$0.35
$4.55
bear $0.35
base $2.45
bull $4.55
margin of safety $1.10
market price* $8.74
Business condition attached to the margin of safety
At least two more consecutive quarters of positive operating income after the second quarter of 2026, with the Digital segment's losses continuing to narrow rather than re-widening.
Newsmax operates a cable/satellite news network (Newsmax) plus a free ad-supported streaming channel (Newsmax2) and a subscription app (Newsmax+), reaching more than 100 million U.S. homes through pay-TV and OTT distribution, supplemented by a smaller digital publishing and licensing business and a handful of international carriage deals in Europe. It went public on the NYSE in March 2025. Revenue is split roughly 80/20 between the Broadcasting segment (advertising, affiliate/carriage fees, and Newsmax+ subscriptions) and Digital (digital advertising and subscriptions). The last two fiscal years look ugly on their face - net losses of $72.2 million in 2024 and $99.5 million in 2025 - but almost all of that came from two defamation lawsuits tied to 2020 election coverage, both of which are now resolved. Newsmax settled with Smartmatic in September 2024 for roughly $40 million (cash plus a warrant), and that obligation was fully paid off by the end of 2025. It settled with Dominion Voting Systems in August 2025 for $67 million, paid $27 million immediately, $20 million in January 2026, and owes one final $20 million installment by January 15, 2027. Combined, these two settlements account for roughly $78.6 million of the 2025 net loss and $76.9 million of the 2024 net loss - the great majority of both years' reported losses. With $25.9 million of cash on hand as of June 30, 2026 and no funded debt, the final payment does not look like a strain, but it is a real, dated cash obligation and we have subtracted its value from every case below rather than ignoring it. Strip the settlements out and the underlying business is thinner than headline growth suggests, but it is inflecting for the better. On the company's own segment reporting (which excludes the litigation charges), Broadcasting's operating profit fell from about $19.7 million in 2024 to $10.7 million in 2025 - management attributes this to the normal falloff in political advertising after a presidential election year, not to a change in the business. Digital's losses widened from about $9.5 million to $17.2 million, driven by added headcount and one-time costs tied to becoming a public company. Combined, the core business (before settlements, stock compensation, and depreciation) actually had negative underlying cash earnings in 2025, a genuine soft patch layered on top of the litigation noise. 2026 is where the picture turns. Revenue grew 15% year-over-year in the first half of 2026 (to $105.8 million, from $91.7 million), and the second quarter was the company's first quarter of positive operating income ($1.3 million) and positive owner earnings since going public, after a still-slightly-negative first quarter. We treat this cautiously - it is only two quarters of evidence - but it lines up with three concrete, dateable facts: the two lawsuits are behind the company, the one-off costs tied to the 2025 stock offering shouldn't repeat, and 2026 is a U.S. midterm-election year, which should give Broadcasting's political advertising a lift the same way 2024's presidential election did, before fading again in 2027. Because 2024 and 2025 were both distorted by one-time legal costs in one direction, there is no clean historical earnings level to anchor on - the stored owner-earnings figures for those two years (about -$1.03 and -$1.05 per share) are not representative of the business as it exists today and were not used as the starting point for this valuation. Instead we built forward from the barely-breakeven run-rate the company has just started to show, being careful not to assume more improvement than the second quarter actually demonstrated. Three cases: Bear case: Digital's cost growth doesn't reverse and continues to offset Broadcasting's gains; the 2026 election bump fades in 2027 as it did in 2025, and margins stay pinned near breakeven, drifting between small profits and small losses depending on the election calendar, for the next decade. Distribution or affiliate-fee renewals - a risk the company itself flags, since a large share of revenue comes through a limited number of cable and streaming distributors - come in on flat terms rather than growing terms. There is no funded debt, so this does not turn into a solvency problem, but there is also little value created beyond the cash already on the balance sheet. Value: roughly $0.35 per share. Base case: Digital's losses narrow over the next several years as the 2025 public-company cost bump doesn't repeat and revenue growth outpaces headcount growth; Broadcasting keeps growing modestly on affiliate fees, Newsmax+ subscriptions, and the European licensing deals signed in 2025 (France, Israel, Cyprus), while continuing to see a bump in advertising every election cycle (2026, 2028, 2030...). Owner earnings per share grow from roughly breakeven today to the neighborhood of $0.20 per share a decade out, and we assume that level roughly persists afterward on the strength of the company's long-standing, contracted distribution reach rather than assuming further growth we can't point to evidence for. Value: roughly $2.45 per share. Bull case: the operating leverage shows up faster and more fully - Digital reaches breakeven within a few years, Broadcasting compounds affiliate and subscription revenue while capturing a full-sized political-advertising cycle in the 2028 presidential election (historically the largest ad cycle for this kind of network), and international licensing becomes a real, if still secondary, contributor. Owner earnings per share reach roughly $0.36 by year ten. Value: roughly $4.55 per share. A few judgment calls worth flagging. We added back all of the depreciation, stock-based compensation mark-to-market items, and non-cash litigation-accrual entries in cash flow the way the formula requires, but subtracted stock-based compensation itself (about $12 million in 2025, and running close to $13 million annualized in 2026) as a real cost, since it dilutes shareholders even though it doesn't use cash. Capital spending is small for this kind of business (under 1.5% of revenue), so it made almost no difference to the result either way. We discounted all three cases at a flat 6% with no risk premium - the risk in this story is carried entirely in how differently the three cases play out, not in the discount rate. One thing we specifically tried to break: the assumption that the 2026 turnaround is real and not a one-quarter fluke. The clearest counter-fact we found is that the company's own non-GAAP "Adjusted EBITDA" for full-year 2025 was actually negative $6.5 million, down from a positive $10.2 million in 2024 - so even excluding the lawsuits entirely, the underlying business got worse in 2025, not better, largely because of the Digital segment's cost growth. That's a real, filed fact, and it is the reason the base case starts from a cautious, near-breakeven level rather than extrapolating straight from the positive second quarter of 2026, and the reason Digital's cost trajectory - not the now-resolved litigation - is the key thing to watch going forward. Governance is concentrated: CEO Christopher Ruddy holds Class A shares carrying about 81.5% of the voting power, so minority shareholders have limited influence over major decisions.