Logic may yet prevail with a Fairfax-Seven tie-up

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We've argued for years that Fairfax and Seven would be good together, and been told, 'nah, it's Nine'.

Seems it's not.

With the Senate approval of the media law reform bill and the likelihood it will go through the lower house next month, the prospect of a union between the publishers of the Sydney Morning Herald, The Age and the West Australian is not only possible; it's more realistic.

Inside talk at Fairfax Media - expressed through the columns of the Australian Financial Review, suggests that exploratory talks between Fairfax and Seven West Media have already started.

While " sources" say no transaction is imminent and nine may be, the two have come around to the reality that there might be a spark. Aaron Patrick in the AFR says both companies are talking with "a range of other players", reminding that Fairfax had been talking with Nine - where the stakes in Stan and Macquarie Media were a talking point - at the end of last and early this year. That seemed to stall, possibly because of Nine's wariness of Fairfax's newspapers.

Both Nine - which sold its Packer stable to Bauer - and Seven have magazine business experience, the latter still leveraging and cross-promoting with its TV and other print platforms.

Whether not not you like print newspapers as a business, the fact is that (much of the) money in newsmedia is still being made there, something both (reluctantly) accept. Fairfax's east coast metro papers are also a good fit with Seven's west coast ones. Both also have regional businesses, even if the former APN titles were allowed to slip away to News.

It's a while now since I asked then chief executive Chris Wharton at the old Future Forum in Sydney, when he was going to make a bid for Fairfax. I didn't expect a straight answer, and got told, "we'll buy it from the liquidator".

Wharton has gone now, turning his leave absence into a retirement this March, and Fairfax is looking less like a basket case as the days go by.

Maybe in that context, Seven chairman Kerry Stokes is ready to consider the opportunity before someone else does. It's not all about print - although Seven's assets do now include the Perth Sunday Times, one of Rupert Murdoch's earliest ventures - with both owning radio networks and digital businesses, and Fairfax holding half of VOD service Stan.

Hard to say whether Fairfax chief executive Greg Hywood is up for a deal, despite the brave talk about the group's "very strong position" and desire to be "at the forefront of any industry shake-up". Media law reform provides a "once in a lifetime" opportunity and it will be interesting to see what he makes of it; and whoever buys Ten, it isn't going to be Fairfax.

Fairfax - valued at $2.2 billion and the largest Australian-based media company - would have to come to terms with the long-term debt in the Stokes camp, but a merger could be good for both of them.

Peter Coleman

Pictured: Wharton and Hywood at the PANPA Future Forum in 2013

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