What the Nine-Fairfax media mega-merger means

The shock at yesterday's $4 billion Fairfax and Nine mega-merger is arguably the most surprising aspect of what will likely go down as a major turning point in the Australian media industry. The CEOs of the major media companies all spent years lobbying governments to change legislation to allow deals like this to occur. The question was more a matter of “who?” rather than “if?”.

The deal itself still has a long way to go before it’s completed, including ACCC and shareholder approval. But, as the first of the big media consolidation deals, it’s worth looking at it a bit more closely.

From a purely sentimental perspective, it’s no surprise there is outcry in the Fairfax newsrooms that the Fairfax Media brand is disappearing. After 150 years the name and the brand means something to a lot of people. A corporate structure, at least when the deal is first completed, could have been proposed that allowed for Fairfax to remain as a division of Nine, but the fact it isn’t is a clear indication of where things are headed.

Commercial media is not a protected species, and like in any other business, there is little room for sentimentality.

Hugh Marks, CEO of Nine, has made it clear this deal is all about digital. On a call with media and analysts after the initial announcement, there was only the most passing of mentions of the Fairfax mastheads. For Nine the prizes are Domain and Stan.

However, Marks was also keen to stress that 60 per cent of the Nine line-up is made up of news and current affairs.

The narrative over the past 24 hours is that Nine is the marauder at the gates, but there is excellent journalism that goes on at Nine. Last year Nine won two Walkley Awards, and has some passionate and extremely capable journalists working in its newsrooms across Australia. Nine clearly cares about news, having recently completed a roll out of a regional news service, the largest such roll out in years. Nine also seems to want to operate a "multi-brand strategy", and ensuring the quality of the current Fairfax mastheads to attract a particular audience seems like good business.

Fairfax brings some of the strongest media brands in the country to the table, particularly The Sydney Morning Herald and The Age. Until it pulled out of the Nielsen digital ratings recently, the SMH was right near the top of the league. It would be almost unthinkable that the SMH brand in Sydney and The Age in Melbourne (which had the fourth largest audience of all titles in the most recent EMMA audience survey) will disappear. Will they change? Undoubtedly. But, encouragingly for the newsrooms, Nine has said the new Board will adopt the Fairfax Media Charter of Editorial Independence.

It’s almost a certainty that there will be job losses as part of the merger, but Marks was adamant that the majority of the cost savings would be “outside core content creation” departments. There's usually little noise made when back-office functions are "rationalised", but just because they're not on the newsroom floor, it doesn't mean these people aren't vital members of the media industry. Let's hope there's ways to minimise the impact on their roles too.

This isn’t the first newspaper-and-TV-company in Australia, and so it might be helpful to look at who else has gone down this path for a potential future for Nine post-merger. Seven West Media has The West Australian, The Sunday Times, PerthNow.com.au, Seven News Perth and Today Tonight all on the one floor in their Perth HQ.

Michael Beach, Editor of The Sunday Times, told me in an interview at the end of last year that the team had spent a lot of time making sure there is still differentiation between all the distinct news brands, to ensure circulation and viewership for each individual brand remains strong. So, the fundamentals of media still stands true: viewers and readers will switch off if they’ve seen the same thing elsewhere. In that interview Michael told Telum that:

On the news floor people are talking to each other, trading information and working out the best way to cover a story... [Journalists] are naturally competitive, and that is vital to us remaining relevant as a paper. We have to be breaking stories across both TV and the mastheads. We have some people who are very good on all platforms, and there are more and more people, particularly in business and sport, who are comfortable working in all mediums. The journalists’ core responsibility is to work for either a paper or news bulletin, but there’s a lot of [cross platform work] going on, but some people are more comfortable than others.

The reality is that not all TV reporters are able to report for a newspaper, and not all newspaper reporters are able to report for TV.

So what will the new Nine look like?

Like most corporate mergers and integrations it’ll take years for all the pieces to land because there’s a lot to work through. Integrating newsroom operations, IT, HR, advertising sales, property and more won't be easy.

As for the news itself, we'll have to wait and see. Will the investigations that Fairfax has become famous for survive? It’s all still unclear, but, for example, you might see The Age’s Investigations team breaking stories on 60 Minutes; or perhaps Nine's Political Editor and former ABC Political Editor Chris Uhlmann will also get to cover the latest political drama for the venerable Sydney Morning Herald. There are great editorial brands and talent on both sides of the merger equation, after all.

For consumers, well, the jury is out until there’s further clarity on the future of the mastheads and how willing the new Nine will be to allow journalists from different Nine outlets to cover the same story. The fact that Nine will ascribe to Fairfax’s Charter of Independence should give comfort, but overall, more choice for consumers is better. However if neither of these media companies survived the changing media landscape, that definitely would be to the detriment of the nation.

The questions that still remain in terms of news and current affairs:

· What is the future for Fairfax Media’s print operations considering the focus of the merger is on “high growth” opportunities?

· Is there scope to integrate Fairfax’s regional media assets with Nine’s extensive regional TV news operations, or will they be spun off?

· How quickly, and to what extent, will the Fairfax mastheads be integrated with Nine’s newsrooms to save on duplication of news content?

Telum will be watching how the merger and resulting acquisition unfolds very closely. And we’ll also be watching out for the next big media merger, which is definitely a matter of “who” rather than “if”.