Nine (ASX:NEC) and News Corp (ASX:NWS) share prices rise after Facebook deal

Nine Entertainment (ASX:NEC) and News Corporation (ASX:NWS) shares are both trading higher after news of deals with Facebook were announced.

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2 businessmen shaking hands, indicating a partnership deal and share price lift

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Shares of Nine Entertainment Co Holdings Ltd (ASX: NEC) and News Corporation (ASX: NWS) are both trading higher during Tuesday’s session. At the time of writing, the Nine share price is sitting at $3.03, up 1.34%. Meanwhile, the News Corp share price is trading 0.89% higher at $31.86.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is also in the green today, currently having risen by 0.91%.

The positive share price movements for the media companies come following recent news of both companies signing deals with Facebook Inc (NASDAQ: FB).

Facebook to pay News Corp, signs letter of intent with Nine

News Corp announced today it has come to a three-year agreement with Facebook under which the social media giant will pay News Corp for use of its Australian news content. This includes content from publications including The Australian, The Daily Telegraph, and news.com.au.

The company also announced today that Sky News Australia, a News Corp cable television network, has come to a parallel agreement with Facebook.

News Corp had previously come to an agreement with Facebook for its US content in October 2019.

Commenting on today’s announcement, News Corp CEO, Robert Thomson said:

The agreement with Facebook is a landmark in transforming the terms of trade for journalism and will have a material and meaningful impact on our Australian news businesses.

He added:

We are grateful to the Australian Prime Minister Scott Morrison, Treasurer Josh Frydenberg and the Australian Competition and Consumer Commission Chair Rod Sims and his team for taking a principled stand for publishers, small and large, rural and urban, and for Australia.

Mr Thomson was referring to the recently passed News and Media Bargaining Code legislation enacted by the Australian Government. Facebook and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) owned Google were the initial subjects of the law.

Facebook was so opposed to the code it initially blocked all Australian news from being shared on its platform for five days. The social media company only dropped the news ban when the government agreed to make several amendments to the bill.

Prior to today’s announcement from News Corp, speculation was already circulating yesterday regarding a possible deal between the company and Facebook.

News Corp did not disclose the value of the deal.

The Australian Financial Review (AFR) is reporting today that Nine Entertainment has also signed a letter of intent with the US$780 billion social media company. Nine is unlikely to formally announce a deal, according to the paper.

Facebook News

Facebook intends to showcase news on its latest Australian offering, Facebook News. Launched in 2019, and coming to Australia soon, a section of the platform will be devoted to displaying news stories personalised to individual user preferences. Facebook will pay publishers for this content.

The company had previously excluded Australia from the initial launch of the product due to the aforementioned dispute with the government over its media code.

Nine and News Corp share price snapshots

One year ago, the Nine and News Corp share prices were sitting at $1.17 and $14.76, respectively. If an investor had bought shares in one of these companies at that time, they would be sitting on a tidy 159% or 116% return on investment.

The market capitalisations of Nine and News Corp are $5.1 billion and $1.3 billion, respectively.

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