The Nine Entertainment takeover of Fairfax Media has been given the green light, but it won’t be happening as a $4 billion deal as many media reported yesterday and this morning – at least it will be around $3 billion.
The Australian Competition and Consumer Commission said Thursday it approved the deal after extensive discussions and examination of more than 1,000 submissions as well as documents demanded from Nine and Fairfax.
The decision removes one of the final obstacles to Nine owning Fairfax Media’s publications, Domain property listings website, half of the streaming video service Stan, 54.5% of Macquarie Media and its radio network, as well as Nine’s own assets (which include the other half of Stan).
The news saw Fairfax shares edge up to 63.7 cents, a rise of 1.9% and Nine shares rise to $1.71, up 1.7%. But in late afternoon trading the shares lost ground and closed steady on the day before – $1.68 for Nine and 62.5 cents for Fairfax.
At those prices, the combined value of the two companies will be $2.9 billion, a long way from that $4 billion figure.
“We concluded that the proposed merger was not likely to substantially lessen competition in any market in breach of the Competition and Consumer Act,” ACCC chair Rod Sims said.
Mr. Sims acknowledged the merger, which was announced in July, would reduce the number of companies intensely focusing on domestic news from five to four, but said international rivals such as The Guardian and Buzzfeed were providing additional competition.
“Only Nine-Fairfax, News/Sky, Seven West Media and the ABC/SBS will employ a large number of journalists focused on news creation and dissemination,” Mr. Sims said.
“With the growth in online news, however, many other players, albeit smaller, now provide some degree of competitive constraint.”
The ACCC also found while Nine’s television operations and Fairfax’s main media assets generally do not compete closely with each other, their online news coverage could overlap after significant investment in this area from both companies.
It said the deal would likely elevate Nine it alongside News Corp and ahead of the ABC in terms of online coverage.
Mr. Sims said he understood the concerns outlined in many submissions that the impending merger would strip resources from Fairfax culture and journalism.
“The ACCC recognises there will likely be changes to the way Fairfax and Nine operate in future, either due to the changing media landscape more generally or due to the merger itself,” he said.
“However, we reached the conclusion that if such changes do occur, they would not be, to a significant extent, caused by the merger lowering the level of competition.”
Fairfax directors have unanimously recommended that shareholders vote in favour of the deal on November 19, in the absence of a superior proposal. Fairfax’s annual meeting will be held the same day. All being well, the merger, through a scheme of arrangement, should be done by Monday, December 10.
