• Hannah Phillips

The Merger Between Nine and Fairfax May Fail but it’s not a Tragedy

There’s no doubt that the $4.2 billion merger (query takeover) between Channel Nine and Fairfax will change the media landscape in Australia.

It was also inevitable. The advent of 5G communications is going to transform the platforms that deliver news and entertainment.

Consumers will be able to use their smart TVs and mobile devices to access web-based television from myriad sources whenever they want it.

Mike Wilson, CEO of Havas Media ANZ, asked: if the change to the media ownership law was the asteroid, what will happen now to the dinosaurs?

“We have our first answer. And there will be more to come, of course, and the media landscape will be changed dramatically. Mergers (although this looks more like a takeover) of this scale are notorious for throwing up surprises, though, and for Nine the ‘cultural integration’ play will be key, as shareholders are busy celebrating efficiency gains,” Wilson told journalists.

“It will be very interesting to see how ‘News’ reacts – they are rarely outmanoeuvred. And in CBS (Ten) we have a massive foreign media owner who has barely even got started in this market. The new entity ought to represent significant new ‘mixed media’ opportunities for agencies and advertisers (as well as market share gains for Nine) – all the research tells us this is the best way to build brands and sell products and services. The trick will be how fast, and painlessly, the Nine-led operation can restructure capabilities, and some very good talent.”

Contrary to most commentary Nine - Fairfax is not likely to ditch hard news, because hard news sells.

Channel Nine didn’t pay Laurie Oakes big bucks for years to deliver entertainment.

The difference between Nine and Fairfax is that the former was 5% news and 95% entertainment, whereas Fairfax was 50% news and 50% commentary and opinion.

It was this that eventually killed them in the market.

Most consumers don’t want the endless opinions of journalists and will happily tune in to something else.

However there are sufficient of them who are political junkies to warrant a strong 24 hours a day news and current affairs channel like Sky or Fox News and Nine now has the capacity to deliver this.

However mergers between two weak commercial units rarely leads to a strong entity.

Nine Chairman, Peter Costello, said 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.”

Fairfax Chairman, Nick Falloon, said 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.”

The shareholders of Fairfax and Nine will have their fingers crossed that these predictions are true but at the moment there is considerable scepticism in the market place.

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