AAP flying into fresh financial turbulence

ACM was one of the four shareholders that owned AAP until last August along with Nine Entertainment Co (owner of this masthead), News Corp and Seven West Media. Nine and News Corp (which contributed nearly $15 million a year to the newswire) decided early last year they would no longer subsidise the business and tried to shut down the operation.

It was later salvaged by a group of investors and philanthropists led by former Foxtel boss Peter Tonagh while Seven and ACM remained clients. Seven and ACM previously paid about $1 million a year each to the newswire, which produces news stories, data and pictures that are sold to major newsrooms across the country.

“It’s doomed because it was struggling financially when it was owned and backed by the major media players and it has no hope of survival without them,” Mr Catalano said. “Consequently, we have to look at other options including News Corp, which is now out of its non-compete, and any other suitable alternative.”

News Corp launched its own newswire, which provides shared news articles for News Corp mastheads such as The Australian, The Daily Telegraph and Herald Sun. Some of AAP’s clients approached News Corp when the launch was announced but they were prevented from having discussions for six months because of a non-compete undertaking made during the sale of the newswire. News Corp has not pursued prospective clients such as Daily Mail Australia, Solstice Media, Seven or ACM since the non-compete was lifted.

Solstice Media managing director Paul Hamra, who represents The New Daily, InQueensland and InDaily, said the organisation still had an arrangement with AAP. Seven is not expected to review its options until a separate content agreement with News Corp, which allows articles to appear in The West Australian, is up for renewal later this year.

A loss of any large contract to News Corp would be damaging for AAP, which is trying to secure long-term funding from the federal government. Industry sources, who spoke on the condition of anonymity because the discussions were confidential, also indicated AAP was trying to offer Nine some content, a sign that it is doing everything it can to survive.

“Since the completion of the sale, AAP has successfully retained over 90 per cent of its customer base, providing them with a comprehensive wholesale service that seamlessly continues our 85-year record of accurate and unbiased news coverage,” AAP chief executive Emma Cowdroy said. “This high level of customer support shows just how vital the AAP newswire is to the Australian media ecosystem.”

Nine and News Corp provided the bulk of earnings to AAP before the change in ownership. AAP retained key clients such as Daily Mail Australia, Guardian Australia, ACM and Seven during the changover, but they contribute a lot less money to the organisation.

The prospect of AAP’s closure has concerned politicians such as Prime Minister Scott Morrison and opposition leader Anthony Albanese because of the crucial role it has played in the news cycle for decades and publishers such as ACM depend on it. Newspapers and other media outlets received breaking news and articles from court cases and sports matches from AAP that otherwise may have not been written.

AAP appeared before a Senate committee hearing last month asking for annual funding from the government. It has already received a $5 million grant, but the Greens and Labor are now recommending the government create a permanent Public Interest News Gathering Trust to ensure AAP can continue to operate.

“We are pleased that the Greens and Labor have recognised that a sustainable independent national newswire provides significant public good and is an essential pillar of media diversity in Australia,” Ms Cowdroy said. “Supporting AAP means supporting the industry as a whole.” AAP is expected to appear at a Senate media diversity inquiry next week.

Documents filed to the corporate regulator in November revealed AAP lost $10 million in the year before it was sold, with the core newswire losing $5.4 million.