Australia’s two richest and most powerful families, the Murdochs and the Packers, appear to have been snookered by the Fairfax Media takeover of Rural Press which could end the dream of a Fairfax break-up and make it far too big to ever be taken over.
Fairfax Media is about to become a $9 billion Australasian media giant, far bigger than PBL or News Corp when it comes to media assets in Australia and New Zealand.
And the moguls can’t do a thing about it. The ACCC would clearly require News Corp to sell the Telegraph and Herald Sun if it moves on Fairfax, and PBL can’t launch a counter-bid until the laws change next year and that won’t happen until after the merger has been consummated.
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Fairfax shareholders don’t even get a vote on the deal, so Rupert’s 7.5% will be diluted down to about 5%. However, at least the Fairfax share price has only slipped 8c to a still-lofty $5.13 earlier this morning, so Rupert’s book loss is negligible and the market seems to like the deal.
Kerry Stokes is in a similar position. He would love to merge Seven with Fairfax but can’t launch any raid until the laws formally change. That just leaves him with the consolation prize of WA News to pursue.
However, none of this makes today’s merger a good thing. Combining the second and third biggest Australian newspaper companies will significantly reduce competition and diversity.
One of the motivations of John Howard’s new media laws is to reduce the number of phone calls you have to make to call in political favours. A quick call to Fairfax chairman and former Liberal Party treasurer Ron Walker or Brian McCarthy, the Rural Press CEO who takes over the combined group’s Australian operations, could deliver all sorts of editorial favours, particularly if the culture of Fairfax editorial independence is broken down any further.
Rural Press has long been known for its conservative bent and cosy boardroom lunches with Liberal and National Party politicians. They are also infamous for cost slashing and running their papers on a shoe-string, which is not good sign for quality or local journalism.
While it hasn’t been spelled out that Rural Press controlling shareholder John B Fairfax will be one of the two Rural Press nominees on the board, this would be a good thing.
How the wheel will have turned if John B Fairfax ends up as Ron Walker’s successor chairman and the largest shareholder of Australia’s biggest media group shortly after the company’s name was changed from John Fairfax Holdings to Fairfax Media.