The blank-cheque company set to merge with Donald Trump’s social media start-up has warned shareholders that its plan to “cancel ‘cancel culture’” faces risks because of the former president’s history of business bankruptcies.
“A number of companies that were associated with President Trump have filed for bankruptcy,” the company said in a registration statement. “There can be no assurances that TMTG will not also become bankrupt.”
TMTG also enumerated the fate of some of its proprietor’s previous business ventures. Trump Plaza, Trump Castle and the Plaza Hotel filed for bankruptcy protection. Trump University, Trump Vodka, Trump Mortgage and Trump Steaks all folded after operating for periods ranging from a few months to a few years.
Depending on how many investors decide to go through with the deal, Trump would control between 47 and 57 per cent of Trump Media & Technology Group after it merges with Digital World Acquisition Corporation, according to the statement filed with the Securities and Exchange Commission on Monday.
Users of the company’s flagship service, Truth Social, will have access to the former president’s social media posts at least six hours before they appear on other platforms, according to the filing. The exclusivity deal, part of a wide-ranging agreement governing the new venture’s relationship with Trump, does not apply to political messaging or “get-out-the vote” efforts.
Trump had nearly 90mn followers on Twitter before the platform banned him in January 2021 “due to the risk of further incitement of violence”. The move came after thousands of partisans, some carrying Trump flags, stormed the US Capitol building in what prosecutors have characterised as a seditious conspiracy to block the certification of Joe Biden’s electoral victory.
TMTG disclosed that it did not have the right to walk away from its agreement with Trump, “even if [his] conduct could negatively reflect on TMTG’s reputation or brand or be considered offensive, dishonest, illegal, immoral, or unethical”. But it does have the right to pre-empt any offer that a rival streaming video platform may make to the politician and former reality-TV star.
The billionaire Elon Musk, who has agreed to purchase Twitter for $44bn, last week said he would reverse the ban on Trump, calling it a “morally bad decision”. One risk to TMTG was that “under new ownership, Twitter may demonstrate a renewed commitment to free speech principles that will heighten competition for users who prioritize such principles”, the registration statement said.
Truth Social launched in February, marking the first stage of the company’s plan to enter the crowded social media and streaming video landscape with a new concept designed to “stand up to ‘cancel culture’ and the ‘self-righteous scolds’”.
The plan has already proved highly lucrative for the team behind Digital World, who paid $25,000 for a special class of “founder shares” in the venture. The shares had a market value of $357mn at the end of March, the filing shows.
But for ordinary investors the prospects of the venture are uncertain.
“If TMTG fails to successfully promote and maintain TMTG’s programming as one which is ‘non-woke’ and one which cancels ‘cancel culture’ . . . its business and operating results could be adversely affected,” the filing states.