First to go? Concerns for Fairfax regional newspapers following Nine acquisition

One of the biggest concerns in Nine’s proposed acquisition of Fairfax is what will happen to its regional and community newspapers. In the announcement yesterday, Nine made it very clear that its main interest was in video streaming platform Stan and property listings website Domain — both with great money-making potential.

It also made it clear it would be reviewing the company to work out what it will keep: “After completing the proposed transaction, Nine will review the scope and breadth of the combined business, to align with its strategic objectives and its digital future,” the announcement said.

Under the merger, Nine acquires all of Fairfax Media, including Australian Community Media, which publishes 160 regional newspapers across Australia. Many of those publications are the only local newspaper for their towns and regions, acquired with the purchase of Rural Press in late 2006. The publisher also has daily newspapers in Woollongong, Newcastle, Ballarat, and Albury-Wodonga.

Fairfax pushes for ABC to fill void

In its submission to the competitive neutrality inquiry into the ABC and SBS — an investigation negotiated in order to pass the laws allowing a Nine and Fairfax merge — Fairfax itself said those newspapers aren’t commercially viable.

In arguing that the ABC should not compete with Fairfax and other commercial players in the online news space, Fairfax said it should shoulder all the responsibility for covering regional and rural areas.

“We do believe that there are, once again, areas where the market can no longer make an adequate return to support a commercial business model … These are the regional areas with small populations and specialist content areas that preserve and support Australian culture,” Fairfax said. “As these areas become increasingly difficult to cover in a way that is commercially viable, it is the duty of the ABC to move in and fill this void.”

Two paragraphs earlier, the same submission said it was “in the public interest to have a thriving, vibrant, diverse local news journalism industry.”

Independents stepping into the breach

Country Press South Australia president Ian Osterman, who edits the indendently-owned The Courier in Mount Barker, told Crikey that Fairfax selling its country papers could be good for their communities.

“Fairfax has pruned staff and resources to its SA country newspapers to the bone, meaning they can no longer produce a product that is as attractive to advertisers and readers,” he said. “The difference in quality between the independent papers and the Fairfax publications is obvious. A few years ago it wasn’t.”

Osterman said the independent papers in SA were still profitable, and sometimes printed almost twice the number of pages as their Fairfax competitors where they were in the same markets.

“As a result I see the possibility that this new media giant … may sooner rather than later come to the view that the ailing Fairfax country media arm is a non-core asset and sell it,” he said. “That may allow a new player into the space with the energy, enthusiasm and expertise to revitalise these struggling papers into what they were before.”

ACM changed its editorial structure earlier this year, restructuring the regional editor roles, making four senior editors redundant.

The business was overhauled in 2015, with jobs cut across the board including 69 positions in the Hunter region in NSW.

In March, Anchorage Capital Partners was reported to be keeping a watching brief on Fairfax and News Corp’s regional assets. Anchorage was also reported to be interested in ACM when private equity firm TPG was preparing an offer for Fairfax last year.

What about the Kiwis?

Across the ditch, the New Zealand branch of Fairfax — called Stuff — will also be reassessed. An attempt at merging it with the country’s other major media company was blocked by the competition regulator because it would not allow enough diversity of ownership. That decision is currently under appeal.

The Australian deal has also prompted talk of other potential acquisitions and mergers in NZ — former Television New Zealand boss Bill Ralston told Stuff that Nine might try to buy the owner of TV network Channel Three. “Nine has got the cash to do it. That would really revitalise Stuff and MediaWorks and create a media organisation with radio, print and TV,” he said. “Nine could do joint programming deals for MediaWorks and it would also work in the area of sports rights quite well I think.”

Nine would not comment on the future of ACM or Stuff if the merger goes ahead.