Stan set to benefit from Nine Entertainment’s Fairfax takeover

26 July, 2018 by Don Groves

Hugh Marks.

Nine Entertainment CEO Hugh Marks today set a lofty target for Stan once the streaming service is fully owned by the merged NEC/Fairfax Media.

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Marks said Stan will grow its significant audience base (last reported at more than 1 million subscribers) as a strong No. 2 to Netflix by reaching 2.5 million-3 million subs. That would trail Netflix’s estimated 3.5 million customers.

While he did not give a timeline for that target, he stressed the merged businesses’ advantages in acquiring, distributing and amortizing content across all platforms.

“The Stan joint venture has really been an indicator of the success of what these two companies can do together,” he said in a conference call with analysts and media, while suggesting Nine would look for deeper relationships with content suppliers and deals with new suppliers.

Marks will be CEO of the new entity which would be valued at about $4 billion based on the market capitalisation of both companies yesterday.

While there will be annual cost savings of $50 million from areas of duplication, Marks stressed: “This deal is not about costs, it’s about investing in content in the future.”

Marks noted news is core to the DNA of both businesses. Fairfax CEO Greg Hywood said that when Nine first made its approach in early July it made absolute sense to progress the deal.

Hywood said the deal is the best outcome for Fairfax’s journalism, employees, the business itself and its shareholders.

NEC chairman Peter Costello will chair the new board. NEC will own 51.1 per cent with Fairfax shareholders taking 48.9 per cent.

Marks said: “This is an exciting day for two companies  that at various times in the past few years have probably been written off by people in the media, but two companies that have successfully innovated and changed our business models to reflect what audiences and the market is doing around us.”

Nine would soon be able to provide addressable advertising on non-network platforms so advertisers can target customers in both linear and non-broadcast services. “This will revolutionize the way we do advertising in this market because what we have, that our new competitors Facebook and Google don’t, is quality, premium Australian content that audiences want to engage with,” he said.

In an email to staff Marks said: “This merger is all about creating a business with the diversity and scale of revenues and earnings to be able to continue to do what we are all about. Create great content. Distribute it broadly. And engage our audiences and advertisers. Ultimately our people will all have new opportunities across more platforms, brands and identity to connect with audiences.”

Fairfax’s directors unanimously recommended the deal unless another company comes in with a better offer. The transaction is expected to be completed by the end of this year after the ACCC conducts a public review.

An ACCC spokesman said: “The purpose of the public review is to assess whether the proposed merger is likely to substantially lessen competition in any market.”

The Media, Entertainment & Arts Alliance has called on the regulator to block the takeover as bad for Australian democracy and diversity of voices in what is already one of the most concentrated media markets in the world.

MEAA president Marcus Strom said: “Today’s takeover announcement is the inevitable result of Coalition’s government’s short-sighted and ill-conceived changes to media ownership laws that were always going to result in less media diversity.

“This takeover reduces media diversity. It threatens the editorial independence of great news rooms at Nine, the Sydney Morning Herald, The Age, Canberra Times, Illawarra Mercury, Newcastle Herald, Macquarie Media and more – right around the country. It harms the ability of an independent media to scrutinise and investigate the powerful, threatens the functioning of a healthy democracy, undermines the quality journalism that our communities rely on for information.

“Nine and Fairfax must explain how they intend to defend the integrity of independent quality journalism in any combined entity.”

 

 

 

 

 

 

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