Seven launches new mag Prevention and ‘could buy Fairfax’

Kerry Stokes’ Seven group could launch a takeover bid for Fairfax, according to analysis carried out by Citigroup.  

Analyst Digby Gilmour says that Stokes has a “once in a lifetime” opportunity to buy Fairfax, reports the Street Talk column in today’s Australian Financial Review.

According to the newspaper, the Citigroup analysis says that bringing Fairfax and Seven together could generate annual savings of $67m, including $50m of job cuts.

Citigroup is basing its analysis on a takeover via West Australian Newspapers in which Stokes is the largest shareholder.

The move would make sense because the assets of the two companies are extremely complementary. Fairfax does not own a metro masthead in Perth, and its online presence, WA Today, has failed to gain traction agains News Ltd and The West’s digital operations. Meanwhile, Fairfax does not have any TV interests to conflict with Seven’s free-to-air network. And unlike Fairfax, the Seven group does not own any radio assets.

However, any such purchase would be bound to be scrutinised by the Australian Competition and Consumer Commission and could trigger a divestment of some of the asets. The cross media ownership regulations state that a person cannot own:

  • a commercial television broadcasting licence and a commercial radio broadcasting licence having the same licence area;
  • a commercial television broadcasting licence and a newspaper associated with that licence area;
  • or a commercial radio broadcasting licence and newspaper associated with that licence area.

(Update: Fairfax Media opened at just over $1.10 this morning, its highest price in more than a month and up about 5% on Friday night’s close.)

(Update 2: Fairfax Digital Media feels we were harsh to suggest that WA Today hasn’t gained traction. That was based on numbers from Hitwise we reported in Mumbrella in February. However, Fairfax points to  the March report of Nielsen/Netratings which is says shows that has 549,940 monthly unique browsers against 459,411 unique browsers at, putting it in second place in the market and closing on, which is at 715,590 uniques.)

(Update 3: Our thanks to Margaret Fearn who points out that the cross media regulations referred to above are out of date, with a more straightforward competition and diversity test replacing them in 2007.)

(Update 4: Fairfax shares closed Monday on $1.13.)

Meanwhile, despite the downturn, Seven’s PacMags is to launch an Australian franchise of healthy lifestyle title Prevention. CEO Nick Chan tells the AFR that it would have a sales target of 70,000 copies a month. The magazine is licenced from the US-based Rodale, which also owns PacMags’ Men’s Health and Women’s Health.

In a press release this morning, PacMags said the title, targeting 40+ women, will launch “in Spring 2009”.


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