The landmark deal is the first major consolidation since the Turnbull government’s relaxation of media ownership laws under reforms passed last year.
Nine’s free-to-air television network, Stan, 9Now, radio interests through Macquarie Media, Fairfax’s real estate arm Domain and mastheads – including The Australian Financial Review, The Sydney Morning Herald, and The Age – will be included within the merger.
The combined entity will be known as Nine, bringing to a close a 177-year association of the Fairfax name with print and news media, and will see current Nine chief executive, Hugh Marks, as the new leader.
Nine chairman Peter Costello will head the new board, with three current Fairfax directors to be invited to join.
The deal was announced to the Australian Securities Exchange by both companies as it opened for trade this morning.
The proposed transaction would be implemented by Nine under a scheme of arrangement, subject to regulatory approvals.
A spokesperson for the ACCC said the regulator would review the merger proposal to assess its impact on competition in the sector. It is expected this would take up to 12 weeks and would involve consultation with industry stakeholders.
Both Nine and Fairfax believe the deal would not present any major competition hurdles.
Fairfax CEO Greg Hywood said the merger was “well within the spirit of the government’s legislation last year”. He said the deal was the “best outcome for or our employees, our business and ultimately our shareholders”.
Under the proposal, Fairfax shareholders will retain 48.9 per cent of the combined entity with Nine shareholders owning 51.1 per cent.
Directors of Fairfax will unanimously recommend that shareholders vote in favour of the merger in the absence of a superior offer, a statement to the ASX said.
In an announcement to staff, Mr Hywood said: “Over the last eight years Fairfax Media has gone from being at the mercy of the non-stop global media revolution to being the best of its breed. And that is why Nine wants to merge their business with ours.”
Mr Marks said Nine’s strong operating momentum had allowed it to invest in the future through businesses such as 9Now and Stan.
“This merger with Fairfax will add another dimension, creating a unique, all-platform, media business that will reach more than half of Australia each day through television, online, print and radio,” he said.
In a media teleconference with analysts, Mr Marks discussed the opportunities the deal created in regard to the future of advertising.
“This will revolutionise the way we do advertising in this market because what we have, that our new competitors Facebook and Google don’t, is quality, premium Australian content that audiences want to engage with,” he said.
Mr Costello said: “Both Nine and Fairfax have played an important role in shaping the Australian media landscape over many years. The combination of our businesses and our people best positions us to deliver new opportunities and innovations for our shareholders, staff and all Australians in the years ahead.”
Chief executive of industry group NewsMediaWorks Peter Miller said the merger represented a very strong story for traditional news brands.
“There are two aspects to this. The first is that it is a tremendous opportunity for digital transformation of two great organisations into one, to harvest synergies and opportunities,” he said.
“Secondly, it provides a powerful marketing platform to reinvigorate news brands working synchronistically. It is a perfect storm where there are opportunities ahead for both consumers and advertisers.”
Australian Association of National Advertisers chief executive John Broome also praised the merger.
“The Nine-Fairfax deal brings together two of the largest digital audiences in the country, as well as big print, streaming, free-to-air and radio audiences,” he said.
“Assuming the deal receives regulatory and shareholder approval, the new company will have an opportunity to provide advertisers with access to quality, segmented audiences on a mass scale.
“We’re optimistic that the merger will create more value for advertisers, but we still need to see more detail to ensure that the deal enhances, rather than diminishes, the consumer experience.”