27 Jul 2018

Takeover terminates trans-Tasman media titan

From Mediawatch, 1:00 pm on 27 July 2018

New Zealand’s biggest news publisher Stuff could soon be under new management. After more than 150 years in publishing, its Australian parent Fairfax Media would cease to exist after a mega-merger with entertainment company Nine. Mediawatch looks at what that might mean for the news business here.

Australian TV channel Nine breaks the news that it's taking over publisher Fairfax Media.

Australian TV channel Nine breaks the news that it's taking over publisher Fairfax Media. Photo: screenshot

The way the mega-merger news broke spoke volumes about who was in the driving seat.

Nine's morning TV show Today had a heads-up to air the breaking news just as the Australian Stock Exchange (ASX) was notified.

By contrast, Fairfax Media's employees got a simple 'all staff' email from chief executive Greg Hywood letting them know the deal had been done. 

The email Fairfax staff received as the merger news broke.

The email Fairfax staff received as the merger news broke. Photo: screenshot

Fairfax owns flagship Australian newspapers The Sydney Morning Herald and Melbourne's The Age and 60 percent of the lucrative real estate publication Domain.

Hywood told his staff "plenty of Fairfax DNA" would remain in the new company, but the merger is effectively a takeover whereby the grandest old name in Australian news disappears. Its assets will be subsumed into an entertainment-focused company led by the top brass of Nine.  

The deal still has to go through the Australian Competition and Consumer Commission, their version of New Zealand's commerce commission, but lesgislative changes last year mean that's all but a formality. 

It will be Australia's biggest digital media business, but it will have a huge footprint in New Zealand.

Fairfax Media also owns Stuff, which owns the bulk of New Zealand's newspapers, several magazines and the nation's most popular news website.

You wouldn't know that from the coverage of the deal across the ditch. None of the major players in it mentioned New Zealand during the press conferences or the media reports.

The 95-page document submitted to the ASX mentions Fairfax's New Zealand holdings just once - in a two-line blurb summarising the company. None of the New Zealand brands appear on a chart showing the logos of the assets under the umbrella of the big beast-to-be.

Mediawatch's requests for interviews with Stuff were referred to Australia - but in purely financial terms it's not surprising there's not much interest in the New Zealand assets there.


The value of the Nine-Fairfax company is set to be about $NZ4.5 billion. Fairfax New Zealand - later rebranded as Stuff - was valued at just NZ$122 million in late 2016. In Australia, Macquarie bank estimated the current value at A$107. 


What might change here in New Zealand?


"It is understood the Nine camp has already talked about offloading a handful of non-growth and non-core assets including Fairfax's regional media and New Zealand business units," the Fairfax-owned Australian Financial Review reported on Friday


"New Zealand is expected to be a tougher sale. Fairfax has tried and failed, on competition grounds, to offload the company in the past. Analysts were quick to point to a potential merger with Kiwi TV and radio player MediaWorks, which is owned by hedge fund Oaktree Capital Management," the AFR reported.  


Stuff is pursuing a digital media merger of its own here in New Zealand with rival media company NZME. That was declined by the Commerce Commission last year but both parties have appealed and are waiting for a final ruling.


If they get a green light after all, Stuff won't be tied to the Nine / Fairfax outfit now being formed in Australia.


But if the local merger is dead, what then? 

The logos of the new media partners.

The logos of the new media partners. Photo: Supplied

Nine's chief executive Hugh Marks has said nothing about New Zealand but Fairfax's Greg Hywood said Stuff was "free to look at other consolidation opportunities".

That could open the door to another hook-up with NZME under different terms, or a merger deal with MediaWorks which is currently feeling exposed as a radio and TV broadcaster in the commercial marketplace.

Andrew Holden edited Christchurch's daily paper The Press for Fairfax from 2007 to 2012. He moved to Melbourne and was editor of The Age from 2012 to 2016.

He said Stuff's New Zealand management would be left alone to get on with their job, as they had been in the past. 

"So long as the businesses are well run they will leave them alone and that will be a great relief to the (New Zealand) team. Nine would not fight a merger of NZME and Stuff if that was to happen," he told Mediawatch.

Andrew Holden

Andrew Holden Photo: supplied

Media pundits in Australia reckon the new company will want to offload many of the 160 regional and local Fairfax papers there. If so, it seems unlikely they would have much interest in retaining the ones they will have here.

Holden said the regional Australian papers were "brutally exposed" by the merger deal.

"Nine has openly said they [the regional papers] have no future with this new company," he said.

"Nine will not want any distraction from their main game," said Tim Burrowes - the editor and founder of Sydney-based media industry news service Mumbrella


He told Mediawatch there were rumours Rupert Murdoch's News Corp may tie up with private equity investors to sell its regional papers in Australia. 


"Nine may try and piggyback on that deal and flip the regional titles. If there are New Zealand assets which could be part of that deal, it could happen," he said.