Shares of Facebook (FB - Free Report) opened higher on Friday after the Wall Street Journal reported that the social media company is close to announcing its first set of video news shows, from outlets such as Fox News (FOXA - Free Report) and CNN . The questions are can Facebook’s news programming be successful, and maybe more importantly, will it boost Facebook’s top line?
Facebook is reportedly set to introduce news shows for its Facebook Watch video platform, with the Wall Street Journal saying that a few shows could be announced as soon as next week—and some may launch in July. The embattled social media company, which is trying its best to shake off its fake news problem, hopes to use a mixture of daily, weekly, and even monthly news shows from more legitimate sources—big and small—to drown out much of the false news circulating the platform that has plagued Facebook of late.
Mark Zuckerberg’s company is set to finance all of the programming that will appear exclusively on Facebook. The social media powerhouse has reportedly offered publishers between $1 million and $3 million for one-year contracts. Aside from Fox News and CNN, Facebook is negotiating deals with News Corp’s Dow Jones & Co., BuzzFeed, digital-media company ATTN, and others. A Fox News show hosted by Shepard Smith has reportedly already started shooting test footage.
There is still a lot of uncertainty floating around and publishers have been “turned off by Facebook’s shifting strategy.” But this video news push is something that Facebook is likely to go forward with, especially as fellow social media power Twitter (TWTR - Free Report) makes a major live video push, which includes news shows.
This news push also comes just a day after Facebook held its annual stockholder meeting in Menlo Park, California that turned into a chaotic and confrontational event where a plane flew over Facebook headquarters pulling a banner that read "YOU BROKE DEMOCRACY." Yet shares of Facebook climbed 2.2% on Thursday, marking its third straight session of gains, as investors see an opportunity to buy a strong stock at a bit of a discount.
"We're going to make sure that we take a broader view of our responsibility," Zuckerberg said at the meeting. Facebook might see these shows as a start, but it’s unclear how popular these new news shows will be. But it is not too hard to imagine at least some of this news content performing well, especially considering that Facebook now boasts 1.45 billion daily active users and 2.20 billion monthly active users.
Furthermore, as more people ditch cable, these live news offerings could become even more valuable, considering that Amazon (AMZN - Free Report) and others could easily move in this same direction. And, since advertising accounted for over 98% of Facebook’s $11.97 billion first-quarter revenues, churning out more video content is likely one of the last remaining untapped sources of ad sales.
At the end of the day, Facebook investors should pay attention to how these shows are received and how they perform, as they could play a valuable role in a media landscape where streaming giants like Netflix (NFLX) are slowly becoming king.
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