Facebook strikes first deal with Seven West (ASX:SWM) as media bargaining code looms large

ASX media share will be in the spotlight after Facebook, Inc. Common Stock (NASDAQ: FB) and stuck a deal with Seven West Media Ltd (ASX: SWM).

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX media shares will be in the spotlight after Facebook Inc (NASDAQ: FB) struck a deal with Seven West Media Ltd (ASX: SWM).

The Aussie media group is believed to be the first to sign a letter of intent with the social media titan, according to the Australian Financial Review.

It isn't only Seven West that likes the deal. The Facebook share price broke its four-day losing streak last night.

Seven West first but not last to strike deal with Facebook

Nine Entertainment Co Holdings Ltd (ASX: NEC) and News Corporation (ASX: NWS) are believed to be close to penning their own agreement with Facebook.

The news should keep the Seven West share price close to its two-year high even as the S&P/ASX 200 Index (ASX: XJO) is set to open lower this morning. The company, which owns the West Australian newspaper and Channel Seven free-to-air stations, closed at 54 cents yesterday.

The Nine Entertainment share price and News Corporation share price are also hovering close to multi-year or record highs on the belief that Silicon Valley tech giants will inject more than $200 million a year into local journalism.

Facebook throws a tanty

The proposed media bargaining law has dragged Facebook and Google's owner Alphabet Inc (NASDAQ: GOOG) kicking and screaming to the negotiation table.

Google was the first to capitulate but Facebook played hardball and blocked Australian news organisations (and then some) from posting on its platform. That wasn't to be a well calculated move as Facebook underestimated the public backlash.

It has since promised to restore access to its service to all Australian organisations.

Facebook share price jumps on media bargaining code compromise

Facebook's three-finger salute to Australia also didn't help the Facebook share price. It tumbled for four straight days before news that it struck a compromise with the federal government sent the shares jumping over 2% to US$265.86 last night.

The stumbling block that stopped ASX media groups from striking a deal with Facebook was the "poison pill" clause that gave Facebook the right to immediately terminate deals.

But Facebook has dropped that after the federal government agreed to amend its media bargaining code.

The changes mean that the government will need to consider existing commercial deals between the platforms and media companies before applying the media bargaining code.

The government also has to give the US giants at least a one-month warning before enforcing the code.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors.

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (C shares) and Facebook. The Motley Fool Australia has recommended Alphabet (C shares) and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Oil industry worker climbing up metal construction and smiling.
Energy Shares

ASX 200 energy shares lead the market as US trade deals fuel optimism

ASX energy shares lifted 3.94% as more US trade deals led to improved market sentiment.

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »

A girl is handed an oversized ice cream cone with lots of different flavours.
Best Shares

8 ASX All Ords shares that tripled in value in FY25

Just 8 out of the 500 companies making up the ASX All Ords achieved share price growth of 200% or…

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »