Newspaper publisher Fairfax Media Ltd (FXJ.AX) said on Thursday it had agreed to a A$2.16 billion ($1.6 billion) buyout from television network Nine Entertainment Co Holdings Ltd (NEC.AX), in one of the biggest shake-ups in Australian media for decades.
The deal marks the end of an era for the 177-year-old publisher of the Sydney Morning Herald and Australian Financial Review mastheads, which will give up the name of founder John Fairfax under the arrangement with the free-to-air broadcaster.
“We will have a media company of scale and depth, offering digital capacity and opportunities like no other in the region,” Fairfax CEO Greg Hywood said on a conference call with analysts.
The deal comes after the government relaxed cross-media ownership laws in 2017, allowing easier mergers of publishers and broadcasters with overlapping metropolitan markets.
The reforms are expected to unleash further rationalization on the Australian media landscape, where established players have long complained of being handcuffed by cross-ownership rules as they lose viewers and advertising dollars to online heavyweights Facebook (FB.O) and Google (GOOGL.O).
Prime Minister Malcolm Turnbull told LAFM radio the deal “allows two strong Australian brands with great traditions to be able to be more secure”.
Fairfax enticed non-binding bids from US private equity firm Hellman & Friedman and a consortium of TPG Capital Management and Ontario Teachers’ Pension Plan last year. Neither offer progressed after Fairfax opened its books.
The Hellman & Friedman approach was worth up to A$1.25 per share, far higher than the roughly 87 cents per share which Nine will pay in a mostly shares-based transaction. Fairfax has since demerged its property classifieds arm, Domain, cutting its valuation.
Fairfax shares rose 13 percent, to be trading in line with the Nine offer, while Nine shares fell 8 percent.
Earlier this month, Fairfax and newspaper rival News Corp (NWSA.O) said they would begin using the same printing press, another example of traditional media companies putting old enmities to rest to survive the changed environment.
“Scale is the modernity mantra for media,” John Hartigan, a former CEO of News Corp Australia who is now chairman of regional TV network Prime Media Group Ltd (PRT.AX), told Reuters.
“You’re seeing that play out globally with Disney and News Corp and Comcast, and it’s not dissimilar on a national basis in Australia.”
