Peter Coleman: Can Seven West and Fairfax finally get it on?
Friday, April 20, 2018 10:23 am
Fairfax Media and Seven West are reported to be talking about a merger.
We've been saying it should happen for so long that some of the fundamental reasons may be going out of date.
But the reality is that the core businesses of Fairfax and SWM unit West Australian Newspapers have more in common than any other projected pairing... newspapers.
Reporting, investigating, collating and presenting news - whether it's on dead trees, or any of a myriad of online formats (digital representations of newspaper pages are back in fashion) - is core both to the metro publisher of the Sydney Morning Herald, The Age and the Australian Financial Review, as to that of the West Australian. Both have regional newspapers, albeit fewer by the minute as Fairfax seeks to shed non-performers; both have magazines in their many forms (including online).
And yes, a national free-to-air TV business would be a useful asset in cross promotion up Australia's east coast, especially as arch-rival News Corp builds its TV presence after taking control of both Foxtel and Sky News.
Nice too, for the great Australian public to have a smidgeon of competition in markets which News has increasingly been allowed to dominate.
With time, things change, and media reform law is in place which would allow a Fairfax-Seven merger now (just as it would have allowed, subject to other considerations, the News acquisition of the Ten Network the Murdoch camp failed to achieve).
Half a decade ago when I raised the thorny topic of Seven bidding for Fairfax with then chief executive Chris Wharton at an industry event in Sydney, the joke was on Fairfax, with Wharton suggesting they'd wait for it to go bust: "We'll buy it from the liquidator," he quipped.
Today, things are a little different, and it is Seven West with money matters on its mind. And for what it's worth, Wharton has gone.
Reports this week about the prospect of a $2.3 billion-plus merger suggest that "share price volatility" may be a problem for SWM. The Australian's Data Room duo of mergers and acquisitions editor Bridget Carter and journalist Scott Murdoch quoted "sources" that chairman Kerry Stokes could be waiting for his company's value to lift before proceeding. Since their report, both shares are up: Seven has risen to 51 cents (valuing it at $769.10 million) and Fairfax is at 69 cents (putting its valuation at $1.59 billion).
The Oz's M&A commentators suggest UBS is "close" to SWM and Fairfax to Macquarie Capital", and raise the possibility that Macquarie itself could be a suitor for Fairfax - despite having "raised its eyebrows at (Fairfax-controlled property site) Domain in the past" - with synergies through its online property site On The House and other property-related interests.
Oh, and the newspapers? While Fairfax's regionals had been excluded from some discussions last year, Carter and Murdoch say they might be retained this time, "before eventual sale".
That's the one that's hard to grasp: You only have to look at the way News Corp Australia markets its interests as one to realise the strategic advantage it gains as a newsmedia publisher.
Not everyone believes in the Data Room reports, website ShareCafe describing it as "odd peculiar". But let's hope they are wrong and that the natural synergies of Fairfax and SWM mean the two can finally get it on.