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Media industry’s cost-cutting measures may be detrimental to bottomline
Published on: Sunday, October 10, 2021
By: Bernama
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Pic by newsignature.com
Kuala Lumpur: CGS-CIMB Research said it believes the continued cost-cutting measures by local news media companies might actually be detrimental to their bottomline.

The brokerage said since most of these media companies’ cost bases are centered on human capital, this would come at the expense of journalism quality, with news credibility all the more at stake now with fake news proliferating on social media.

“In our view, news producers have a cogent argument against the tech giants. Since they have the global scale, Google and Facebook could easily push down ad rates so that advertisers would go to them instead of local publishers,” it said in a research note Friday. 

“Yet, they are merely news aggregators, while those who produce the news receive a measly sum.”

At this point, there is no certainty that the Australian episode with Google and Facebook will pave the way for other countries to follow suit, the research house said in reference to Google’s compensation deal with Australian news companies.

“However, recall that in April 2020, the Malaysian Newspaper Publishers Association urged the government to table a similar law that the Australians had proposed,” it added.

The Australian government and news producers - chiefly News Corp - had for years pressured Google and Facebook to start compensating local publishers for the news links and snippets that surfaced on their search engines.

The argument is that these technology giants have benefited immensely from the advertising that appears when people search for these news items, yet the news producers do not get reimbursed for their work. In July 2020, the Australian government presented the draft for the News Media Bargaining Code.  

In early 2021, Google threatened to pull out of Australia but eventually relented in September 2021 to pay News Corp and other publishers in a multi-year deal to compensate these news companies an undisclosed sum.

Facebook, however, chose to block users from posting links to content produced by Australian news producers.



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