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Seven West Media signs Google and Facebook agreements
Provides FY21 trading and debt update
Seven West Media (ASX: SWM) today confirmed it has finalised its partnership with Google and has also signed a long-form agreement with Facebook awaiting signature by the latter overnight.
The agreements are consistent with the respective Letters of Intent announced in February. The agreement with Google is five years and the agreement with Facebook is three years.
Completion of the two agreements confirms the strong recognition of the quality and credibility of our leading television and newspaper news brands and entertainment content. Together, they underpin our sustainability and enable us to continue to build our digital platform.
These partnerships have been made possible by the introduction of the Media Bargaining Code. This has been an important reform led by Prime Minister Scott Morrison, the Chair of the Australian Competition and Consumer Commission, Rod Sims, Treasurer Josh Frydenberg and Communications Minister Paul Fletcher.
James Warburton, SWM Managing Director and Chief Executive Officer
SWM anticipates the digital revenue associated with the agreements will commence before the end of FY21, with the majority to be derived in FY22. Minimal incremental costs are required to deliver the revenue.
With regards to trading, Seven’s Q3 FY21 advertising revenue grew at the upper end of the 7-10% range provided at the first-half results briefing in February.
Net debt is forecast to be approximately $270 million to $280 million by the end of FY21. Net proceeds of $45 million from the Airtasker IPO in March were used to retire debt, bringing total debt retirement to $195 million in the second half to date.
The transformation of SWM continues. Finalisation of the Google and Facebook agreements completes one of the key objectives outlined in our February results, delivering further digital transformation, and realising the true value of our news and current affairs product on third-party digital platforms.
Our balance sheet is now in a much stronger position and our FY21 Q4 content is positioned to deliver audience and share growth, particularly among people 25 to 54 and on 7plus.
James Warburton, SWM Managing Director and Chief Executive Officer
This release has been authorised to be given to the ASX by the Managing Director and CEO of Seven West Media Limited.
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Makes the whole “we dont need Facebook” argument take on a different light
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The Australian Government has introduced the world-leading News Media and Digital Platforms Mandatory Bargaining Code to address the bargaining power imbalance between Australian news media businesses and digital platforms, and to support a diverse and sustainable news media sector in Australia. The Australian Communications and Media Authority (ACMA) has several important functions under the Code, including registering news businesses, and maintaining a register of arbitrators. Additional funding of $4.2 million over three years from 2020-21 will be provided to ACMA in this Budget to enable the regulator to discharge its responsibilities.
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Tonight I am pleased to announce that the ABC has signed letters of intent with both Google and Facebook . When these commercial deals are concluded, they will enable the ABC to make new and significant investments in regional services.
These investments will provide a huge boost to the regions at a time when many areas of regional and rural Australia have experienced a withdrawal of media services.
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Nine Entertainment agreement with digital platforms
Nine Entertainment (ASX: NEC, Nine) has signed agreements with Facebook and Google, following the Commonwealth Government’s enacting of the News Media Bargaining Code.
The deal with Facebook is for the supply of news video clips and access to digital news articles on Facebook news products, for a term of up to 3 years with a minimum amount payable over the term.
The 5-year agreement with Google includes the supply of news content (excluding video) for Google’s News Showcase and other news products. Google will also expand its marketing initiatives across Nine’s platforms. The amount payable is a fixed annual fee with modest growth in the early years.
Having regard to the expected net revenue from these Facebook and Google agreements, the impact of the termination of Google’s previous sales agreement on programmatic advertising sales revenue from 1 March 2021, as well as the ongoing growth in subscription revenues for Nine’s key mast-heads, Nine expects growth in the Publishing division’s EBITDA in FY22 (over FY21) in the range of $30m to $40m.
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UPDATE 1/11:
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ABC to add more than 50 journalists in Regional Australia
The ABC has announced an additional 50-plus journalist roles in regional locations as a result of deals struck with Facebook and Google.
Following the passage of the News Media Bargaining Code in February, which included the public broadcasters, the ABC entered into commercial negotiations with the digital platforms.
An agreement was signed with Facebook this week and follows an agreement reached with Google last month. Revenue from both will go towards increasing the ABC’s investment in regional and rural journalism across Australia.
