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Nine and Fairfax, Two Australian Media Giants, to Merge Nine and Fairfax, Two Australian Media Giants, to Merge
(about 5 hours later)
SYDNEY, Australia — Australian media group Nine Entertainment announced on Thursday it would merge with Fairfax Media in a bid to create an integrated media player that includes print, television and digital assets. SYDNEY, Australia — The Australian media group Nine Entertainment announced on Thursday a takeover of Fairfax Media, publisher of some of the most powerful voices in the Australia’s news industry, in a bid to create a media giant encompassing print, television and digital assets.
The deal, estimated to be worth about $4 billion Australian dollars ($3 billion), would give Nine control of the new company, to be called Nine, with its shareholders owning 51.1 percent of the business. Critics of the deal immediately raised concerns about concentration of media ownership in Australia and the future editorial independence of Fairfax’s prominent publications, which include The Sydney Morning Herald and The Age. The combined business will include Nine’s free-to-air television network and Fairfax’s print and online publications, which include The Australian Financial Review and a lucrative online real estate portal, Domain.
The combined business will include Nine’s free-to-air television network, Fairfax’s print and online publications, including the Sydney Morning Herald and The Age, which are among the most powerful voices in the Australian news media, and the publisher’s lucrative online real estate portal, Domain. “We are confident that the strength of the combined management team and staff will ensure the continuation of our quality journalism,” Greg Hywood, Fairfax’s chief executive, said in a joint statement announcing the merger.
“Over the last eight years Fairfax Media has gone from being at the mercy of the non-stop global media revolution to being the best of its breed,” Greg Hywood, Fairfax’s chief executive, said in a staff message. “That is why Nine wants to merge their business with ours.” Mr. Hywood is expected to leave Fairfax in about six months. The combined company will be called Nine, and Nine’s current shareholders will own a majority of the new business. The deal, estimated to be worth about 4 billion Australian dollars, or roughly $3 billion, is expected to be completed by the end of the year.
He continued, “Working through the details will take a number of months but you can be assured that there will be plenty of Fairfax Media DNA in the merged company and Board.” The deal comes after new legislation last year that eliminated restrictions separating broadcast media from print, allowing media companies to own more outlets in a city.
Though news of the takeover came as a surprise to many, experts had predicted a deal between the two companies after new legislation last year eliminated restrictions separating broadcast media from print, allowing media companies to own more outlets in a city. Opponents of the deal said the changes would lead to less diversity in what is already one of the world’s most concentrated media markets. Most of Australia’s newspapers, radio stations and television broadcasters are controlled by a handful of owners, like Rupert Murdoch’s News Corp. Mr. Murdoch’s company accounts for nearly two-thirds of daily newspaper circulation here while Fairfax accounts for nearly a quarter.
Opponents of the deal said the changes would lead to a less diverse media market in what is already one of the world’s most concentrated media ecosystems. Critics also worried about the impact that Nine, which is known for publishing lighter lifestyle journalism, might have on Fairfax — a journalistic institution in Australia that has long shaped public opinion on politics, business and culture.
The merger has also raised questions about whether Fairfax’s newspapers will be strengthened or weakened by the union with Nine, which is known for doing lighter lifestyle journalism than Fairfax — a journalistic institution in Australia that has long shaped public opinion on politics, business and culture. “This is an exceptionally bad development,” Paul Keating, former Australian prime minister, said in a statement about the merger, which is the first under media reforms passed last year. Mr. Keating was an advocate of rules that prohibited the combination of broadcasters and print media publishers, having once famously said that a media owner could be the prince of print or queen of the screen, but not both.
“News of today’s announcement takeover of Fairfax by Channel Nine will change the news landscape of Australia altogether,” Mr. Keating said.
Though Mr. Hywood said there would be “plenty of Fairfax Media DNA in the merged company,” experts said Fairfax’s rural, suburban and regional publications would most likely have no future within the new combined business.
“It’s catastrophic,” Denis Muller, a senior research fellow at the University of Melbourne’s Center for Advancing Journalism, said of the deal. “It’s clearly a takeover of Fairfax by Nine and it seems Nine will be calling the editorial shots.”“It’s catastrophic,” Denis Muller, a senior research fellow at the University of Melbourne’s Center for Advancing Journalism, said of the deal. “It’s clearly a takeover of Fairfax by Nine and it seems Nine will be calling the editorial shots.”
Nine’s Hugh Marks will be the chief executive of the new company, and Peter Costello, a former Liberal party politician now also with Nine, will be the new chairman. Like many media companies, Fairfax is struggling to keep readers as the number of news outlets online grows. The company’s stock is still below the levels it reached before the global financial crisis, even as the broader Australian market has bounced back.
Fairfax chief executive Greg Hywood is expected to leave the business after about six months. “This merger with Fairfax will add another dimension, creating a unique, all-platform, media business that will reach more than half of Australia each day through television, online, print and radio,” Hugh Marks, chief executive of Nine, said in the statement announcing the merger. “For our audiences and employees, this means we will continue to be able to invest in premium local content across news, sport, entertainment and lifestyle,” he added. Mr. Marks will be the chief executive of the new company, and Peter Costello, a former Liberal Party politician now also with Nine, will be the new chairman.
The deal is expected to be completed by the end of the year. Wall Street last year started a bidding war for Fairfax Media, with two large American private equity firms, TPG Capital and Hellman & Friedman, valuing the company at nearly $3 billion.
Just weeks before those bids emerged, Fairfax said it would have to sharply reduce staffing at many of its newspapers to contain costs and experts concluded the driver behind the bids was Domain, which has quietly become Fairfax’s most lucrative business. Domain’s digital revenue grew 15 percent in the six-month period that ended in December while Fairfax’s overall revenue dropped almost 5 percent.
Both TPG and Hellman & Friedman withdrew last year from buying out Fairfax but did not say why.