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The House of Cards Crumbles: Why the Bell Media Layoffs and Government's Failed Media Policy are Connected … – Michael Geist –

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7 months ago

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Bell’s announcement this week that it is laying off thousands of workers – including nearly 500 Bell Media employees – has sparked political outrage with Prime Minister Justin Trudeau characterizing it as a “garbage decision.” The job losses are obviously brutal for those directly affected and it would be silly to claim that a single policy response was responsible. Yet to suggest that the government’s media policy, particularly Bills C-11 and C-18, played no role is to ignore the reality of a failed approach for which there have been blinking warning signs for years. Indeed, Trudeau’s anger (which felt a bit like a reprise of his Meta comments over the summer) may partly reflect frustration that his policy choices have not only not worked, but have made matters worse.

Bill C-11, the online streaming law that is now before the CRTC, was never really designed to address Bell’s broadcasting concerns. Indeed, the company made clear what it wanted: access to cheap U.S. programming. When the company appeared before committee back in 2022, it said its primary risk was competition from foreign streaming services accessing the Canadian market directly and by-passing Canadian broadcasters. This challenge has been readily apparent for years. In fact, in 2011 I wrote about how this was likely to become a major issue for Canadian broadcasters dependent on licensing U.S. programming to profitably fill their broadcast schedules:

Once U.S. rights holders conclude that it is more profitable to retain the Internet rights so that they can stream their programs online to a global audience and capture the advertising or subscription revenues that come with it, Canadian broadcasters may find that they can only license broadcast rights with the U.S. rights holders competing directly with them via the Internet.

This was back in 2011. More than a decade later, Bell wanted the government to fix the commercial problem by intervening through Bill C-11:

“We can ensure the central role of Canadian broadcasters by securing access to foreign content. We can also incentivize foreign streamers to partner with Canadian broadcasters, much like foreign linear services have done for decades. We believe Bill C-11 should explicitly enable this.

Bill C-11 rightly doesn’t do that, but removing licensing fees said to be worth $40 million was supposed to help. That approach of shovelling money through grants, tax credits, reduced fees, or regulated payments has been the government’s go-to strategy for years and the only thing it seems to bring are demands for more.

The layoffs on the news side of the business implicates both Bills C-11 and C-18. In the case of Bill C-11, broadcasters are still holding out hope that the CRTC will order the large online streaming services such as Netflix, Disney and Amazon to contribute to their local news production costs. The Canadian Association of Broadcasters has asked the Commission to create a new News Fund that it would administer. Funding for the fund would come from the Internet streaming services, with 30% of their contribution allocated toward a sector with which they have virtually no connection whatsoever. Even if the CRTC agrees, the fund would not take effect until later this year and Bell was apparently unwilling to wait to see how it plays out.

While I have seen some suggest that Bill C-18 has nothing to do with radio station sales or layoffs, the government’s approach is inextricably linked to it. First, the government’s longstanding media approach has largely focused on print and digital news outlets, not broadcasters. For example, the labour journalism tax credit worth hundreds of millions of dollars excludes broadcasters. It is now worth nearly $30,000 per journalist, but broadcast journalists are not eligible. I think there are serious problems with this approach (not the least of which is the implications for press independence), but the government clearly made a bet that it could focus its attention on the traditional print sector with the expectation that hugely profitable companies such as Bell would continue to support their news divisions. Much like the mistaken bet that Facebook couldn’t live without Canadian news, the same may be true for parts of the broadcasting sector.

Second, the government promoted Bill C-18 as providing hundreds of millions to broadcasters for news. Indeed, the Parliamentary Budget Officer estimated that it would generate $329 million, with 75% of that money going to broadcasters. Given Bell’s position in the market, it stood to be one of the two largest recipients of those revenues (alongside the CBC), amounting to tens of millions per year. But as everyone knows, Bill C-18 ultimately only generated a fraction of what was promised, with a single $100 million payment from Google shared among all sectors. Once the administrative costs and lost Meta deals are taken into account, that number is closer to $75 million, some of which is a re-allocation of existing Google money.

For Bell, the revenues are even smaller, however, because the government then decided to cap the amount allocated from Bill C-18 to broadcasters at 30% or $30 million (the CBC picks up another 7%). In other words, broadcasters went from expecting a quarter billion dollars in annual payments from Bill C-18  to support news to just $37 million for the entire television and radio broadcast sector. Further, those radio stations that do not produce news content to made available online aren’t eligible for anything and everyone has lost traffic and the resulting ad revenue due to the removal of links on Meta. To suggest that this had no impact on Bell’s media decisions this week is to engage in the same policy fantasies of the past few years that have cost hundreds of millions of dollars and placed the independence of Canadian media at risk.

