Australia’s Nine to merge with Fairfax Media

Hugh Marks

Australia’s Nine Entertainment (NEC) and Fairfax Media have agreed to merge, creating a diversified media group valued at about A$4bn (US$2.97bn).

The new entity will combine NEC’s free-to-air networks and digital businesses with Fairfax’s newspapers and stake in the Macquarie radio networks as well as their jointly owned Oz streamer Stan.

NEC CEO Hugh Marks will be CEO of the new company. NEC shareholders will get 51.1% of the new entity, with Fairfax shareholders having 48.9%.

The move marks the first major deal since the federal government’s media reforms last year, which relaxed the rules governing ownership of TV channels, radio stations and newspapers in the same market.

While there will be annual cost savings of A$50m in areas of duplication, Marks stressed: “This deal is not about costs, it’s about investing in content in the future.”

In a conference call with media and analysts, he added: “This is an exciting day for two companies that at various times in the past few years have probably been written off by people in the media. The two companies have successfully innovated and changed our business models to reflect what audiences and the market is doing around us.”

Marks set a lofty target for Stan, which currently has more than a million subscribers. Hailing the SVoD service as a strong number two to Netflix’s Australian feed, which has an estimated 3.5 million customers, he said Stan would grow its base to between 2.5 million and three million but did not give a timeline.

The exec pointed to the merged businesses’ advantages in acquiring, distributing and amortising content across all platforms and suggested the new Nine would look for deeper relationships with programme suppliers and new sources of content.

Nine will soon be able to provide addressable advertising on non-network platforms so advertisers can target customers in both linear and non-broadcast services, Marks said.

“This will revolutionise the way we do advertising in this market because what we have, that our new competitors Facebook and Google don’t have, is quality, premium Australian content that audiences want to engage with,” he added.

Fairfax directors unanimously recommended the deal unless another company comes up with a better offer. The transaction is expected to be completed by the end of this year after the Australian Competition & Consumer Commission (ACCC) conducts a review.

An ACCC spokesman said: “The purpose of the public review is to assess whether the proposed merger is likely to substantially lessen competition in any market.”

Communications and arts minister Mitch Fifield said the proposition from Nine and Fairfax demonstrated that “our changes to media law are giving the opportunity for Australian media organisations to look at how they can make themselves the strongest they can be.”

However, the Media, Entertainment & Arts Alliance (MEAA) called on the regulator to block the takeover on the grounds of it being bad for Australian democracy and diversity of voices in what is already one of the most concentrated media markets in the world.

MEAA president Marcus Strom said: “Today’s takeover announcement is the inevitable result of the coalition government’s short-sighted and ill-conceived changes to media ownership laws that were always going to result in less media diversity.

“This takeover reduces media diversity. It threatens the editorial independence of great newsrooms at Nine, the Sydney Morning Herald, The Age, Canberra Times, Illawarra Mercury, Newcastle Herald, Macquarie Media and more – right around the country.

“It harms the ability of an independent media to scrutinise and investigate the powerful, threatens the functioning of a healthy democracy, undermines the quality journalism that our communities rely on for information.”