ABC Managing Director David Anderson said the agreements provided a significant boost to the ABC’s services in regional areas. “We decided at the very start of these negotiations that any net revenue we received from these deals would go where it is needed most – and that is in regional Australia.”
The ABC currently employs around 550 content makers in its 48 regional bureaux. The new roles created by this agreement represent an increase in the number of regional journalists of around 10 per cent.
Mr Anderson said the ABC would be placing the additional journalists into the areas where they were needed most and would have the most impact. “We want to provide greater coverage of regional stories in areas that are under-served by the media or are in news deserts. Extra regional services are a great way to start 2022, our 90th year, and this announcement is fitting given the ABC’s relationship with rural and regional Australia over those nine decades.”
In the first 12 months of the roll out, the ABC will run a series of pilots to inform longer term planning. All positions and placements will be reviewed towards the end of 2022. The initiatives build on the investment the ABC made in regional Australia in 2017 when it put in 83 additional positions to support the upgrade of its regional bureaux to multimedia hubs.
Starting this week, the ABC will begin placing journalists in more than 20 locations in all states and the Northern Territory with all positions expected to be filled by early 2022. Some positions will be located in existing ABC regional bureaux and others will be placed in areas that have not had an ABC presence before.
Five ‘mini-bureaus’ will be trialled in Warragul, Batemans Bay, Carnarvon, Hervey Bay and Charleville.
Individual reporters will be placed in Swan Hill, Whyalla, Victor Harbor, Northam and Gladstone where there are currently no ABC reporters based.
Regional hubs that serve large areas will also get additional support in Horsham, Burnie, Dubbo, Wagga Wagga, Katherine, Esperance, Karratha, Longreach and Toowoomba.
Reporters will also be embedded for limited times in other, more remote locations.
In addition to these roles, several new national specialist rounds will be added to the ABC’s regional team, covering topics such as water, mining, social affairs and health.
ABC’s acclaimed regional youth initiative ABC Heywire, also benefits, with plans to embed teams in regional locations, starting in Victoria and focusing on the stories and issues impacting young people in the region.
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Feedback sought on potential new rules for large digital platforms
The ACCC (Australian Competition and Consumer Commission) is seeking views from consumers, businesses and other parties on options for legislative reform to address concerns about the dominance of digital platforms.
A discussion paper, released today, outlines options for addressing harms to competition, consumers, and business users in a range of areas dominated by large digital platforms, including social media, search, app marketplaces, general online retail marketplaces and ad tech.
“The upcoming fifth report will mark the half-way point of the Digital Platform Services Inquiry. Now is the time to consider whether further reforms are needed to supplement the important tools in Australia’s competition and consumer law to maintain a vibrant digital economy that drives innovation and enhances productivity,” ACCC Chair Rod Sims said.
“There is momentum building internationally, with authorities and lawmakers around the world taking action to address the competition and consumer harms arising on digital platforms.”
“These platforms hold powerful positions in the economy and society and can often dictate terms to businesses that use their services. This in turn can harm consumers and the small businesses that rely on them, including through higher prices, greater use of personal data, reduced choice, less innovation or lower quality products,” Mr Sims said.
The discussion paper outlines potential measures as part of a possible new regulatory framework to promote competition and increase consumer welfare in digital platform services. This is important to ensure innovation and growth in the digital services reliant on dominant or ‘gatekeeper’ digital platforms, and increased productivity.
A new regulatory framework could incorporate measures to address anti-competitive conduct (for example anti-competitively preferencing a platform’s own services above those of its business users), barriers to entry (such as access to data), bargaining imbalances, and insufficient consumer and business user protections (including effective dispute resolution processes).
The paper also outlines other potential measures to improve consumer protection, including obligations on platforms to deal more effectively with online scams and restrictions on other conduct that harms consumers, such as exploitative or manipulative user interfaces.
“Since the ACCC began examining digital platform services in 2017, large digital platforms such as Google, Apple and Meta (Facebook) have continued to grow and expand their impact and influence on the economy and our day-to-day lives,” Mr Sims said.
