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When right-wing network Newsmax and Smartmatic agreed to settle the voting software firm’s election defamation lawsuit last fall, the financial terms of the agreement were not disclosed and seemingly remained confidential. That is no longer the case.
In a regulatory filing released this week by Newsmax as part of its planned initial public offering, the channel revealed that it agreed to pay Smartmatic $40 million as well as issue a “five-year cash exercise warrant” for the voting machine firm to purchase 2,000 shares of preferred stock in the conservative cable channel.
The investment prospectus also noted that there was an inherent risk to investors due to the ongoing defamation case brought by Dominion Voting Systems, which is set to go to trial next month.
“While Newsmax Media is vigorously defending the Dominion suit, an unfavorable outcome in the matter could have a material adverse effect on the Company’s financial position, results of operations and cash flows,” the company’s filing stated.
“We entered into a confidential settlement with Newsmax in September to resolve litigation and cannot comment further on the details,” J. Erik Connolly, Smartmatic external legal counsel, said in a statement to The Independent. “We are now focused on our litigation against Fox News for defaming Smartmatic and knowingly lying to their viewers about Smartmatic’s role in the 2020 election. We look forward to presenting our evidence to a jury and finally having the opportunity to hold Fox accountable for its harmful actions.”
Newsmax did not immediately respond to a request for comment.
Smartmatic, which also reached a confidential settlement with One America News in a similar case last April, still has several pending cases against right-wing outlets and MAGA personalities over false claims of fraud in the 2020 election.
A New York appeals court ruled in January that Fox Corporation must face trial in Smartmatic’s massive $2.7 billion lawsuit over Fox News’ promotion of baseless conspiracy theories that voting machines “rigged” the election on Joe Biden’s behalf and “stole” it from Donald Trump. In the largest defamation settlement in U.S. history, Fox paid $787.5 million to Dominion in 2023 to settle that company’s election lawsuit.
Smartmatic also recently got a favorable ruling in its lawsuit against election-denying pillow salesman Mike Lindell. A federal judge in Minnesota found the MyPillow CEO in contempt of court for failing to hand over financial documents and other discovery material in the case. That ruling came after another judge ordered Lindell to pay nearly $60,000 in legal fees over his “frivolous” countersuit against the firm.
While nowhere close to the eye-popping settlement that Dominion received from Fox News, the $40 million Newsmax agreed to pay Smartmatic represents a significant chunk of the MAGA network’s revenue base.
According to the filing, the network — between its broadcast and digital operation — pulled in $135 million of revenue in 2023 and close to $80 million in the first six months of 2024. Net losses for the network were close to $55 million for the first half of last year — which was $17 million higher than the same period in 2023.
Additionally, it’s possible that Smartmatic agreed to the settlement amount due to Delaware Superior Court Judge Eric Davis ruling out the possibility of punitive damages just days before the trial was to start. While Davis agreed that Newsmax’s statements about Smartmatic altering the results of the election were “factually false,” he rejected the claim that the channel acted with “express malice” under Florida law, which is where Newsmax is headquartered.
“There is no evidence that Newsmax acted with evil intent towards Smartmatic,” the judge noted at the time.
Following last year’s settlement, Smartmatic said it was “very pleased to have secured the completion of the case against Newsmax” and was “looking forward to our court day against Fox Corp and Fox News for their disinformation campaign,” adding that “lying to the American people has consequences.”
Two months later, Newsmax published a statement that it had “resolved the litigation brought by Smartmatic through a confidential settlement” and the “allegations regarding whether the [2020 U.S. presidential election] and its results were somehow altered or manipulated by Smartmatic are factually false/untrue.”
“Smartmatic is pleased that Newsmax, in a statement published on its website on November 30, 2024, has finally acknowledged the falsehood of claims alleging that the 2020 U.S. presidential election was manipulated by Smartmatic,” the voting software company reacted. “After years of litigation and extensive discovery, Newsmax was unable to substantiate its accusations. This acknowledgment reinforces Smartmatic’s dedication to protecting its reputation and combating election disinformation.”
In this month’s prospectus, which came out after Newsmax said it had reached its goal of raising $225 million in order to go public, the network noted that it was paying the Smartmatic settlement in four installments and insisted that none of the funds raised in the stock offering would be paid to Smartmatic.
“Newsmax Media reached a settlement agreement with Smartmatic on September 26, 2024, pursuant to which all claims will be released by Smartmatic for consideration, including a cash amount of $40 million payable over time and the issuance of a five year cash exercise warrant to purchase 2,000 shares of Series B preferred stock at an exercise price of $5,000 per share,” the documents state. “As of the date hereof, the Company has made payments under the settlement agreement totaling $20 million. Payment of the remaining balance will be made in installments of $10 million on or prior to each of March 31, 2025 and June 30, 2025. The payments will be made from the Company’s existing cash on hand, and no proceeds of this Offering will be used to make the remaining payments.”
As first revealed in its prospectus last June when it launched its $225 million placement, Newsmax also informed prospective investors that it is currently paying off another large settlement to an anonymous counterparty over breach of contract claims in a commercial agreement. As was the case with Smartmatic, Newsmax stated that no funds from the offering would be used towards paying this settlement agreement.
“In March of 2023, Newsmax and the counterparty entered into a settlement agreement to resolve these claims prior to the commencement of any litigation against Newsmax. In addition, the parties also entered into an amendment to their commercial agreement,” the filing stated. “The Company has a total of approximately $34.6 million remaining to be paid to the counterparty pursuant to the terms of the agreement, with annual payments that will range from approximately $6.7 million to $7.3 million through 2028, with the balance, if any, payable through the end of the term.”
Based on the IPO circular, Newsmax stated that it currently has roughly $6.7 million of cash on hand. Also, due to its current settlement liabilities and pending litigation, the network warned investors that there could be some risk associated with Newsmax going forward.
“As of the date of this Offering Circular, Newsmax is unable to predict the final outcome of the Dominion matter and cannot reasonably estimate the amount of its liability, if any,” the prospectus noted. “However, an unfavorable outcome in the Dominion matter could have a material adverse effect on Newsmax’s financial position, results of operations and cash flows.”
