Referring to Australia’s Media Bargaining Code which became law last month, Mr Thomson said the deals were not just about News Corp, but “provided some bargaining leverage for smaller publishers”.
“You don’t change the landscape with one deal for one company,” he said.
News Corp, which publishes The Australian and The Daily Telegraph in Australia and has The temperature from London, The New York Post and The Wall Street Journal, signed a global agreement with Google in February.
“A very thoughtful agreement”
The three-year deal will mean News Corp journalism will join Google News Showcase, which launched in Australia in early February.
News Corp will develop a subscription platform, share ad revenue through Google’s ad technology services, expand audio journalism, and expand video journalism through YouTube.
Seven West Media, Nine (the publisher of this banner) and Guardian Australia have also signed agreements with Google, with Seven also signing an agreement with Facebook. News Corp, Nine and Guardian Australia are still negotiating with the social media platform.
Mr Thomson would not divulge commercial details, but described the deal as “a very textured, very thoughtful deal”.
He said Google sets its content priorities and News Corp “learns a lot from Google.”
“We will work to develop new content with them, from 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-sharing agreement on ad mechanics.”
By working closely with Google teams… we have a much better idea of what this content landscape will look like.
— Robert Thomson, CEO of News Corp
Mr. Thomson said the deals with Google would give News Corp a better understanding of what “contemporary content” looked like and how it could make the most of that opportunity.
He said that while News Corp understood how people accessed content through digital and mobile means, the key to understanding how that would change was to ask what it would look like in the future.
“Working closely with Google teams … we have a much better idea of what this content landscape will look like,” Thomson said.
“It helps to have the partnership and frankly, it certainly helps to have the money.”
Streaming Challenge
Mr Thomson also spoke to News Corp’s pay-TV operator Foxtel, saying it was a “pivotal time” for the broadcast offering as the company sought to bolster its Binge and streaming platforms. Kayo.
In News Corp’s second-quarter fiscal results presentation, the subscription video services business that hosts Foxtel increased revenue just 2% to $511 million.
As of December 31, Foxtel’s total number of paying subscribers was 3.31 million, of which 2 million were for the traditional broadcast offering and the rest on streaming platforms. Of these, 624,000 paid for the Kayo sports offer, 431,000 paid for the Binge entertainment platform and 258,000 paid for Foxtel Now.
We are now entering a crucial moment for Foxtel, having set up this streaming service.
— Robert Thompson
“At Foxtel, the number of streaming services grew 92% in the second quarter compared to the prior year, which represents a fundamental change in the character of the business,” Mr. Thompson said during the 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 amid the COVID-19 pandemic, with long-term deals in place. “at reset rates” for the AFL. and rugby league.
Mr. Thomson also thanked Foxtel’s leadership team, namely CEO Patrick Delaney and Chairman Siobhan McKenna, for their focus on understanding subscriber churn and the products’ vulnerability to it.
He also acknowledged concerns about products such as Binge and Kayo cannibalizing Foxtel’s traditional broadcast audience.
Mr Thomson said the team had done “expert work” to ensure the total number of streaming subscribers had “little impact on this primary streaming audience”, noting that it was Foxtel’s challenge to ensure that Foxtel customers understood that they were paying for a premium product.
“We are now entering a crucial moment for Foxtel, having established this streaming service,” he said.
Mr Thomson said the opportunity for Kayo Sports, which has a new competitor in Nine’s Stan Sports, was holding back Telstra’s Live Pass customers.
Last month, Telstra, which has a 35% stake in Foxtel, announced a new business partnership that would see Kayo Sports replace the telecom company’s AFL and NRL Live apps.
“Live Pass has approximately 3.2 million users. Our best estimate is just 10% of those who currently have Kayo, the potential opportunity for us over the next 10 months to grow the Kayo user base quite significantly,” said Thomson.
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