Fri, Jul 27, 2018 - Page 10 News List

Media firms Nine and Fairfax to merge

‘NEW OPPORTUNITIES’:The companies said that the deal ‘unlocks the potential for significant value creation’ by combining content, brands, audience reach and data

AFP, SYDNEY

A woman reads a copy of the Sydney Morning Herald, published by Fairfax Media Ltd, at a cafe in Sydney, Australia, yesterday.

Photo: Bloomberg

Publisher Fairfax Media Ltd and Nine Entertainment Co yesterday announced plans to merge, which is to create an integrated Australian media giant across television, online video streaming, print and digital.

According to the deal, Nine will effectively be the dominant partner, with its shareholders owning 51.1 percent of the combined entity and Fairfax shareholders owning the rest.

The new company is to include Nine’s free-to-air television network, Fairfax’s radio interests and mastheads — including the Sydney Morning Herald and the Age in Melbourne — and a suite of digital assets.

The new entity is to be called Nine, with Fairfax ceasing to exist, drawing the curtain on a venerable brand that has been an Australian staple for more than 170 years.

It is the first deal under a controversial new media ownership law passed in Australia in September last year that removed restrictions — in place to protect diversity — that prevented companies from owning newspapers, radio and television stations in the same city.

Major players in the market had long pressed for change, saying that the rules were outdated and did not account for digital media platforms and new publishers like Google and Facebook Inc, and video streaming giants such as Netflix Inc.

Like its international peers, Fairfax has had its profits squeezed as advertising and circulation slump in the digital age, and it has been slashing staff and costs in recent years.

Its board unanimously recommended the proposal, which is expected to deliver significant savings for both companies.

“The Fairfax board has carefully considered the proposed transaction and believes it represents compelling value for Fairfax shareholders,” Fairfax chairman Nick Falloon said.

A merger “unlocks the potential for significant value creation by combining the content, brands, audience reach and data across the respective businesses,” both companies said in a statement.

“The combination of our businesses and our people best positions us to deliver new opportunities and innovations for our shareholders, staff and all Australians in the years ahead,” Nine chairman Peter Costello said.

CMC Markets chief strategist Michael McCarthy said it was more like a takeover than a merger.

“Although the parties are terming it a merger, the terms could be interpreted as a takeover, given the premium Nine will pay for control of Fairfax,” McCarthy said.

According to the proposal, Fairfax shareholders are to receive 0.3627 Nine shares and A$0.025 for each share they hold in Fairfax, representing a 21.9 percent premium to Fairfax’s closing share price of A$0.77 on Wednesday.

The deal is expected to be completed this year, subject to approval from shareholders and the competition regulator, with Nine chief executive Hugh Marks heading up the company and three Fairfax directors joining the board.

News of the deal came prompted some Australian journalists to comment on Twitter.

“Didn’t see this coming. Huge changes for the Australian media landscape,” senior Fairfax reporter Kate McClymont said.

Australian Broadcasting Corp presenter Virginia Trioli tweeted: “They gave away the name ‘Fairfax’? I want to cry.”

The Media, Entertainment and Arts Alliance union said the plan was “bad for Australian democracy and diversity of voices in what is already one of the most concentrated media markets in the world,” and called for it to be blocked.

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