News Corporation

Nasdaq Global Select | Jul 12, 2020, 5:42 AM EDT

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Facebook (FB) Inks Deal With News Corp for Upcoming News Tab

Facebook’s FB news tab, slated to be launched this fall, will reportedly feature headlines from The Wall Street Journal, which is published by News Corp NWS. Although no details of the agreement have been provided, Facebook is likely to pay a licensing fee to The Wall Street Journal.

Per a report from The Wall Street Journal, Facebook’s news tab will also feature headlines from the New York Post and content from The Washington Post, Buzzfeed News and Business Insider, among others.

Facebook is a Popular Source of News

Notably, Facebook is a popular source of news as reflected by a recently conducted survey of Pew Research Centre, cited by TechCrunch. According to the survey, 52% of U.S. adults already get their news from Facebook while approximately 28% and 17% of surveyed adults follow Twitter TWTR and YouTube as news source, respectively.

However, 51% of the surveyed people believe that inaccuracy is a big issue in news provided by the social media platforms. Notably, social media has also been blamed for spreading misinformation and irrelevant news

Facebook through its news tab aims to bring real-time journalism and news into limelight. This is expected to aid the company solidify its presence in the growing digital news market currently served by the likes of Twitter, YouTube, Instagram, LinkedIn, Reddit, Snapchat and Apple AAPL.

In addition to algorithm generated news based on user interest, Facebook’s news tab will be edited by experienced editors to publish breaking and top news stories. We believe a well curated and high-quality news tab will increase user engagement for Facebook.

Reportedly, the news tab will be separate from Facebook’s already existing news feed that displays status updates and friend requests.

Facebook to Face Apple News+ Challenge

Earlier this year, Apple launched Apple News+, an online subscription service that brings together more than 300 digital publishers and newspaper houses. News from publications like The Wall Street Journal and Los Angeles Times feature on the app.

Per The PPA article, Apple News Service has 85 million monthly active users. Additionally, over 5 billion news articles are read on Apple News each month.

Nevertheless, we believe that Facebook’s well curated news tab with handpicked news from some of the leading media houses globally makes the company a strong contender.

Moreover, Facebook’s initiatives to improve privacy, transparency and authenticity of ads, and remove fake accounts are likely to boost user trust and engagement. Further, partnerships with ESPN and Fox for sports related streaming on Facebook Watch are a positive.

However, Facebook continues to be plagued by privacy related issues. Moreover, rising regulatory headwinds, including the antitrust investigation and EU’s investigation into the company’s cryptocurrency Libra, raises concern. The unfriendly regulatory environment is expected to delay Libra’s launch, which Facebook has targeted for the first half of 2020.

Zacks Rank

Facebook currently carries a Zacks Rank #4 (Sell).

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