The decision two years ago by Fairfax to get its Auckland newspapers printed at the APN plant in Ellerslie makes it easier for the two companies to join forces.
The decision two years ago by Fairfax to get its Auckland newspapers printed at the APN plant in Ellerslie makes it easier for the two companies to join forces.
APN’s announcement this week that it has entered into discussion with Fairfax about merging the two companies’ New Zealand businesses kick starts the prospects of the long awaited rationalisation in the newspaper sector. Following closely on the heels of APN’s announced demerger of its New Zealand business and a successful $160 million institutional capital raising, the temptation for Fairfax to join in the creation of a publicly listed New Zealand newspaper company may prove irresistible. Either way the demerged APN will be listed as a standalone company on the NZ stock exchange.
Fairfax would not be drawn on the prospect, citing its continuous disclosure obligations to the stock exchange, but there is no doubt it will be closely considering the possibility of the creation of a giant NZ-based newspaper company. Greg Hywood, Fairfax CEO said a merger would enhance the position of both businesses. Any such move would need the approval of NZ regulators, but it would make sense. APN has already submitted a proposal to the New Zealand Commerce Commission for consideration.
The two companies have a history of cooperation especially since Fairfax made the decision two years ago to rely on APN to print its titles in the major metropolitan area. Their NZ operations were described as “complementary” by Peter Cosgrove, APN chairman in his shareholder address this week.
The creation of a merged company would have minimal impact on the printing set-up of the companies. APN’s sole printing plant at Ellerslie already prints both companies’ mastheads while Fairfax has upgraded its Wellington plant with the installation of a Geoman press from The Age at the now defunct Tullamarine site. It also operates a printing site out of Christchurch in the South Island.
The situation in Australian is more complex, following APN’s stated intention to exit its regional newspapers, mainly located in Queensland. Publishing such iconic titles as The Sunshine Coast Daily, and Gympie Times, the business reported a $10 million annual loss last year.
Both Fairfax and News Limited are likely to be interested, but there is unlikely to be a spirited bidding war as both look for ‘knock down’ prices. News Limited already owns 15% of APN so it’s in the box seat, but if the Fairfax/APN New Zealand deal goes ahead that dynamic could change.
However with Greg Hywood, flagging a dire future for his printed newspapers, APN may face considerable time looking for a good deal.