Nine and Fairfax want to merge into a new giant of Australian media

Australian groups Fairfax Media and Nine Entertainment announced Thursday their upcoming merger into a giant that will gather including televisions, daily newspapers or streaming sites and upset the media landscape of the island-continent.

This merger is in fact an acquisition since according to the agreement, the shareholders of Nine Entertainment will control 51, 1% of the shares of the new entity, Nine Entertainment Co (NEC).

The new juggernaut will include Nine's network of free television channels, Fairfax radio and its publications, including the prestigious Sydney Morning Herald. or The Age of Melbourne.

The new denomination will at the same time sign the disappearance of the brand Fairfax, present for 170 years in the media universe

This is the first of its kind in a controversial new media ownership law pbaded in Australia last September.

It rescinded restrictions that prevented name of pluralism of information, media groups to hold newspapers as well as radio and television simultaneously in the same city.

Large media groups have long sought a development in this area by stating that these restrictions penalized them in the context of new competition from Internet giants like Google or Facebook or video like Netflix.

– 'Bad for Democracy' –

Like many press groups worldwide, Fairfax has seen its earnings plummet as a result of the drop in advertising revenue and circulation in the digital age. He carried out job cuts and ran a cost reduction campaign.

His Board of Directors "carefully badyzed the proposed transaction and believes that it represents an undeniable value for its shareholders," said the chairman. of Fairfax, Nick Falloon.

The merger "unleashes the potential for value creation by combining content, brands, access to audience and data in all industries," said two groups in a statement

"Nine and Fairfax both played an important role in shaping the Australian media landscape for many years," said Nine President Peter Costello.

"The combination of our activities and our employees will put us in a position to create new opportunities and innovation for our shareholders, our employees and all Australians in the coming years, "he added.

Michael McCarthy of CMC Markets noted that this merger was more of Nine's takeover than the merger.

"Although the parties talk about + merger +, this is more like a takeover considering the premium that Nine pays for Fairfax's control, "he said.

Fairfax shareholders will receive 0.3627 Nine shares and 2.5 cents for each of their Fairfax shares, which is a 21.9% premium to Fairfax's closing price of 77 cents on Wednesday

Fairfax's share gained 12% on Thursday morning, and Nine's share was down 8%. The merger must be completed this year, subject to approval by the regulator.

Her announcement took many Australian journalists out of court.

"I did not see it coming in. It's a huge change in the Australian media landscape," Kate McClymont, one of the world's biggest media makers, said on Twitter. Signed by the Sydney Morning Herald

"They give up Fairfax's name, I feel like crying," tweeted Virginia Trioli, star host of the Australian Broadcasting Corporation, the public network.

Union Media, Entertainment and Arts Alliance has ruled the merger project "bad for Australian democracy, for the diversity of voices in what is already one of the most concentrated media sectors in the world."

The merger comes a few months after the end of last year's acquisition by the American television channel CBS of the third largest television network in Australia, Ten Network.