbers. Yeah. But they shot up pretty good and, and ended up falling back down. But like, it was on this bet that they were going to kind of displace, you know, one of the major food companies because their tech was so good and it didn't actually really work out. Right. So like that, there are situations where like it makes sense for a stock to be higher than revenues because

investors are assuming that there's some long-term growth potential or some innovation or whatever that is going to... I mean, and again, that makes sense in an environment with zero interest rates because money is chasing returns and is willing to be speculative. We're not in that environment right now. That's a good point. But what I'm trying to say, Tim, is they don't even have large revenues. So they are not profitable and their revenues are small. But here's the third part of the story. They're in a dying sector. Newsmax is in the world of linear cable, which is in the process of disaggregating and dying.

Everybody's moving off of the cable. And so this is, you know, to the extent that they have revenues, they are like the other linear cable news networks. They're derived from carriage fees that they are paid by cable companies. That is dying. That model is going away right and this is blockbuster and this again to your point like the third thing like their revenues are low they're losing money and it is not a business that like is going to disrupt something and it's as if somebody started up a competitor a tiny mom and pop competitor to blockbuster in the final three years of Blockbuster's lifespan while Netflix was already eating its lunch.

And then this mom and pop VHS shop IPO'd and the stock market went crazy for it. That's the analogy. This is why I'm going to have to go full Bernie. This is... I mean, the only way that this actually works is if free market capitalism really works and there's a system that works is that this stock absolutely tanks and a bunch of people eat their shirt on it. But I don't – to me this feels more like GameStop and all that kind of stuff.

I guess it's moved into the meme stock phase. What is happening? That's my question. So I don't know. But I do want to give one more kind of stuff. I guess it's moved into the meme stock phase. What is happening? That's my question. So I don't know that, but I do want to give one more piece of comparison. Okay. I would like to compare because I would think in a rational market world, the obvious comp would be News Corp. And so people would say, okay, so Fox News, which is the nearest competitor, does some very large multiple of both revenues and profits, as Newsmax does currently. And so in a perfect world where Newsmax experienced hockey stick growth, then maybe someday they could be Newscore.

Currently, Newscore shares are sitting at $30 a share with an implied market cap of just under $16 billion. So they are worth not quite, a little more than half of Newsmax. And I would say News Corp is not just, it's the Wall Street Journal, it's the Fox Corporation, it's some UK papers. This is insane. Tim, this is insane tim this is insane and that then leads the question of like so where's this coming from is this our wall street bets is this is there some coordinated effort to push this up is somebody i don't get it it's a foreign sort of backdoor deal right i guess right i mean like the options let's just go through the

the realistic options there is somebody pumping it right like maybe a foreign interest a whale there's a single whale that is pumping it or like a series of bots you know whales that like you have a series of like you know kind of a network people that are pumping it. It's a troll, right? Like there's a group of, this is the Wall Street bets, right? Like it's a troll and a bunch of people thought it was funny. And then a bunch of retail investors got, you know, jumped on the bandwagon of the troll. Or, I mean, like three is like real corruption, right?

Like it is similar to the Trump coins where Ruddy and trump ruddy and trump talk a lot again this takes a back to ruddy ruddy lives there he's a member of mar-a-lago like him and trump hang out and talk a lot like and in way back in 2016 ruddy was hedging his bets between jeb and trump and we had a we had a brunch and he's just like he's a deal maker he's just a guy you know what i mean like he is just trying he wants to be on the inside he's like he's name dropper he's all that so i don't know maybe there's there is something more sinister here and like people are trying to run up ruddy's valuations and then there's a backdoor i again i'm just trying to like what are the other

possibilities besides corruption corruption troll and and and some whale or network of whales pumping it well what's the other option i think those are basically the options now what would make that possible here is because again ruddy holds so much of the stock that what is on the market trading is a relatively small amount of Newsmax stock. And so their trading volume is like a quarter of Newscore's. So even though it's trading a much higher price, there are just fewer shares of it floating around right now out in the open market. But it does create like a huge wealth transfer. I mean, Chris Ruddy just became a 10 billionaire. I mean, he's not, he's a, Chris Ruddy is now in the Trace Commerce Club.

