How News Corp Can Benefit By Partnering With Facebook
Reports suggest that News Corp (NASDAQ:NWSA) is in advanced discussions with Facebook for an online subscription partnership. This deal, if it happens, would let News Corp promote digital subscriptions for its newspapers – which include the Wall Street Journal and the Times of London – via Facebook, giving it access to the latter’s 2 billion strong user base. Facebook is increasingly becoming a “go to” platform for users to consume content, and publicizing online subscriptions for key digital media properties via this platform can prove to be beneficial for News Corp and help attract subscribers. According to our estimates, the News and Information Services segment accounts for around 16% of News Corp’s valuation, and circulation and subscription revenues are a key driver for the segment.
See our complete analysis for News Corporation
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We expect News Corp’s circulation and subscription revenues to decline over our forecast period as many customers prefer free (ad-supported) content over paid subscriptions.
However, via its partnership with Facebook, News Corp can provide some of its content for free consumption and encourage users to subscribe to its publications for premium content. Reaching customers via a medium they frequent and providing sample content for free can prove to be an effective strategy for News Corp. As digital advertising revenues decline for media companies such as News Corp, with social media players increasingly dominating this segment, initiatives to grow subscription revenues will be necessary over the long term. While the company has been a relatively slow adopter to social media, and did not participate actively in Facebook’s Instant Article initiatives, it now appears that News Corp is warming up to the changing trends in the media segment, and this could help drive revenues for the company in the long term.
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