Advertising opportunities, staff cuts and Fairfax disappears: What the Nine Fairfax Media merger will look like

Nine CEO Hugh Marks and Fairfax Media CEO Greg Hywood have broken down some of the bigger questions for investors and the media about the proposed merger between the companies. Mumbrella's Zoe Samios provides you with a wrap.

The proposal to merge Nine and Fairfax Media would have to be one of the biggest deals in Australia’s modern media history.

Two of Australia’s biggest media brands – one a traditional television business and the other an independent legacy publisher with a history dating back more than 150 years – are set to come together before the end of the year.

Nine CEO Hugh Marks (L) and Fairfax Media CEO Greg Hywood (R) announced the news this morning

But as with any merger or acquisition, there are areas to consider. According to Nine CEO Hugh Marks and Fairfax Media’s CEO Greg Hywood, advertising opportunities, $50m in cost synergies, the loss of the Fairfax Media brand and a focus on businesses ‘accelerating growth’ are among some of the big changes to be expected.

What does the merger bring to Nine?

Nine today focused on how the new deal would strengthen its journalistic ability and advertising solutions.

In what he described as a “very exciting day for two companies” that had previously been “written off”, Marks said the deal would revolutionise the way Nine provides advertising solutions. He said it would help fight the likes of competitors Google and Facebook.

“For Nine, as we go into the next year and with the fact that we’ve got a large percentage of our audience consuming our content in an on demand context, we move into a world shortly where Nine will start to be able to serve addressable advertising in our off network platforms,” Marks said.

“This is significant because advertisers can start to target customers around Nine’s premium content. Even better as we go forward across the year, with the scale of audience in that off network platform, we’ll be able to move to targeted advertising across our off network  and linear television broadcast, meaning we can offer advertisers a better, more informed advertising solution that they’ve brought from us in the past.

“What we have that our new competitors – The Googles and Facebook’s of the world don’t – is we have quality, premium, Australian content, that audiences want to engage with.”

Why was this the best deal for Fairfax Media?

Late this morning, Fairfax Media CEO Greg Hywood described the proposed as a compelling offer, congratulating the Fairfax Media staff who had transformed the business into building out the deal.

“Ultimately to deal proposed today is – we believe – the best outcome for journalism, for our employees our business and of course our shareholders,” Hywood said.

“We believe Nine is a great home of the mastheads. Nine, like us, has a long tradition of quality journalism and the scale of the combined business will provide more opportunities for growth and expansion for journalism.

“The merged business will include plenty Fairfax Media DNA in management at the board. There is no certainty that a deal will be finalised, and is it likely to take some months,” he added.

What happens to Fairfax Media and Nine journalists?

This morning the company announced $50m in cost synergies. Fairfax Media, who have undergone years of major staff restructures, were irked by the announcement.

Today, Marks told the media the two companies would still operate their respective digital platforms.

“They will work pretty much as we work today. And we will look for opportunities where working together means we can get great outcomes. There’s certainly no proposal to do anything other than business as usual.”

When pushed more specifically on whether there would be a big Sydney Morning Herald Nine newsroom, Marks simply said “no”.

But he didn’t rule out potential consolidation within editorial. He did, however, point out the deal wasn’t about “cost”.

“This deal is all about investment in content for the future, in our ability to continue to invest in the core competencies that we have across news, sport, entertainment and lifestyle. The 50 million dollar number obviously most of that will come from functions outside the core content creation functions. It’s a duplication of services,” Marks said.

He later added: “There’s never any guarantee in this world, this is a commercial organisation but certainly the principles of the deal are premised on the fact that the benefits of this merged organisation and the efficiency that will be gained through de-duplication of back office functions will enable us to continue to invest in content.”

The loss of the ‘Fairfax Media’ brand has devastated a number of journalists

And what about the Fairfax Media brand?

Since the announcement this morning, Fairfax Media journalists have expressed their disdain for the loss of the Fairfax Media brand. Under the new agreement, Fairfax Media – as a corporate brand – will disappear, with only the mastheads’ names to stand.

But Hywood said the move of the organisation under the Nine media banner was “completely appropriate”.

The important thing is that it’s not about the corporate name of an organisation that matters here, it’s the future of the mastheads,” Hywood said.

“The audience, our readers, connect with the Sydney Morning Herald with The Age, they connected with the AFR, they connected with a variety of publications around the country. That’s what people connect with, that’s what they want. They want that journalism. They want that public good. That’s what is important in all this.

“The good thing about this arrangement this that it puts those mastheads on an even stronger commercial footing than they currently are.”

However, Marks has assured the charter of editorial independence – which Fairfax Media abides to – will be welcomed into the new business.

“It’s an easy thing for us to ascribe to as a board of Nine because judge us not by our words, but our actions. We’ve been in the journalism business at Nine for many years, in this new form of the business.

“If you spoke to any of our journalists on the floor here, I think you’d find our actions are entirely consistent with the charter that Fairfax guides its principles by so it’s a great combination of cultures from that particular perspective,” Marks said.

“The board is more than happy to adopt the principles of Fairfax independence charter.”

Why invest in a print product?

For a number of years, the rhetoric around print has not been optimistic. Cost cuts, lack of advertising spend in print newspapers and magazines, have affected broader perceptions of the publish industry. When Marks was asked about his investment in a major print publisher, he focused on the idea of ‘content’ more broadly.

“We all talk about platforms and the way we look at the business is about content. For us this is all about ensuring that this business has the resources, the revenue model and the revenue mix..that go to be able to fund what needs to be funded because content ain’t cheap. Especially good content ain’t cheap,” Marks said.

“I would imagine any content creator at the end of the day is more focused on that audience that they want to reach, than they are about the platform.”

Marks assured the media the company would continue to invest in Fairfax Media’s regional titles, turning his attention to the effort’s of Fairfax Media in providing journalism “across the country”.

“That is absolutely something that we will continue to invest as we go forward, ensuring that every place that can possibly be supported as we go through this media change is in the best possible position to do it,” he said.


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