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Trump could cash out his DJT stock within weeks. Here’s what happens if he sells

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3 weeks ago

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August 23, 2024

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Former President Donald Trump is on the brink of a significant financial decision that could have far-reaching implications for both his personal wealth and the future of his fledgling social media company, Trump Media & Technology Group (TMTG). As the lockup period on his shares in TMTG, which owns Truth Social, nears its end, Trump could soon be free to sell his substantial stake in the company. However, the potential payday, which makes up a large portion of his net worth, comes with considerable risks for Trump and his supporters.

Trump’s stake in TMTG comprises nearly 59% of the company, amounting to 114,750,000 shares. As of now, this holding is valued at approximately $2.6 billion. These shares are currently under a lockup agreement, a common feature of initial public offerings (IPOs), designed to prevent company insiders from immediately selling their shares and potentially destabilizing the stock. The lockup, which began after TMTG’s merger with a special purpose acquisition company (SPAC), is set to expire on September 25, though it could end earlier if certain conditions are met.

Should Trump decide to sell his shares after the lockup expires, the market could respond in unpredictable ways. The sale of a substantial number of shares by a major stakeholder like Trump could flood the market, potentially driving down the stock price. Daniel Bradley, a finance professor at the University of South Florida, suggests that the market might react negatively to such a large sale, particularly if there aren’t enough buyers to absorb the supply. This could lead to a sharp decline in the stock’s value, impacting both Trump’s personal wealth and the company’s market standing.

Moreover, Trump’s involvement in Truth Social has been a key driver of investor interest. The platform, marketed as a free speech alternative to mainstream social media, has attracted a loyal user base largely due to Trump’s presence. If Trump were to sell his stake, it might signal a lack of confidence in the company, potentially shaking investor confidence and further depressing the stock price.

Trump’s decision is also influenced by his ongoing legal battles, which have already cost him over $100 million in legal fees. Selling his shares could provide a significant financial boost, helping him cover these mounting expenses. However, this move could also have political ramifications, especially as he continues his bid for the Republican nomination in the 2024 presidential race.

Trump Media’s success is closely tied to Trump’s political fortunes. The company’s stock has shown volatility in response to developments in the presidential race, with Trump’s chances of winning having a direct impact on the stock’s value. If Trump sells his stake, it could be interpreted as a lack of confidence in his own political future, potentially undermining both his campaign and the company’s prospects.

Truth Social, the flagship product of TMTG, has faced challenges in generating traffic and advertising revenue, especially compared to established social media giants like X (formerly Twitter) and Facebook. Despite this, the company’s valuation has remained high, fueled by investor speculation on Trump’s political future. If Trump remains in the race and manages to secure the presidency, the value of his shares could increase. Conversely, any missteps on the campaign trail could have the opposite effect, further destabilizing the stock.

As the lockup period comes to an end, Trump faces a critical decision that could shape the future of both his personal finances and Truth Social. Whether he chooses to hold onto his shares or cash out, the outcome will likely have significant consequences for the company, its investors, and Trump’s political aspirations.

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Arizona man accused of social media threats to Trump is arrested

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3 weeks ago

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August 23, 2024

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Cochise County, AZ — Law enforcement officials in Arizona have apprehended Ronald Lee Syvrud, a 66-year-old resident of Cochise County, after a manhunt was launched following alleged death threats he made against former President Donald Trump. The threats reportedly surfaced in social media posts over the past two weeks, as Trump visited the US-Mexico border in Cochise County on Thursday.

Syvrud, who hails from Benson, Arizona, located about 50 miles southeast of Tucson, was captured by the Cochise County Sheriff’s Office on Thursday afternoon. The Sheriff’s Office confirmed his arrest, stating, “This subject has been taken into custody without incident.”

In addition to the alleged threats against Trump, Syvrud is wanted for multiple offences, including failure to register as a sex offender. He also faces several warrants in both Wisconsin and Arizona, including charges for driving under the influence and a felony hit-and-run.

The timing of the arrest coincided with Trump’s visit to Cochise County, where he toured the US-Mexico border. During his visit, Trump addressed the ongoing border issues and criticized his political rival, Democratic presidential nominee Kamala Harris, for what he described as lax immigration policies. When asked by reporters about the ongoing manhunt for Syvrud, Trump responded, “No, I have not heard that, but I am not that surprised and the reason is because I want to do things that are very bad for the bad guys.”

This incident marks the latest in a series of threats against political figures during the current election cycle. Just earlier this month, a 66-year-old Virginia man was arrested on suspicion of making death threats against Vice President Kamala Harris and other public officials.

