Truth Social before implosion?
Trump’s Secret Meetings Put $1.3 Billion at Risk
By Roland Peters
09/12/2022, 8:39 p.m
Big social media has banned him, but Donald Trump has Twitter clone Truth Social and gigantic plans. But the problems are piling up at the ex-US President’s media company. In the end, he may end up empty-handed.
I don’t care, I’ll just do it myself! This was roughly how ex-US President Donald Trump reacted after Twitter, Facebook and Instagram banned him from their pages in early 2021. It took about a year for his Twitter clone, Truth Social, the “truth” social network, to go live. The most prominent participant: himself. But Truth Social could soon run out of money. Trump would be deprived of another opportunity to get his views across to voters.
In two months already find the mid-term elections Instead, the United States is in campaign mode. President Joe Biden and Trump support their respective congressional and gubernatorial candidates and appear in contested states. One tries to convince Americans that they would be far better off with the Democrats in power than they would be with the Republicans. The other goes on to say that Biden’s election victory was just a scam.
Before the storming of the Capitol on January 6, 2021, Twitter and the conservative television network Fox News were probably Trump’s biggest mouthpieces for the claim. To date, the claim has not been proven. After his banishment, it’s mainly Truth Social and smaller conservative media. But the company, which belongs to the Trump Media & Technology Group (TMTG), is piling up problems. The starting point is Trump himself, who, according to the New York Times, is said to have ignored the law in meetings and agreements last year.
Hoping for money
TMTG is running out of time several times. According to US media, the network does not make any money, so it is millions of dollars in arrears with payments to service providers. The company owes the cloud service alone, without which the network would have to shrink to absolute insignificance, in August 1.6 million dollars, writes “Axios”.
(Photo: REUTERS)
Trump’s media company actually wanted to be listed on the stock exchange via a shell company, a so-called Special Purpose Acquisition Company (SPAC). A rain of money would wash away the financial problems. But it is becoming increasingly unlikely that it will come to that. Trump’s large-scale plan to become a fixed star in the conservative media cosmos of the USA, who “can hit back against Big Tech”, as it is said, is about to implode.
TMTG presents itself to potential investors as “activating the conservative media universe” in which, among others, Fox News, the One America Network (OAN), the other Twitter clone Gettr, or the newspaper “Washington Examiner” should become satellites. Trump’s media company had boasted that it wanted to compete with a news television channel CNN, an entertainment channel Disney Plus and Netflix in addition to Truth Social. Most recently, the company placed job advertisements for programmers. An additional tech division should also compete with Google Drive and Amazon Web Services in the long term.
The idea for this came from two former participants of Trump’s television show “The Apprentice”, who addressed the still president after his election defeat. Trump liked it, but had to find a way to finance the planned media company. He finally saw it in meetings and discussions with the SPAC Digital World Acquisition.
The legal way is for such a shell company to collect money from investors via an IPO, then merge with a company to which it then pays part of this money. That would bring in $1.3 billion for Trump’s media company, according to the Reuters news agency. It would be more than decent seed money to get into the massive US media market.
But the US Securities and Exchange Commission and the Department of Justice are investigating against the SPAC. The merger is on hold. Digital World Acquisition’s head, investment banker Patrick Orlando, may have courted Truth Social and arranged the merger in talks with Trump without making it public at the SPAC IPO — and that would be illegal. A federal court jury in New York has now subpoenaed all SPAC board members for testimony.
The background to such a ban is that shell companies are hardly scrutinized when they go public because of their low level of business activity. In doing so, authorities want to block this potential backdoor for fraudulent or unstable companies and better protect investors from a possible later loss.
Trump’s deadlines are up
The delay in the merger could bankrupt TMTG, as the pre-merger contractual debt limit is $50 million. The company has already used part of this, but as mentioned, it has no income. The contractual understanding with investors is that the merger will happen by September. If this does not happen, the shareholders will get their money back and the SPAC will be dissolved.
For a merger deadline to be extended by one year, 65 percent of the investors would have to agree, but this has not yet been achieved. SPAC is courting investors’ money with a target TMTG market value of $15 billion. But most of them, according to US media, are small investors who are involved for ideological reasons and have not yet agreed. The board of the shell company can delay the merger without the necessary approval for a maximum of six months, i.e. until March 2023. The SPAC said it believes that TMTG has “sufficient funds” until April 2023.
So the problem has only been postponed for Trump. First, it is unclear how long the investigations against Digital World Acquisition will last. Second, the authorities could also simply prohibit the merger because of allegations of illegal collusion. Then Trump would be left empty-handed. And possibly without an established mouthpiece for a presidential candidacy in 2024.