Commentary

Trump Wants To Make A New Media Buck - Will It Work?

Starting a big media company takes talent, resources and money. Hopefully, not yours. Let someone else pay for it -- like a new publicly traded company.

Former President Trump prefers this route. But as opposed to other companies that slowly build a business privately for years and then go to public, the effort here offers promises, but not much clarity.

This is about the new untested media company bought by a special purpose acquisition company (SPAC), which itself doesn’t have any corporate operational activities. Then it wants to go public. It’s as if a SPAC is buying a SPAC.

We are told the platforms -- a social-media platform and a subscription video on demand (SVOD) service -- will allow the former President and others to speak their minds about everything from tech to politics, while launching, one assumes, an avalanche of criticism.

The potential customer base is around 70 million or so, comprised of those who voted for Trump in 2020. The hope is they might stick around for a second act.

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Trouble is, he's not the only game in town. Regular consumers of conservative right-wing media content might continue to consume their favorite channels/platforms.

Thus, the spin. Public stock market speculation can be everything for some business professionals -- and perhaps a direction of things to come -- at least initially.

The day after the announcement, Trump's untested, not-so-operational company agreed to be acquired as a special purpose acquisition company (SPAC), Digital World Acquisition Corp. That company’s stock closed the day up an eye-popping 350% on Thursday to $45.50 after the merger news. It was up another 200% in early Friday trading.

Digital World is already being talked about as a "meme" stock, one that gets driven by regular consumer investors through online chat rooms. That means a lot of volatility -- up and down. Think entertainment companies Gamestop and AMC Entertainment.

Let’s look at the nuts and bolts part of it. You need content on media platforms and lots of it to make a company work. Hopefully, it's exclusive content. But what if it's awful? Will viewers, advertisers and investors get their money back?

There are lots of ways to raise money. Remember after the November 2020 election, Trump raised around $255 million from supporters to help pay for legal fees in states where he filed lawsuits charging election fraud.

The results weren't good: More than 50 lawsuits brought by Trump or his allies alleging election fraud and other irregularities were dismissed by state and federal judges. That’s not a good return on investment for those investors.

But what if only a tiny percentage of that $255 million went to actual legal fees? Trump got to keep the rest. That’s a good deal for him.

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