(The Source: The DRUM)
Both companies are hoping that the merger will deliver annualised cost savings of at least $50 million over the next two years.
Australian media companies Fairfax Media and Nine Entertainment will merge at the end of 2018 to form a new company called Nine, subject to regulatory clearance.
Nine will include a free-to-air television network, Fairfax's newspapers The Sydney Morning Herald (SMH) and The Age, property listings portal Domain, subscription video platform Stan and 9Now, and Fairfax's radio assets.
According to SMH, both companies are hoping that the merger will deliver annualised cost savings of at least $50m over the next two years. Nine chief executive officer Hugh Marks will take charge of the new company, Nine chairman Peter Costello will remain in his position and three Fairfax directors will join the board of the new company, together with two current directors from Nine.
"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," Costello said in a statement, adding that both Nine and Fairfax had played an important role in shaping the Australian media landscape over many years.
Hywood added: “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.”
The Australian Association of National Advertisers (AANA) welcomed the move, saying it is confident that the strength of the combined management team and staff will ensure the continuation of quality journalism.
“The Nine-Fairfax deal brings together two of the largest digital audiences in the country, as well as big print, streaming, free-to-air and radio audiences. Assuming the deal receives regulatory and shareholder approval, the new company will have an opportunity to provide advertisers with access to quality, segmented audiences on a mass scale," said John Broome, chief executive officer of AANA.
"It’s the first major consolidation in the media sector since the Federal government dropped its two-out-of three rule last year and we can expect to see other major moves. We’re optimistic that the Nine-Fairfax merger will create more value for advertisers, but we still need to see more detail to ensure that the deal enhances, rather than diminishes, the consumer experience."