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Nine prepares for trading with Fairfax assets from Monday, announces additional $15m cost savings

Nine has identified an additional $15m in cost savings ahead of Monday’s first day of trading as a joint business with Fairfax Media.

The business, which announced the merger in July this year, confirmed it had already realised $35m of the initial $50m cost cut plan through savings in corporate costs, sales and digital publishing, but had now identified a total of $65m worth of savings – a difference of $15m.

From Monday, Fairfax Media and Nine will become ‘Nine’

Nine has said that $50m of those cost savings will be achieved by June 2019.

“Of the initial estimate of annualised pro-forma cost savings of ‘at least $50m’ to be ‘fully implemented over two years’ as announced in July 2018, Nine confirms that $35m has been realised on implementation.

“A further c$30m, (for a total of c$65m) has now been identified, $50m of which (on an annualised basis) will be realised by June 2019, less than one year after the merger announcement, with the remainder by June 2020. The rationalisation of technology costs is still largely to be addressed.

“These synergies will be above and beyond Nine’s ongoing, business as usual revenue and cost management, which has been a feature of results in recent years.”

It comes the same week as Nine revealed 92 staff would lose their jobs. Today is the last day of work for some of Fairfax Media’s executives, including CEO Greg Hywood, chief financial officer, David Housego, general counsel, Gail Hambly, group director of strategy and corporate development, Dhruv Gupta and human resources lead, Michelle Williams, and director of communications, Brad Hatch. Mark Hawthorne, Fairfax Media’s Victorian publisher, also said farewell today.

The latest announcement comes as the merger is officially implemented. This afternoon on the ASX, Nine announced the appointment of new non-executive directors Nick Falloon, Patrick Allaway and Mickie Rosen to the Nine board. At the same time, it announced the retirement of Nine non-executive directors David Gyngell and Janette Kendall.

In an internal note, CEO Hugh Marks thanked all staff for their patience through the process.

“Monday will be our first day and presents an opportunity to reset and chart our course as one business. In the media landscape, we become Australia’s largest locally owned media company, evolved from two of the great heritage brands, Fairfax and Nine, who have served our community with the best entertainment, content, sport and news journalism for decades,” Marks said.

“Great content means any number of things at Nine: it can be a TV show like The Block which draws millions of viewers every night and captures water cooler discussion, or it can be ground-breaking journalism such as Adele Ferguson’s reporting of banking malpractice that drives community discussion on both a national and local level and forces the sector to reform.

“It can be great entertainment content like Young Sheldon or Billions which is delivered to the device of the audience’s choosing on platforms like Channel 9, 9Now and Stan or can be a radio programs such as Neil Mitchell’s on 3AW which sets the agenda and drives debate across an entire city like Melbourne.

“This is the very special opportunity in front of us.  To continue to create unique content – be it in the entertainment space or in our journalism – that audiences want.”

The merger – which sees Nine take a 51.1% stake in Fairfax Media, a 54.5% stake in Macquarie Media and an 100% stake in Stan – is biggest the proposal to come out of the media reforms. The reforms include the repeal of the two out of three and 75% media ownership rules, since they were passed late last year.

Nine’s share price is up 2.75% today, with shares trading at $1.68. Market capitalisation sits at $1.34b as of 2:30pm.

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