“It is clear that large digital platforms are often protected by high barriers to entry and expansion, and in some cases, they have become ‘gatekeepers’, acting as critical intermediaries between businesses and consumers, and controlling access to consumers.”
“We are looking at whether we need additional laws or reform to make the online environment fairer for businesses and safer for consumers,” Mr Sims said.
The discussion paper outlines various options, and the ACCC has not yet determined which proposals, if any, it will finally recommend.
“We are looking closely at the significant reforms for digital platforms occurring or being proposed in the European Union, the United Kingdom, the United States and in the Asia-Pacific region given that these platforms operate globally. While our key objective is to ensure any reform is appropriate for Australia, we recognise the benefits to all stakeholders of international alignment in this important area,” Mr Sims said.
“The News Media Bargaining Code, which was legislated by the Australian Government in 2021, is a great example of how regulatory change can quickly and effectively address the consequences of the largest platform’s market power.”
Following the introduction of the Code, Google and Meta reached voluntary commercial deals with news media businesses which have performed an important role in strengthening Australian journalism.
“We encourage all interested parties and consumers to provide their views to inform our assessment on whether a new framework is needed to foster competition and protect consumers in relation to digital platform services,” Mr Sims said.
Submissions to this discussion paper can be made to digitalmonitoring@accc.gov.au by 1 April 2022. Further information is available at Digital platform services inquiry 2020-2025.
CRA statement on News Media and Digital Platforms Bargaining Code
Industry body Commercial Radio Australia said the Federal Government’s review into the operation of the News Media and Digital Platforms Mandatory Bargaining Code would be an opportunity to examine whether stronger actions are required to urge Google and Facebook to strike content deals with radio broadcasters.
Chief executive officer Joan Warner said the digital giants had yet to reach commercial agreements with the majority of commercial radio stations despite the ACCC granting CRA authorisation last October to collectively bargain over payment for radio content featured on those platforms.
“We are continuing to seek commercial outcomes but if Google and Facebook are unwilling to negotiate fair compensation, then stronger actions and designation may be required,” Ms Warner said.
“We remain concerned that the current status quo will leave smaller media organisations such as radio stations at a competitive disadvantage.
“Commercial radio operates newsrooms across the country and generates a substantial amount of local news and information consumed by Australians on digital platforms.”
The Morrison Government said today that Treasury would conduct a review into the Code as required within 12 months of it coming into effect.
When granting CRA authorisation, the ACCC said that “commercial radio stations play an important role in providing regional and local reporting”.
CRA represents 261 member radio stations across metropolitan and regional Australia, including smaller operators across regional areas.
From Free TV
News Media Bargaining Code Pushes Digital Platforms To Pay A Fair Price For Australian Journalism
The News Media Bargaining Code, introduced just over 12 months ago, has been broadly successful in driving commercial negotiations, however further improvements could be made, according to Free TV Australia’s submission to a review of the Code.
Bridget Fair, CEO of Free TV said, “While digital platforms have not yet been designated under the Code, these valuable commercial arrangements would not have been possible without the incentives of the framework.
“For a long time, digital platforms have been refusing to pay a fair price for news content, despite the value it creates on their services. It is critical that the bargaining code legislation be maintained, to support the sustainability of Australian media.
“The digital platforms – Google, Facebook, and their subsidiaries, continue to hold a dominant position in search and social media markets.
“The News Media Bargaining Code, with its final offer arbitration framework, has become an international model for addressing the competitive imbalance in countries including Canada and the United Kingdom”.
Free TV also makes a number of recommendations for improvements to the code framework, particularly as commercial arrangements come up for renewal. These include:
- a statement of expectations on digital platforms that establishes an intention to designate if commercial arrangements are not entered and maintained with all relevant news media companies;
- any designation intention including social video platforms like YouTube;
- removing the ‘significant contribution’ test in the designation criteria to reinforce that all eligible news media businesses are able to seek agreements under the Code if the treasurer determines to designate a digital platform service; and
- committing to two-yearly reviews of the operation of the framework.
Ms Fair said, “Future reviews of the Code should also consider the definition of core and covered news content and the potential for streamlining the ACMA registration process.
