Right Wing Biz Watch

By David Lieberman, April 10, 2023

CINEMARK MAY STAY IN RIGHT WING CAMP FOLLOWING EXECUTIVE SHUFFLE

Cinemark founder Lee Roy Mitchell, a major Trump supporter, has resigned as Executive Chairman of the Board of the nation’s No. 3 movie exhibition chain. But he will continue to wield a lot of influence at the only major exhibitor to widely show Dinesh D’Souza’s election denial film 2000 Mules, the company’s new proxy shows

A 2007 agreement the company made with Mitchell – who controls 8.4 percent of the voting shares – gives him the right to name two directors to the 11- member board. He picked his son, Kevin Mitchell, to replace him. The founder’s other pick, Carlos Sepulveda, is now the non-executive Chairman of the Board.

A quick check of data compiled by Transparency USA shows that in 2018 Sepulveda contributed $3,500 to Mike Toth, a GOP candidate for Justice of the Third Court of Appeals in Texas who supported Trump’s immigration policies, $2,000 to the Texas State Rifle Association PAC, and $1,000 to Texas Attorney General Ken Paxton who the Justice Department is investigating for official misconduct.

No results turn up for Kevin Mitchell.

Ordinarily we wouldn’t care about the politics of exhibition chain executives. But Cinemark jumped into the disinformation ecosystem last year when it showed D’Souza’s 2000 Mules at more than 169 of its theaters. That made it the only major U.S. exhibition chain to show the film that alleged cell phone records showed some people voted multiple times in 2020. Trump called the film “genius” while his former Attorney General Bill Barr said the assertions were “unimpressive” and “indefensible.”

Cinemark’s decision to show the film wasn’t entirely surprising. Lee Roy Mitchell has been an important contributor to right-wing candidates and causes.  Beneficiaries of his largesse include Texas Gov. Greg Abbott, Paxton, Texans for Lawsuit Reform PAC, and a single-candidate super PAC that supported Ted Cruz.

RUMBLE READIES FOR 2024 WITH RIGHT WING CONTENT,

BARE KNUCKLE FIGHTING

Rumble, a Peter Thiel-supported haven for right wing video creators including Alex Jones and QAnon supporters, hopes to reverberate in 2024 from a series of new content deals fueled by revenues from what it describes as stronger than anticipated ad sales during the 2022 mid-term elections.

“Rumble’s content drives massive audiences during election cycles,” CEO Chris Pavlovski told analysts in a March 30 conference call to discuss late 2022 earnings. “The massive growth we have experienced is now driving new creators, and even sports leagues, to join our platform.”

In the first three months of this year it has introduced “Triggered With Don [Trump] Jr,” “The Kimberly Guilfoyle Show, “Coffee With Scott Adams” the creator of comic strip “Dilbert,”  Steven Crowder’s content including his show “Louder with Crowder,” a pay-per-view special with comic Russell Brand, and relaunched “The Dan Bongino Show.”

It also expanded into social media-driven sports. It has agreements to offer Power Slap live events, the Bare Knuckles Fighting Championship, as well as Nitro Rallycross and Street League Skateboarding.

The company said it had 80 million monthly average users (MAUs) in the last three months of 2022, up from 21 million in the same period in 2020. It also said that users uploaded an average of 10,373 hours of videos each day at the end of 2022, a 216 percent increase from the period in 2021.

Pavlovski, who noted that Rumble “has a lot of conservatives,” said that the company’s recent growth “really sets us up for the next few years here, especially in 2024 as we get to the presidential election. You can only imagine what that will look like going forward for us.”

The company’s year-end financial report supports his growth claims – although profits remain elusive.

Rumble lost $11.4 million in 2022, an improvement from its $13.4 million loss in 2021, on revenues of $39.4 million, up 316%. More than 80% of the revenue growth came from ad sales.

Rumble’s stock price rose by 7 percent, to $10.00 a share, the day after the report. It quickly retreated to close on April 10 at $9.00, giving the company a market value of about $2.5 billion – in the same ballpark as better-known media companies including Lionsgate and AMC Networks. The company went public in September following its merger with Cantor Fitzgerald Acquisition Corp, VI, a special purpose acquisition company (SPAC). Pavlovski controls 85 percent of the voting shares.

Rumble’s main attraction? It welcomes disseminators of falsehoods and slurs. For example, YouTube demonetized Steven Crowder’s channel for multiple violations of its standards including in 2021 after he questioned the presidential election results in Nevada.  Russell Brand moved to Rumble after YouTube took down a video that said the National Institutes of Health recommended using Ivermectin to fight COVID, a violation of YouTube’s COVID-19 Medical Misinformation Policy. And Scott Adams’ syndicator dropped “Dilbert” early this year after he said in an online video that “the best advice I can give to white people is to get the hell away from black people” who, he added, constitute a “hate group.”

NewsGuard, a firm that helps advertisers identify unreliable platforms, called Rumble “hoax central” after an October study found that its search results frequently featured sources that fail to “follow basic journalistic practices.”

Last month Rumble said it won’t make corporate decisions based on environmental, social and governance (ESG) considerations. It added that by “pushing back against cancel culture and creeping censorship, we help facilitate a free exchange of ideas between our content creators and users.” It urged stakeholders to “judge us by the returns we deliver as we work to restore a free and open Internet.”

RISING INVESTOR DOUBTS COULD SINK TRUTH SOCIAL’S PROSPECTS

The soap opera at Digital World Acquisition Corp. (DWAC), the SPAC that hopes to partner with Donald Trump’s Truth Social, became more convoluted last week – raising new doubts about its ability to close its deal to fund the social media platform.

DWAC told the Securities and Exchange Commission late Monday that it could not file its 2022 year-end financial report on time. The reason: its “accounting staff needs additional time to prepare the financial statements.”

DWAC assured the market regulators that the report would come “within the fifteen-day grace period.”

It pretty much has to file by then. Nasdaq could delist the DWAC shares if it fails to do so.

The warning chilled DWAC investors who seemed to be warming ever so slightly to a possible merger with Truth Social’s parent company, Trump Media and Technology Group (TMTG).  DWAC’s stock price rose more than 19% from March 31 to April 3, when it closed at $15.25 a share, as investors noted the attention Trump received ahead of his indictment in New York on 34 counts of falsifying his business records to help his 2016 presidential campaign.

The stock market gains vanished after DWAC said it couldn’t file its report on time. DWAC closed the week at $13.34, roughly back to the trading price before Trump’s new drama – and just slightly higher than the $10 investors paid when the company went public in 2021. Shares soared to more than $100 in early March 2022, after the TMTG deal was announced.

DWAC can’t afford to antagonize Wall Street. The firm might have to dissolve and return the cash it raised from shareholders if they don’t approve the merger by early September.

The odds of a deal happening look slim at best. In late February DWAC exercised the third of its four options to postpone a shareholder vote by three months; the current deadline is June 8, And last month DWAC fired Patrick Orlando as CEO citing “the unprecedented headwinds faced by the company.”

The headwinds appear to include an investigation by federal prosecutors in New York into possible money laundering at TMTG in connection with $8 million in emergency loans it accepted from two mysterious entities with ties to Russian president Vladimir Putin. Also the Securities and Exchange Commission and Financial Industry Regulatory Authority are investigating possible insider trading at DWAC related to the deal with TMTG.

Right Wing Biz Watch is a ongoing series of articles examining the business and finances of right wing media. Its author, David Lieberman, covered the media business full time for 30 years at USA Today and other publications before joining The New School as an Associate Professor in its  graduate Media Management program.

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