A Fairfax-Nine merger is better than Fairfax collapsing

Arvind Hickman
By Arvind Hickman | 27 July 2018
Arvind Hickman

Before the ink has even dried the knives are out. Former Prime Minister Paul Keating called the new Fairfax/Nine merger ‘a great pity’ and Denis Muller from the University of Melbourne labelled it a ‘modern tragedy’.

The ACCC has not even had a chance to look at a proposed merger between Nine and Fairfax Media and it appears a 150-year-old bastion of independent journalism is dead and buried and media diversity will be irrevocably damaged ...

It is true that Australia’s largest media merger in the past 30 years will have an impact on the diversity of major media players, but in an industry that is in structural decline – is the alternative any better?

Fairfax Media needs a suitor, its current business model is not going to sustain its newspaper business for many more years. 

Under pressure from global digital platforms, audience fragmentation and rapidly shrinking print advertising budgets, the far bigger threat to media diversity is if Fairfax Media’s newspapers continue to decline – as has been the case for several years – to the point where the business is about to collapse.

Since 2012, more than 3,000 journalists have been made redundant and job cuts at Fairfax have been a regular feature.

If the reported $4 billion deal is rubber stamped by the ACCC it means that Fairfax’s mastheads will at least move to a media company that is on more solid commercially foundations.

Nine’s boss Hugh Marks has been honest about the fact that Domain and Stan are the jewels that really sold the Fairfax merger to Nine, but that’s hardly surprising. Nine part owns the successful SVOD business with Fairfax Media. Domain has been the standout performer at Fairfax in recent times and has a partnership with Nine’s flagship renovation show The Block.

Nine must avoid editorial cuts

But what does this mean for Fairfax Media’s mastheads and newsrooms?

Marks said the mastheads and the digital websites would be preserved and there would be no redundancies to “core content creation roles”.

The inclusion of the word “core” is subjective and vague enough to concern Fairfax journos, and it is not inconceivable that some consolidation will occur between newsrooms in the future.

However, there are reasons to believe that Nine will not wield the axe too aggressively, even if some minor tweaks occur.

Although Domain is where a lot of market value is derived, Fairfax Media’s reputational value stems from the great journalism and investigative work of its metro mastheads.

It would be incredibly short-sighted and foolish of Nine to buy a legacy newspaper business with a long-standing reputation for investigative journalism and then gut that part of the business to deliver cost savings.

I would expect Nine to look at how it can leverage Fairfax Media’s talent to strengthen its own news and current affairs division, and vice versa – in a similar way that Fairfax Media’s investigative unit currently works with 4Corners. These synergies should hopefully complement both businesses, rather than cannibalise each other.

Most of the $50 million in cost savings over the next two years will focus on duplication – mostly back office support functions like finance and HR, as well as senior management roles.

What this means for advertisers

There’s another reason why newspapers are likely to stay for the immediate future – advertisers.

The real value of this merger is that it allows Nine to build a single multimedia marketing platform that it can sell to advertisers and commercial partners.

If the deal is rubber stamped, Nine will have assets in linear and subscription on demand TV, newspapers, radio, digital media (including verticals) and events with massive scale, consumer data and reach.

That’s an incredibly powerful platform to go to market and one that should prove attractive to advertisers and media buyers. Depleting any of these assets makes little commercial sense when marketers and media agency partners are increasingly looking for omnichannel solutions.

There will come a time when newspapers are simply no longer, but there is no reason to believe Nine will stop the printing press ahead of its time.

What will be critical for the success of this tie-up, as with most major mergers, is how Nine manages to integrate the two cultures, a point that Havas Media boss Mike Wilson pointed out yesterday.

It’s about ensuring Nine’s management style and focus allows Fairfax Media to be more commercially successful without impinging on the culture and independence charter that has made Fairfax Media the news powerhouse it is. It’s a difficult balancing act ­– but by no means impossible. It’s also a move that is necessary for the newspaper business to remain sustainable.

Nobody knows what the future holds for this potential merger, including both parties, as it’s simply too soon.

But a stronger combined Fairfax Media/Nine entity is surely a better thing than one or both companies struggling.

I will certainly lament the loss of the Fairfax Media brand as a sad day for this industry, but losing the Sydney Morning Herald, The Age, The Australian Financial Review, the Brisbane Times and WA Today would be a far worse outcome for media diversity and democracy in Australia.

I’d rather see Fairfax Media’s legacy continue under Nine than diminish altogether.

By Arvind Hickman, former AdNews journalist

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