“As the framework continues to mature, it is important that it continues to reflect the evolving nature of Australian media businesses”.
Executive Summary:
Submission by Free TV Australia
Review of the News Media and Digital Platforms Mandatory Bargaining Code
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Free TV welcomes this review of the News Media Bargaining Code and strongly supports the maintenance of the existing framework with its key pillars of:
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A designation power for the Treasurer
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A framework for genuine commercial negotiation to achieve a fair value for the news content made available by the digital platform services of Google and Meta
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Final Offer Arbitration (FOA) to operate as a deadlock breaking mechanism in the event that the two parties cannot come to a commercial agreement.
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While no designation has yet occurred, the evidence from 12 months of operation of the Code demonstrates that the incentives from these key pillars have broadly been successful in driving commercial negotiations. The ACCC has indicated that the commercial arrangements have led to the payment of over $200 million by the digital platforms to news media companies.
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The Code has addressed the fundamental bargaining power imbalance that led to the previous refusal of digital platforms to pay a fair price for news content despite the value it creates on their services. It is critical that the legislation be maintained, as without the bargaining Code framework the commercial arrangements that have been struck to-date would not have been possible.
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The ACCC’s original findings on the market power held by Google and Meta have been confirmed in recent ACCC analysis (February 2022) that highlighted that these platforms continue to hold a dominant position in the supply of search and social services respectively. As such, the policy analysis that underpinned the creation of the media bargaining Code remains valid.
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This bargaining code framework, including FOA, has become the model for other countries looking to address the fundamental competitive imbalance between digital platforms and news media businesses, for example the recently introduced C-18 Bill in Canada and the UK Government’s response to the consultation on a new pro-competition regime for digital markets.
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However, Free TV submits that improvements can be made to the framework to ensure that all eligible news media businesses are fairly remunerated for their news media content, including as existing commercial arrangements come up for renewal. Critically, this must include video news content on social video platforms such as YouTube.
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Accordingly, to maintain incentives on digital platforms to seek commercial arrangements, the Government should:
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issue a statement of expectations on digital platforms that establishes an intention to designate (following the required process in the legislation) Facebook, Google Search and YouTube (and their subservices) if commercial arrangements are not entered and maintained with all relevant news media companies
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Remove the “significant contribution” test in the designation criteria to reinforce that all eligible news media businesses can seek agreements under the Code if the Treasurer determines to designate a digital platform service
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Commit to biennial reviews of the operation of the Code to ensure that it continues to foster genuine commercial relationships and to maintain an effective check and balance on the market power of the digital platforms.
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Free TV has also highlighted areas where future reviews should focus, including in relation to the balance of the factors an arbitration panel must consider, the definitions of core and covered news content and the potential for streamlining the ACMA registration process.
Free TV welcomes Treasury report on first year of the News Media Bargaining Code
Free TV Australia has welcomed the release of Treasury’s report on the operation of the News Media and Digital Platforms Mandatory Bargaining Code, which finds that the Code has been successful in achieving its objectives during its first year of operation.
Free TV Australia chief executive Bridget Fair said: “Since the Code’s inception, we have been pleased to see commercial broadcasters entering into agreements with Google and Meta, confirming the value of trusted Australian news to both the platforms and our audiences.
“Without the News Media Bargaining Code, these agreements and the payment for our valuable news content would not have been possible,” Ms Fair said.
Free TV notes Treasury’s recommendation that the Government should direct the ACCC to report on the bargaining power imbalance between news media businesses and digital platforms that use news content, as well as ongoing regular reviews of the Code.
In responding to this recommendation, the Government should also issue a statement that clearly sets out its expectations that digital platforms continue to enter and maintain agreements with all relevant news media companies. If these agreements are not reached, the Government should exercise its power to designate digital platforms under the Code.
This should include services operated by Google and Meta such as Google Search, Facebook Feed and Instagram and social video platforms, YouTube and Facebook Watch, that are a critical path to market for television news services.
“While the Code has so far been successful in incentivising platforms to enter into commercial agreements with news media organisations, this incentive must be maintained. We look forward to engaging with the Government as it develops its response to this review,” Ms Fair said.