A dominant newspaper, radio and digital media business would be created in New Zealand by a merger between APN’s NZME and Fairfax’s New Zealand assets.
The companies are in exclusive talks to merge the businesses, which include the two biggest daily newspapers, the New Zealand Herald and the Dominion Post, and Stuff.co.nz, the number one local website which has grown 83% over the last four years.
Combined revenues of the business would be almost $A600 million and two businesses together reach almost every person and every geographic corner of New Zealand.
The companies say the New Zealand businesses are mostly complementary and they want to complete a merger by the end of calendar 2016.
“This is an important opportunity for all of our shareholders to be part of the future of content and journalism in New Zealand,” says Fairfax CEO Greg Hywood.
“The merger would enhance the position the businesses are in to continue to deliver high quality, local content to audiences now and in the future.”
APN CEO Ciaran Davis said: “The combination of these two businesses would provide the necessary capability to continue investing in high-quality local news, sport and entertainment at a time when advertiser commercial investment continues to fragment across international media platforms that do not invest in local content.”
The deal, which would see a listed entity on the NZ exchange and the ASX, needs the approval of New Zealand’s competition watchdog, the Commerce Commission.
APN would then focus on its Australian growth media assets of radio and outdoor. It has said it wants to sell down its regional daily and community newspaper titles.
The company today also launched a $A180 million rights offer and its shares went into a trading halt. The funds will be used to repay some of the APN’s debt.
As part of the plan, NZME will be demerged and exchange listed in New Zealand and Australia by the end of June or in early July. APN shareholders will get one NZME share for each APN share.
APN has an audience of about 3 million in New Zealand and revenue of $A433 million. In the latest market update, APN says New Zealand market conditions are challenging with revenues down 10% at the end of the first quarter.
In the latest half year results, Fairfax’s New Zealand businesses earned $A166 million, down 7.6%. Its combined digital and print audience in New Zealand is 3.2 million.
On paper, the combined audience of both business exceeds the New Zealand population of almost 4.5 million.