Fairfax Media will cease to exist by the end of the year – regulators willing.
Nine and Fairfax have agreed to a historic merger in a cash-and-stock deal to create a $4.2 billion company that would reshape Australia’s media landscape.
The combined company, called Nine, will be headed by Nine CEO Hugh Marks. The venerable 177-year-old Fairfax corporate name looks set to disappear.
Nine shareholders will retain 51.1 per cent of the combined entity; Fairfax shareholders will keep the rest.
Three current Fairfax directors will be invited to join the board of the combined business, which will be chaired by Nine Chairman, Peter Costello, and include two further current Nine directors. The merged company will be called Nine.
Not Nine Fairfax but just Nine.
I have to say I’m surprised The Age and SMH have survived this long. I had expected Fairfax to shut them down, sell the AFR, and focus on radio and digital media. That might happen anyway, but at least Greg Hywood has realised a 21% premium for his shareholders. (Yes I realise it is 21% on the currently much lower price than just a few years ago.)
Many of the Fairfax staff have taken to social media expressing their dismay. But frankly they only have themselves to blame. Six years ago it looked like Gina Rinehart was going to take over Fairfax Media and the staff went wild:
A lot of ink and pixels are going to be wasted on a Rinehart takeover of Fairfax. People will talk about the end of democracy, a lack of diversity, perhaps even the collapse of civilisation as we know it.
The first objective of any media company is to earn a profit, or have a patron who will tolerate losses. All the other objectives, promoting democracy, providing alternate voices, enhancing civilisation, whatever, are subsidiary to the first objective. Right now Fairfax can’t earn a profit and doesn’t have a patron.
Media patrons are not unknown or even unusual. As indicated the ABC has the federal government, The Conversation has a consortium of universities, Crikey has Eric Beecher, the Global Mail has Graeme Wood, The Monthly has Morrie Schwartz. This pattern of ownership is hardly surprising. In a 2003 Journal of Law and Economics paper looking at media ownership across 97 countries, Harvard economist Andrei Shleifer and co-authors found two dominant modes of media ownership – government and concentrated private owners.
The apparent concern, however, is that Gina Rinehart is said to be somewhat conservative and the Fairfax papers – especially The Age – are considered to be quite progressive.
Specifically it has been reported that Gina Rinehart has refused to guarantee “editorial independence” at Fairfax. Who can blame her? It isn’t like that “editorial independence” has produced an excellent product commanding a price premium. Fairfax needs to be restructured beyond simply changing the size of the paper. One of the benefits of a takeover is that inefficient and ineffective work practices get abolished.
But some might argue that Gina Rinehart will use Fairfax to push her own views and agenda – as opposed to the current editorial stance. How much of a problem is this really? It doesn’t matter who owns the media – if they cannot attract other paying customers the media patron will lose money and eventually will sell out or shut down.
As I wrote at the time Fairfax doesn’t have a decade. It didn’t.