Here's what a merged Nine and Fairfax will look like

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The merged Nine and Fairfax will be a combination of the second-largest largest newspaper publisher in Australia with the second-largest free-to-air television broadcaster.

The new company, to be called Nine, is expected to have almost $2 billion in revenue, making it the second-largest media organisation in Australia, behind News Corp.

Andrew Ledovskikh, a senior analyst with IBISWorld, says the merger will have significant benefits for Nine, with open access to Fairfax’s newspapers and online publications, as well as Fairfax’s Macquarie Media radio interests.

“However, the merger will have possible implications for how Fairfax operates, putting into question, for example, its regular investigative journalism partnerships with the ABC,” says Ledovskikh.

Both newspaper publishing and free-to-air television have been in decline.

“Fairfax has struggled over the past five years, with its revenue declining almost 50% since 2012-13. The company has tried to cut costs, announcing 115 job cuts in May 2017,” says Ledovskikh.

“Nine Entertainment hasn’t seen the same sort of declines, but revenue growth has been stagnant over the past five years.”

The merged media companies will have a suite of high growth digital businesses and a range of leading media brands:

Source: Nine

Nine’s revenue is evolving, becoming a more digital business, as this chart shows:

Source: Nine

And at Fairfax, digital and non-print revenue has been growing between 23% and 39%, according to the latest trading update in May.

Newspaper industry advertising revenue, as a percentage of the total Australian advertising pie, dropped to 8% from 23% between 2012 and 2018.

That’s a $300 million average annual reduction in revenue across the industry.

For the full year to June, Nine is expecting to report EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) at the upper end of the previously announced range of $250 million to $260 million.

Fairfax is forecasting 12 month earnings of $272 million to $275 million which is in line with analysts’ consensus.

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