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Google deal ‘just the end of the beginning’: News Corp boss

Miranda WardMedia writer
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The chief executive of News Corp has said deals with the likes of Google and Facebook to pay for journalism will inject new life into the fourth estate.

Speaking to the Morgan Stanley Technology, Media & Telecom Conference overnight, Robert Thomson said media companies signing deals with Google for the search giant to pay for journalism was fundamentally changing the terms of trade for content.

News Corp CEO Robert Thomson told the Morgan Stanley Technology, Media & Telecom conference that deals with tech platforms will give journalism a “second wind”. 

“Without being too Churchillian about it, it’s just the end of the beginning,” he said.

Mr Thomson said deals between tech platforms and news publishers were important for society as they would help make journalism sustainable.

“The fourth estate is about to get a second wind,” he said.


Referencing the Australian media bargaining code which became law last month, Mr Thomson said these deals were not just about News Corp but about “providing some negotiating leverage for smaller publishers”.

“You don’t change the landscape with a single deal for a single company,” he said.

News Corp, which publishes The Australian and The Daily Telegraph in Australia and owns The Times of London, The New York Post and The Wall Street Journal, signed a global deal with Google in February.

‘A very thoughtful deal’

The three-year deal will mean News Corp’s journalism will join Google News Showcase, which launched in Australia in early February.

News Corp will develop a subscription platform, share advertising revenue through Google’s ad technology services, build audio journalism and develop video journalism through YouTube.

Seven West Media, Nine (the publisher of this masthead) and Guardian Australia also signed deals with Google, with Seven also inking an agreement with Facebook. News Corp, Nine and Guardian Australia are still negotiating with the social media platform.

Mr Thomson would not divulge the commercial details, but described the agreement as “very textured, a very thoughtful deal”.

He said Google was establishing its content priorities and News Corp was “learning a lot from Google”.

“We’re going to work to develop new content with them, text to video, what type of video works for them, the importance of audio for YouTube,” he said.

“We’re also working on things like subscription mechanics, there’s a revenue share deal on the ad mechanics.”

Working closely with the Google teams ... we are getting a much better sense of what that content landscape will look like.

— Robert Thomson, News Corp CEO

Mr Thomson said deals with Google would allow News Corp to better understand what “contemporary content” looked like and how it could make the most of that opportunity.

He said while News Corp understood how people were accessing content through digital means and on mobile, the key to understanding how it would change was asking what it would look like in the future.

“Working closely with the Google teams ... we are getting a much better sense of what that content landscape will look like,” Mr Thomson said.

“It helps to have the partnership and frankly, it certainly helps to have the money.”

Streaming challenge

Mr Thomson also addressed News Corp’s pay television operator Foxtel, saying it was a “crucial time” for the broadcast offering as the company looked to beef up its streaming platforms Binge and Kayo.

At News Corp’s second-quarter fiscal results presentation, the subscriptions video services business that houses Foxtel boosted its revenue by only 2 per cent to $US511 million.

As of December 31, Foxtel’s total closing paid subscribers were 3.31 million, with 2 million for the traditional broadcast offering and the remainder across streaming platforms. Of the latter, 624,000 were paying for sports offering Kayo, 431,000 were paying for entertainment platform Binge and 258,000 were paying for Foxtel Now.

We are now entering a crucial moment for Foxtel, having built up that streaming service.

— Robert Thomson

“At Foxtel, the streaming service numbers are up 92 per cent in quarter two compared to the previous year, which is a fundamental change in the character of the business,” Mr Thompson told the conference.

He said the important part of streaming was “having the product to stream” and cited News Corp’s efforts to renegotiate its sports rights in the middle of the COVID-19 pandemic, with long-term agreements in place “at reset rates” for the AFL and rugby league.

Mr Thomson also credited Foxtel’s leadership team, namely CEO Patrick Delaney and chairman Siobhan McKenna, with focusing on understanding subscriber churn and how the products were vulnerable to that.

He also acknowledged concerns around products such as Binge and Kayo cannibalising the traditional Foxtel broadcast audience.

Mr Thomson said the team had done an “expert job” at ensuring the total number of streaming subscribers had “little impact on that core broadcast audience”, noting it was Foxtel’s challenge to ensure Foxtel customers understood they were paying for a premium product.

“We are now entering a crucial moment for Foxtel, having built up that streaming service,” he said.

Mr Thomson said the opportunity for Kayo Sports, which has a new competitor in Nine’s Stan Sports, was retaining customers of Telstra’s Live Pass.

Last month, Telstra, which has a 35 per cent stake in Foxtel, announced a new commercial partnership that would result in Kayo Sports replacing the telco’s AFL and NRL Live apps.

“Live Pass has about 3.2 million users. Our best estimate is only 10 per cent of those currently have Kayo, the potential opportunity for us over the next 10 months in building up Kayo’s user base quite significantly,” Mr Thomson said.

Summary | 6 Annotations
News Corp
2021/03/05 02:45
fourth estate.
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Robert Thomson
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get a second wind
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three-year deal
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Google News Showcase
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