Nine is proposing to buy Fairfax, with the company potentially about to cause a major shakeup to the Australian media landscape, a week after Fairfax and News Corp have moved to share print facilities.
The amalgamation will include all of Fairfax’s print mastheads and radio interests in Macquarie Media, Nine’s free-to-air television network, along with a digital portfolio holding Domain, Stan and 9Now.
The merger with Nine is the latest in a number of changes for Fairfax this year, just last week it said it will close its print facilities in Beresfield, Newcastle and Ormiston, Brisbane in a printing deal with long-time rival News. The AMWU said it was blindsided by the decision, voicing concern for the future of around 120 workers at both sites, with it being unclear how many will now be deployed or made redundant by Fairfax.
Under today’s agreement, Nine will acquire all Fairfax shares under a Scheme of Arrangement, with Nine shareholders to own 51.1 per cent of the combined entity and Fairfax to own 48.9 per cent. Fairfax says the merger is expected to deliver annual savings of at least $50m, which will be fully implemented over two years.
The merger is under subject to approval from the ACCC, with the Media, Entertainment & Arts Alliance (MEAA) calling to block the merger.
A timeline has been created for the merger, with Fairfax saying the transaction, if it goes ahead smoothly, should be implemented by December.
[Related: AMWU kept in dark over print deal]
Nine is placing a 21.9 per cent premium on Fairfax shares.It says it expects a group EBITDA of around $250-$260m while Fairfax is expecting a Group operating EBITDA of $272-275m.
Hugh Marks, CEO of Nine says, “Nine’s strong operating momentum has allowed us to invest in the future of our business through each of 9Now, digital publishing and of course, Stan. 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.
“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. 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. For our shareholders, the merged business will generate an increasing percentage of its earnings from high growth digital businesses that provide a compelling opportunity to generate both incremental value and cash flow into the future.”
Greg Hywood, CEO of Fairfax says, “The proposed transaction for Fairfax reflects the success of Fairfax’s transformation strategy which has created value for shareholders through targeted investment in high growth businesses, such as Domain and Stan, and prudent management of our media assets. The combination with Nine provides an exciting opportunity to continue to drive incremental value well into the future.
“We are confident that the strength of the combined management team and staff will ensure the continuation of our quality journalism.”
Lorraine Cassin, national print secretary with the AMWU says, “We accept that the media landscape and consumer behaviour is changing, however, responses to these changes should not come at the expense of good quality news.
[Related: Fairfax and News to share printing]
“Just because the name Fairfax is gone, it does not mean that the important role of print journalism should go with it. Every job lost of the outsourcing of services by sending them offshore, means tighter deadlines and less time for quality control. This will inevitably result in a further reduction in the quality of journalism.”
News also slimmed workers at its print sites in SA and Vic in March, although it did not disclose how many were made redundant.
Three current Fairfax directors will be invited to join the Board of the combined business, chaired by Peter Costello, which will also add two further current Nine directors.
Peter Costello, chairman of Nine says, “Both Nine and Fairfax have played an important role in shaping the Australian media landscape over many years. 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.”
Nick Falloon, chairman for Fairfax says, “The Fairfax Board has carefully considered the proposed transaction and believes it represents compelling value for Fairfax shareholders. The structure of the proposed transaction provides an exciting opportunity for our shareholders to maintain their exposure to Fairfax’s growing businesses whilst also participating in the combination benefits with Nine.”
Fairfax also dropped print distribution for some of its major mastheads in north Qld earlier this year, saying it was no longer commercially viable. Both Fairfax and News were considering their options with potential buyers looking to buy regional and community newspapers.
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