Nine could sell Fairfax’s NZ arm

Nine has opened the door to selling non-core Fairfax assets on an investor roadshow.

Greg Hywood, left, and Hugh Marks.

Nine has opened the door to selling non-core Fairfax assets on an investor roadshow including the New Zealand business as part of its $4.06 billion merger with the 177-year-old publisher.

Sources said the free-to-air network’s chief executive, Hugh Marks, indicated he would be willing to offload the New Zealand unit, valued at $109 million, during a week of intensive presentations to sell investors on the valuation of the takeover and justify the takeover premium he is offering shareholders. Fairfax tried and failed to sell the New Zealand publishing business last year on competition grounds.

Mr Marks will also listen to expressions of interest from potential buyers of the regional publishing unit, valued at $221m, but sources cautioned Nine could also retain the business or look to keep specific titles tied to its television business.

One such Fairfax masthead is the Newcastle Herald, which operates in the same NSW market as NBN Television, one of Nine’s most profitable stations.

A spokeswoman for Nine declined to comment on potential asset sales, but said the investor roadshow was being well received, an outcome reflected in Nine’s share price last week.

“The shareholder engagement process is going well. We’ve been able to lay out the strategic rationale beyond cost synergies and there is broad support for the opportunity,” the Nine spokeswoman said.

Nine’s stock rebounded after the market initially eroded much of Nine’s proposed premium in the days following the deal’s announcement on July 26.

Shares in Nine finished up 1.28 per cent on Friday at $2.37, although the stock is down from the pre-bid $2.52 level.

While counterbids for Fairfax are possible, the probability does not appear to be high at present.

While practically every Australian media company has spent the past year quietly considering potential purchases, sales or mergers, many remain cautious.

Shares in free-to-air broadcaster Seven West Media rallied last week after the Stokes family ruled out a counterbid for Fairfax Media, reducing the possibility of a bidding war with Nine for Fairfax.

In his first comments since the deal emerged, Mr Stokes said Seven West could prosper without pursuing mergers and acquisitions.

“We’ve got a strong business and we will continue to build on that. The notion of consolidation makes sense where you can leverage that scale to create value,” Mr Stokes told The Australian in an exclusive interview.

“That’s where I think there are potential opportunities, but there’s certainly no necessity out there to do a deal in response to Fairfax and Nine.

“If they are trading that premium to get a bigger business then that makes sense for them. We don’t have a competitive concern.”

Nine’s proposed takeover of Fairfax’s newspapers, radio stations, online media businesses and the 50 per cent of streaming service Stan that it doesn’t already own has heightened speculation that the transaction could set off a deal frenzy as media companies and new entrants try to stake their claim on the digital future.

It was rumoured last week that a consortium including interests associated with John B. Fairfax and Irish media mogul Cameron O’Reilly were considering mounting a challenge to Nine.

The consortium is said to also include Eric Beecher, who operates Private Media, publisher of Crikey, and Bruce Guthrie, a former News Corp editor and co-founder of digital publisher The New Daily.

But sources close to the trio strongly rejected the speculation.

On Friday night Australian Competition & Consumer Commission chairman Rod Sims underscored the importance of the digital platforms inquiry in relation to the Nine-Fairfax deal.

While the market does not believe the competition regulator will intervene in the takeover, Mr Sims talked up the chances.

In his speech, Mr Sims also acknowledged that tech giants were rapidly devouring an industry that had long been dominated by legacy media companies.

“This will be a fascinating ­review, given the considerable changes affecting traditional media in recent years,” he said.

“Significantly, in this matter, we will have the benefit of considerable insight into these changes from our digital platforms inquiry.” Mr Sims revealed he was watching closely the European Commission line of thinking on the power of Google and Facebook.

Nine head of sales Michael Stephenson, meanwhile, has outlined plans to better compete with tech giants for dollars in Australia’s $16bn ad market.

Nine is launching a data-driven addressable TV ad platform, much like one launched last year by Seven to aim ads at consumers in a more targeted way.

In Britain and the US, broadcasters have generated new revenues from brands that want to target ads at a particular region, or even a specific household.

The cost per thousand impressions for pricing addressable TV ad units is typically up to six times higher than a national ad.