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Trump Media & Technology Group Faces Declining Stock Amid Financial Struggles and Increased Competition

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3 weeks ago

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August 20, 2024

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Tech News in Canada

Trump Media & Technology Group’s stock has taken a significant hit, dropping more than 11% this week following a disappointing earnings report and the return of former U.S. President Donald Trump to the rival social media platform X, formerly known as Twitter. This decline is part of a broader downward trend for the parent company of Truth Social, with the stock plummeting nearly 43% since mid-July. Despite the sharp decline, some investors remain unfazed, expressing continued optimism for the company’s financial future or standing by their investment as a show of political support for Trump.

One such investor, Todd Schlanger, an interior designer from West Palm Beach, explained his commitment to the stock, stating, “I’m a Republican, so I supported him. When I found out about the stock, I got involved because I support the company and believe in free speech.” Schlanger, who owns around 1,000 shares, is a regular user of Truth Social and is excited about the company’s future, particularly its plans to expand its streaming services. He believes Truth Social has the potential to be as strong as Facebook or X, despite the stock’s recent struggles.

However, Truth Social’s stock performance is deeply tied to Trump’s political influence and the company’s ability to generate sustainable revenue, which has proven challenging. An earnings report released last Friday showed the company lost over $16 million in the three-month period ending in June. Revenue dropped by 30%, down to approximately $836,000 compared to $1.2 million during the same period last year.

In response to the earnings report, Truth Social CEO Devin Nunes emphasized the company’s strong cash position, highlighting $344 million in cash reserves and no debt. He also reiterated the company’s commitment to free speech, stating, “From the beginning, it was our intention to make Truth Social an impenetrable beachhead of free speech, and by taking extraordinary steps to minimize our reliance on Big Tech, that is exactly what we are doing.”

Despite these assurances, investors reacted negatively to the quarterly report, leading to a steep drop in stock price. The situation was further complicated by Trump’s return to X, where he posted for the first time in a year. Trump’s exclusivity agreement with Trump Media & Technology Group mandates that he posts personal content first on Truth Social. However, he is allowed to make politically related posts on other social media platforms, which he did earlier this week, potentially drawing users away from Truth Social.

For investors like Teri Lynn Roberson, who purchased shares near the company’s peak after it went public in March, the decline in stock value has been disheartening. However, Roberson remains unbothered by the poor performance, saying her investment was more about supporting Trump than making money. “I’m way at a loss, but I am OK with that. I am just watching it for fun,” Roberson said, adding that she sees Trump’s return to X as a positive move that could expand his reach beyond Truth Social’s “echo chamber.”

The stock’s performance holds significant financial implications for Trump himself, as he owns a 65% stake in Trump Media & Technology Group. According to Fortune, this stake represents a substantial portion of his net worth, which could be vulnerable if the company continues to struggle financially.

Analysts have described Truth Social as a “meme stock,” similar to companies like GameStop and AMC that saw their stock prices driven by ideological investments rather than business fundamentals. Tyler Richey, an analyst at Sevens Report Research, noted that the stock has ebbed and flowed based on sentiment toward Trump. He pointed out that the recent decline coincided with the rise of U.S. Vice President Kamala Harris as the Democratic presidential nominee, which may have dampened perceptions of Trump’s 2024 election prospects.

Jay Ritter, a finance professor at the University of Florida, offered a grim long-term outlook for Truth Social, suggesting that the stock would likely remain volatile, but with an overall downward trend. “What’s lacking for the true believer in the company story is, ‘OK, where is the business strategy that will be generating revenue?'” Ritter said, highlighting the company’s struggle to produce a sustainable business model.

Still, for some investors, like Michael Rogers, a masonry company owner in North Carolina, their support for Trump Media & Technology Group is unwavering. Rogers, who owns over 10,000 shares, said he invested in the company both as a show of support for Trump and because of his belief in the company’s financial future. Despite concerns about the company’s revenue challenges, Rogers expressed confidence in the business, stating, “I’m in it for the long haul.”

Not all investors are as confident. Mitchell Standley, who made a significant return on his investment earlier this year by capitalizing on the hype surrounding Trump Media’s planned merger with Digital World Acquisition Corporation, has since moved on. “It was basically just a pump and dump,” Standley told ABC News. “I knew that once they merged, all of his supporters were going to dump a bunch of money into it and buy it up.” Now, Standley is staying away from the company, citing the lack of business fundamentals as the reason for his exit.

Truth Social’s future remains uncertain as it continues to struggle with financial losses and faces stiff competition from established social media platforms. While its user base and investor sentiment are bolstered by Trump’s political following, the company’s long-term viability will depend on its ability to create a sustainable revenue stream and maintain relevance in a crowded digital landscape.

As the company seeks to stabilize, the question remains whether its appeal to Trump’s supporters can translate into financial success or whether it will remain a volatile stock driven more by ideology than business fundamentals.

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