Media and information services company News Corp. (NASDAQ:NWSA) has secured a significant content-licensing agreement with ChatGPT owner OpenAI, the Wall Street Journal reported. Following the announcement of this deal, NWSA stock jumped 6.3% in Wednesday’s after-hours trading.
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According to the report, the deal’s value could exceed $250 million over a span of five years, including compensation in both cash and credits for utilizing OpenAI’s technology. In return, OpenAI will use content from News Corp.’s multiple consumer-facing news publications to improve user query responses and train its models.
Increasing Demand for High-Quality Content
As generative AI tools like ChatGPT rely on high-quality content to refine their models and develop new products, such as AI-powered search tools, the demand for quality content will likely grow. This trend positions publishers like News Corp. to secure significant compensation for their intellectual property.
It’s worth noting that NWSA’s content is distributed under some of the most popular brands, including the Wall Street Journal, Barron’s, Dow Jones, the New York Post, The Australian, the Herald Sun, and others. This extensive portfolio offers News Corp. a substantial opportunity to strike more content licensing deals in the future.
Is News Corp. a Buy?
News Corp.’s top and bottom lines are under pressure primarily due to lower advertising revenues and lower physical book sales. Nonetheless, NWSA stock is up about 42% in one year, as investors cheered the company’s efforts to transform its business and enhance shareholders’ value. Moreover, it has extended its partnership with Alphabet’s (NASDAQ:GOOGL) Google, which should drive its revenues.
News Corp. stock has two Buy recommendations. These analysts’ average NWSA stock price target of $34.50 implies 32.95% upside potential from current levels.
