Finance Finance News One place you won’t read about the downside of the Fairfax-Nine merger

One place you won’t read about the downside of the Fairfax-Nine merger

The Australian Financial Review defends the Fairfax - Nine merger.
Fairfax's Australian Financial Review has become the vocal champion of the former's merger with Nine Network.
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Opinion on the merits of the controversial Fairfax-Nine merger remains divided as a final vote on its future looms, but in the pages of the Australian Financial Review, Fairfax’s national masthead, the deal is already a clear-cut winner.

Confidence that Australia’s biggest act of media consolidation in decades will be approved continues to grow, prompting more and more media commentators and financial analysts to weigh in on the merger – or takeover, depending on who you read.

An analysis by The New Daily of articles published on the Fairfax masthead’s website since July this year revealed an overwhelmingly positive tone to coverage of the merger.

Of the 33 articles on the topic, The New Daily found:

  • 21 presented the merger in a positive light
  • 11 were balanced with a range of views
  • Only one was outwardly critical of the proposal

At other media outlets the deal remains the subject of intense debate.

The largely positive view of the merger is in marked contrast to the view of the majority of columnists in the rival national print masthead, Rupert Murdoch’s The Australian, and other media outlets.

‘Compelling’ deal?

The major theme within the AFR’s coverage of the merger is the supposed benefit such a deal would have for shareholders, including cheerful quotes from Fairfax chairman Nick Falloon on its “compelling” nature, despite the recent volatility of Fairfax shares.

A selection of AFR headlines.
A selection of headlines from the pages of the AFR conveys the nature of the stories.

In spite of this coverage, many shareholders of both Fairfax and Nine Network have voted with their feet and headed for the exits, cashing in their shares ahead of the final merger vote on Monday, November 19.

As a result, Fairfax has seen its share price fall to a one-year low of 58.5 cents per share, while Nine’s share price has taken a 37 per cent haircut – not typically the desired outcome of a takeover (or ‘value-enhancing merger’) of this nature.

At odds with rival reports

The AFR coverage of the deal sits in direct contrast with that of fellow national news outlet The Australian.

In his column for the Murdoch paper on Saturday, November 10, columnist Terry McCrann said the ACCC-approved merger was a “tragedy” for Nine shareholders.

“An ACCC rejection — which, though, simply could not have happened in all logic and reason — would have been to save chairman Peter Costello from the destructive consequences of his giving his CEO Hugh Mark his delusional head,” he said.

Mr McCrann said Mr Costello should call off the merger or “risk the destruction” of both the company, and its share price.

“That obligation remains,” Mr McCrann cautioned.

Mr McCrann is not alone in his criticisms: in the same paper former Fairfax high-flyer Stuart Simson wrote “the market is making clear where Fairfax and Nine shareholders are landing is probably the worst position of all.”

“Fairfax continues to struggle in monetising its digital audiences with advertising,” he said, adding that Nine, too, faces “some nasty short-term choices”.

The Domain question

Not every commentator is as critical of the deal as The Australian’s suite of authors, however, and those that still see the merger as a positive step tend to focus on Fairfax’s 60 per cent stake in real estate site Domain.

The New Daily understands that Nine believes it can use the popularity of its TV channels to promote Domain and bolster its value, but even Fairfax’s crowning jewel could be more of a burden than a boon – its own financial performance since listing on November 16, 2017, hasn’t been exactly what investors had been hoping for.

Domain blamed its weaker-than-expected financial start to the year on lower property listings in Sydney and Melbourne as confidence in housing markets falters. This means it could potentially end up posting a profit fall in its first full financial year as a listed business.

However, don’t expect to read that headline in the Financial Review.

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