Shares in Nine Entertainment Co Holdings Ltd (ASX: NEC) are gaining today after the company announced it has officially signed agreements with Facebook Inc (NASDAQ: FB) and Alphabet Inc‘s Google (NASDAQ: GOOGL) (NASDAQ: GOOG) following Australia’s News Media Bargaining Code.
At the time of writing, the Nine share price is $3.03, 2% higher than yesterday’s close.
The media company owns news outlets including 9 television, The Age, The Sydney Morning Herald, and the Australian Financial Review.
Nine’s deal is the result of a battle over the Australian Government’s proposed media code earlier this year that saw Facebook remove all Australian news from its platform.
Days after the stand-off between Facebook and Australian news media, the News Media Bargaining Code passed through Parliament. The code encourages news media companies to undertake commercial agreements outside of the code.
Let’s take a look at the agreements driving the Nine Entertainment share price today.
Nine’s new deals
Nine Entertainment announced this morning that the media company has officially signed agreements with Facebook and Google.
While Nine hasn’t announced what it will be charging the tech giants, it expects revenue from the deals will boost its news media assets considerably.
According to Nine’s release, it expects its publishing division’s earnings before interest, tax, depreciation, and amortisation (EBITDA) to grow by $30 million to $40 million as a result of its deals with Facebook and Google.
Nine states the growth will be due to the fees charged to Facebook and Google, the end of an earlier agreement on Google’s advertising sales revenue, and increased customer subscriptions.
According to anonymous sources quoted by The Age, Nine is charging Google around $45 million annually to use its news content. That’s about double what it’s said to be charging Facebook.
The deal between Nine and Facebook will see Nine’s news video clips and articles posted on the social media platform. It has a minimum amount payable and a 3-year term.
Through Nine’s agreement with Google, Nine will supply news content for Google’s News Showcase and the platform’s other news products. Google will also expand its marketing on Nine’s platforms. Google will not be sharing videos from Nine’s media brands.
Nine stated the costs to Google will involve a fixed annual fee with modest growth in its early years. Nine’s deal with Google will cover a 5-year period.
Nine Entertainment share price snapshot
The Nine Entertainment share price has been performing well on the ASX lately.
Currently, it’s 30% higher than it was at the start of 2021. It’s also gained 102% since this time last year.
The media company has a market capitalisation of around $5 billion, with approximately 1.7 billion shares outstanding.