Fairfax Media and Nine Entertainment have announced plans to merge by the end of 2018.
Fairfax Media will cease to exist with the Nine’s $1.6 billion takeover, ending the association with the man who gave the company its name and marking the end of an era for the 177-year-old publisher of the Sydney Morning Herald, The Age and Australian Financial Review.
The deal will create Australia’s largest integrated media company, combining Nine’s free-to-air television network, Fairfax mastheads Fairfax’s mastheads including The Sydney Morning Herald and The Age, a suite of digital assets including Domain, Stan and 9Now, and Fairfax’s radio interests through Macquarie Media.
This is the biggest media development to come out of the government’s media changes last year which removed how many media voices a company can own in a single market by repealing the two out of three and 75 per cent media ownership rules.
It also concentrates media ownership in Australia even further.
The company will be headed by Nine’s current chief executive Hugh Marks. It will be chaired by Nine Chairman, Peter Costello and will include two further current
Nine directors. Three current Fairfax Directors will be invited to join the Board of the combined firm which will be called Nine.
Under the deal, Nine shareholders will hold 51.1 per cent of the combined company, and Fairfax shareholders will hold the remaining 48.9 per cent.
In his statement, Mr Marks said the merger would “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.”
“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,” Mr Marks said.
“For our agency partners and advertisers, we will provide an expanded marketing platform with even greater advertising solutions underpinned by a significantly enhanced data proposition.”
The merger is expected to deliver annualised savings of at least $50 million over two years
But in a note to staff, Mr Marks said the merger was not about cost reductions.
“Such a merger of two major media groups will of course result in some duplication of functions and you will read about synergies that will be pursued by the business as part of this transaction. But let me stress this merger is not about cost reductions,” he said.
“This merger is all about creating a business with the diversity and scale of revenues and earnings to be able to continue to do what we are all about. Create great content. Distribute it broadly. And engage our audiences and advertisers. Ultimately our people will all have new opportunities across more platforms, brands and identity to connect with audiences,”
The merger comes a week after Fairfax and News Corp announced a deal to share printing presses.
The Australian Competition and Consumer Commission will review the deal to assess whether it is likely to substantially lessen competition.
The journalists’ union has urged the ACCC to block the deal.