Australia

AAP 2.0 architect leaves newswire following government handout

The architect of an eleventh-hour bid to save embattled newswire Australian Associated Press left the company as it secured crucial funding from the Morrison government to prevent it from going broke.

Nick Harrington, an investment manager who brought together investors and philanthropists to save the newswire before becoming head of strategy and corporate development, left the loss-making company days after it received a $5 million government grant. AAP, which has lost a string a key media clients, is attempting to secure more external funding through a code that will force Google and Facebook to pay news outlets for their content.

Nick Harrington, the architect behind the AAP 2.0 bid, has left the company.

Nick Harrington, the architect behind the AAP 2.0 bid, has left the company.Credit:James Alcock

AAP chief executive Emma Cowdroy said Mr Harrington's role was always meant to be temporary but there was no indication this was the case before his resignation. He did not mention resignation plans in the only interview he gave about AAP. He did not respond to interview requests on Sunday.

"Nick resigned on September 21st," Ms Cowdroy said. "He was only ever coming across to transition into the new corporate structure." Ms Cowdroy said the role was unlikely to be replaced.

Mr Harrington's abrupt departure comes at a pivotal time for AAP, which is asking the public to help it raise $500,000 (as of Sunday it had raised $123,237). The company has secured a $5 million relief package from the Morrison government and is asking to be included in a new piece of legislation that will force tech giants to pay news media organisations for the existence of articles on their platforms. Mr Harrington was not in charge of lobbying government or the ACCC for funds (AAP chair Jonty Low, chief executive Ms Cowdroy and former Foxtel boss Peter Tonagh led the efforts).

AAP was saved by a group of investors and philanthropists led by Mr Tonagh in late July. It was originally expected to close in June when its previous shareholders Nine Entertainment Co (owner of this masthead) and News Corp Australia decided they would no longer subsidise the business. The service now operates as a non-for-profit with no shareholders and without $15 million in subscriber fees from Nine and News Corp.

The new owners did not anticipate smaller subscribers were not willing to pay as much for the service because it produces less news articles and sacked almost 50 per cent of staff. Seven West Media and Australian Community Media - its two biggest clients - signed three month contracts.

Seven already has a deal in place from when it bought The Sunday Times and digital site Perth Now from Rupert-Murdoch's News Corp several years ago. Media sources have indicated Seven is likely to buy more articles and photos from News Corp once its contract with AAP expires. News Corp, which runs its own national newswire, agreed not to poach AAP clients for six months. After the existing contracts expire and News Corp's non-compete is lifted, more financial pressure could be put on AAP.

Industry sources previously told The Sydney Morning Herald and The Age AAP would go broke if they did not receive funding from government. In addition to the grant, which it has not received in cash, AAP is asking to receive money under a new code being created by the Australian Competition and Consumer Commission that will force Google and Facebook to pay news organisations for the use of articles in their newsfeed and search engine. AAP is currently not eligible to receive funding because does not fall under the definition of a news media business, but it has written to the ACCC arguing its case to be included. ACCC chair Rod Sims previously said the argument for AAP to receive government funding was "compelling".

The newswire has widespread government support despite concerns about its financial viability. Before the Morrison government's funding, Senate crossbenchers Jacqui Lambie, Stirling Griff and Rex Patrick wrote a joint letter to Prime Minister Scott Morrison imploring him to use the Public Interest News Gathering fund to save the newswire.

Separately, Senator Sarah Hanson-Young said the Greens would be willing to help the government pass new laws to make global tech giants pay local news media companies for their content, with one of their conditions that AAP got the money. Media sources said AAP funding was also a condition of the Labor Party's support. Concerns were raised at News Corp in the last few weeks that its newswire could put AAP under further pressure and could ultimately jeopardise bipartisan approval of the code.

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