Fairfax nine merger

Forget the chatter about “synergies” and “multi-platform distribution models”, the Nine-Fairfax deal is a direct threat to the survival of Australia’s big mastheads, particularly the Sydney Morning Herald and The Age.

That’s not because of the loss of the (relatively weak) Fairfax Media brand. It’s because of the loss of Fairfax Media’s existential purpose.

Let’s go back to the roots of Fairfax as a diversified (what we’d now call a multi-platform) media company in the 1950s and ’60s, when it spread across metro and regional newspapers, magazines, radio and television. The elder Sir Warwick Faifax and his trusty sidekick, Rupert “Rags” Henderson, were open about their goal — to entrench The Sydney Morning Herald.

This evolved with the launch of the AFR and the takeover of The Age, to the goal of being the Australian standard-bearer — almost the owner — of the broadsheet journalism brand, delivered through its big city mastheads.

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That defensive infrastructure morphed and survived through the ownership changes after the elder Warwick died in 1987: the younger Warwick in 1988, Conrad Black in 1992 and the Rural Press reverse take-over of 2008.

It’s why when the board marched up to the Rubicon of ending printing Monday to Friday in 2012, it’s existential purpose wouldn’t let it cross  — what was bad for the mastheads, simply couldn’t be good for the company.

But Nine has its own existential purpose: a culture that aims to put Nine at the centre of Australian television. Now, decisions will be made based on what’s best for Nine in television. The mastheads are now just another bit of someone else’s defensive infrastructure — devalued from kings to pawns.

The bits that Nine really wants are the advertising revenues that come from majority ownership of Domain (on its own, two-thirds the value of Fairfax) and control of its own streaming future through total ownership of Stan.

There are other bits it can make work as profit centres, like the radio networks or the AFR. Will it want to? That’s another question. It may, instead, seek to pay down debt by on-selling.

There are bits it can’t wait to offload, the bits that bring costs not revenues. Nine CEO High Marks has already indiscreetly suggested the regionals will go, although there was some polite walking back over the weekend. Still, they’ll either be moved as a block through private equity (potentially through News Corp on the way) or be closed or sold one by one in the manner that Fairfax has been quietly shedding its New Zealand regional papers since February.

Then there’s The SMH and The Age. Nothing in the scale of the merger makes them more financially viable.

As in all mergers, there will be a hunt on for synergies. Nine has a history of pushing square pegs into round holes to justify takeovers or investments. For example, Crown casino being a venue for the Logies.

So, sure, the printed papers are useful for promoting Stan and practical for distributing Domain. But neither so useful nor so practical as to offset the continued slide in print revenues.

Ramping up the cover price (now at $3) and ending costly regional distribution cut circulation of the Sydney and Melbourne papers to about 80,000 when the company withdrew from publicly audited circulation last year. In Victoria and NSW, with about 5.8 and 7.6 million people, this is printing as promotion, not distribution. Almost performance art.

In a television focused company like Nine, nostalgia for the mastheads is unlikely to keep the printed product alive for long. The killing time? Probably not until after the federal election. But what’s saving it then?

And if there’s no physical masthead, why keep multiple news sites alive? The new Nine is planned as a multi-platform, not a house of brands. Sooner or later, a director or manager will ask, “Aren’t we better off consolidating our news online under a single brand? Isn’t it all about scale?”

And then they’ll say, “Isn’t Nine our brand?”