NewsMax has lost a lot of money. Nearly $11 million, in fact, since the site's launch in 1998. NewsMax lost roughly $8.4 million of that in 2000 and 2001.
The majority of NewsMax's revenue in 2001 came from product sales -- 52.8 percent, compared to 19.5 percent in 2000. That jump mirrored a huge drop in advertising revenue, from 42.3 percent of total revenue in 2000 to 15.9 percent in 2001.
Richard Mellon Scaife has a stake in NewsMax. According to the prospectus, Scaife owns about 7.2 percent of NewsMax Media, expected to drop to 5.8 percent after the IPO. That's not exactly surprising, given that CEO Christopher Ruddy used to work for Scaife at his newspaper near Pittsburgh. Scaife's official stake -- and you have to wonder, given Scaife's reputation as the moneybag behind a lot of hardline conservatives, if he didn't kick in even more than his official share of the company indicates -- makes him NewsMax's third largest shareholder. At the top is Ruddy, with 32.6 percent (27.1 percent after the IPO), followed by Michael Ruff (with 25 percent, or 20.3 percent after the IPO), described in the prospectus as a former real estate developer in Dallas and current president of Icarus Investments, a venture capital firm. There are a total of 190 stockholders of record.
All totaled, Ruddy and the company's directors -- who also include Arnaud de Borchgrave, late of the Washington Times; former Navy admiral Thomas Moorer; and Lord William Rees-Moog, a former editor and current columnist for the Times of London -- control about 64 percent of NewsMax Media through stock ownership and stock options, which would drop to 53.5 percent after the IPO. Interestingly, Scaife is not listed as a company director, but his stock is counted with the rest of the other named directors.
Christopher Ruddy is doing pretty well for running a company that has lost $11 million. According to the prospectus, Ruddy made about $97,000 plus stock options in 2001. The previous year he made $65,000 with a $30,000 bonus. (In 1999, he's listed as making no salary but a $10,000 bonus and a million-plus shares of stock and stock options.) So that's how he can afford to be seen in swank New York eateries. Ruddy's salary for 2002 is described thusly: "Mr. Ruddy's annual base salary ... is $125,000, which was reduced to $25,000 effective February 2002, but will be restored to $125,000 upon the closing of this offering."
NewsMax hasn't exactly been, uh, honest about some of these numbers. Ruddy once claimed NewsMax became profitable in November 2000; please refer to the earlier paragraph for proof otherwise. NewsMax also claimed in January that the paid circulation of its magazine was 240,000, and in a recent e-mail to readers, claimed "more than 300,000 paid readers ... We have just surpassed almost every conservative publication in America." But according to the prospectus (filed in March, if you'll recall), the paid circulation is listed as "approximately 59,395." Perhaps NewsMax understands that while you can get away with lying to magazine reporters and your own readers, it's generally a bad idea to lie to the government.
http://conwebwatch.tripod.com/stories/2002/nmstock.html
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