Oh, deep into it. It's an astonishing. I mean, probably he's worth six, seven, eight billion. Yeah. Right now. Yeah. It's a wild, wild thing. And it's just, you know,

capitalism, two cheers, one cheer. Irving Kristol famously wrote two cheers for capitalism. And I was always sort of like a one and a half cheer for capitalism kind of guy. Slowly winching that back to one cheer for capitalism because I want to, we should say capitalism has done more to lift more people out of poverty than any other economic system. And it has, it has greatly enhanced human flourishing,

but man, you look at shit like this. What is your Chris, Chris Ruddy story no it was just that just that like he called me and I don't know this guy was he runs Newsmax and and he asked me to go to brunch took me some really fancy brunch in Miami and it was just all he was just so sleazy like it was just such a deal maker type thing like It was not the type of meeting. Back then when I was a PR flack for candidates, media executives would ask to meet sometimes. They would want access to the candidate. They would want

inside information, maybe scoops. They want to make sure that lines are open in case something happens. There are like genuine above board reasons for a media company to want to meet with the pr flack for a for a politician his meeting was like like like like what can we do for you kind of deal you know like can we we'll put we'll send out an email with your thing on it you can write whatever you want it'll be free pr like just like it was a very like the sleaziness of it was just very like above board and at the time i'll just admit it's like a young ambitious pr guy i was like oh this is cool like i've got an in with newsmax like i can get them to write whatever i want for my candidates and my bosses will think it's great because we got these this nice story written about my candidate but like in the in this context with the benefit of the hindsight and the benefit of

him playing this with a lot more nefarious characters um i just there's no reason to trust any like that there is anything even remotely above board happening over there yeah i want to i want to slip in one other one other piece of information here to inform people's opinion of what might be happening. While Newsmax is up, the Dow Jones Industrial Average is down 273 as we are sitting here right now taping. So the market broadly is pulling way back. The S&P also down today. The S&P also down today. The NASDAQ also down today. The rest of the market is pulling back.

Companies are hemorrhaging money. And Newsmax is the safe harbor that capital is flooding to because linear cable news is the future. I want to add one more fact to this because I'm looking at the Axios thing. Rumble, which is the competitor to YouTube. We're here on YouTube. Rumble, which is a competitor. That has a valuation right now of $2. billion market value whatever that is 10 percent of news

max like again going back to your theories of the case right like at least with rumble you could like conjure a theory that like there is such enough of a demand for a right-wing youtube that it could grow into the future and expand and maybe, you know, platform at least platforms can expand. Newsmax is just a content mill, right? Just content.

So I just, you know, I mean like there's an actual story right now about how like that there's this Trump bump for MAGA companies and, and rumble and Trump media is one of the ones they use. But even in that context, it's crazy for the Newsmax to be 10x that. I mean, as opposed to Rumble, which, again, it just shows things are fishy.

That said, final question. Are you sure we shouldn't IPO? Because maybe this is our moment. Maybe this is our moment. Let me tell you, if we ended up having a $27 billion valuation, let me tell you, I would use a lot of that money for good. I would use it to support pro-democracy causes. Sure. Not all of it.

Not every single cent of it. But I would use some of it to help my community. It's a wild, wild thing. And it's going to be interesting to see what happens with Newsmax over the next, I would say the rest of this week to see where it settles. Do the tariffs, because we're going to get the big tariff. This is the other thing you saw. Trump is doing his tariff announcement tomorrow, but he's doing it after the markets close before. Will that impact Newsmax at all?

Or are they tariff proofed? I think they're probably tariff proofed. Yeah. It's a, you know, this is the world. All systems are functioning. Everything's going great, guys. DSA. Okay.

Anyway, everybody don't listen to that, Sarah.