Fairfax Media could look to tie up with Nine Entertainment Co and Southern Cross Austereo to “better compete with News Corp”, should the government finally pass changes to media laws this year.
An article in today’s print edition of Fairfax paper the Australian Financial Review predicts the three-way tie up between the major media companies in what is described as a “scale up”, bringing together around $4bn in combined revenues in order to compete with News Corp’s interests across its newspapers, Fox Sports, Foxtel/Ten and APN News & Media.
The suggestion comes on the same day senior government MP Dean Smith has signalled plans to abolish the reach rule will be finalised within the next three months.
“We are close to landing on a final position over the summer to be able to present a plan internally in the first quarter of 2016,” Smith told Fairfax Media.
“This six-month extension [between WIN and Nine] is a positive sign that as we move closer to the debate on abandoning the reach rule that regional media consumers and local content issues will be a priority in the future broadcasting landscape.”
A Fairfax-Nine-SCA tie up would potentially make strategic sense and builds on existing strategic relationships, bringing together newspaper, TV and radio assets, as well as their combined digital clout.
Fairfax and Nine are in a joint venture partnership involving subscription video on demand service Stan, while SCA carries some Nine content on its regional TV channels and brings its extensive FM radio assets to the other parties print/digital/television networks.
Should the government allow changes to the media laws, particularly the rule preventing broadcasters reaching more than 75 per cent of the population, it is expected to trigger a wave of mergers and acquisitions with regional players such as Southern Cross Austereo and WIN both already thought to have had preliminary discussions with Nine.
When news of the Nine/SCA talks leaked last November both of the two ASX listed companies were forced to publicly acknowledge the discussions and reaffirm that they “make an appropriate announcement to the market in accordance with its disclosure obligations” if and when a deal was struck.
WIN tipped to be a key player in media reform
Billionaire Bruce Gordon, who owns WIN and a 14.9 per cent stake in both Nine and Ten is also expected to be a key players in the regional acquisitions.
Gordon purchased a larger stake in Nine in October ahead of the expected media reforms. He is also a long term shareholder in Network Ten.
WIN last week also reached a new six month deal with the Nine Network to continue to carry its content, after protracted negotiations over affiliation, with the regional TV network narrowly avoiding going off-air at midnight on New Year’s Eve. As negotiations stalled, prior to Christmas, WIN raised the prospect of a merger.
The timing of the deal is likely to allow both sides to continue broadcasting until the government finalises its position on media reform.