Ontario Teachers join bid for Aussie newspapers
The Ontario Teachers’ Pension Plan has joined a consortium led by U.S. private equity firm TPG Capital in a $2.23 billion bid for the real estate advertising business and prestige broadsheet newspapers of Australian publishing giant Fairfax Media Ltd.
According to Fairfax, TPG Capital’s consortium is offering $0.95 cents per share for three mastheads — Australia’s oldest paper in the Sydney Morning
Herald as well as the Melbourne Age and The Australian Financial
Review — alongside the growing Domain.com.au real estate portal and a handful of other digital assets.
The deal would leave Fairfax shareholders with the company’s current debts and a collection of smaller media assets, including a 50 per cent stake in online video streaming service Stan, radio stations and dozens of regional and community newspapers in Australia and New Zealand.
“The Fairfax Board of Directors is reviewing the Indicative Proposal,” the company said a statement to the Australian Securities Exchange. “The Fairfax Board notes that there is no certainty that the Indicative Proposal is capable of being implemented given the complexity involved in splitting the businesses. This proposed split of businesses may not optimise shareholder value.”
Fairfax said the non-binding, unsolicited bid was subject to several conditions, including shareholder approval and the goahead from the country’s Foreign Investment Review Board.
The consortium bid comes as Australia’s government plans to claw back media ownership restraints in its Tuesday federal budget, advanced signals of which pushed the country’s media stocks up in Monday trading. Fairfax, which has a market capitalization of $2.49 billion, saw its shares rise 2.6 per cent to $1.08.
Prime Minister Malcolm Turnbull’s government is expected to scrap rules which bar a single media owner from having commercial television licences that reach more than 75 per cent of the Australian population or from owning more than two of the three kinds of regulated media (radio, television, print) in the same region.
The changes to Australia’s media laws follow intense lobbying from several industry players, among them Rupert Murdoch’s News Corp, who are grappling with advertising revenue competition from American digital tech giants Facebook and Google. Canada’s government is currently considering its own reforms to media sector legislation as companies within its jurisdiction face similar challenges.
Fairfax last week announced plans to cut 125 journalists at the
Morning Herald, Age and Financial Review — or a quarter of the newsrooms. Staff at the Morning Herald and Age immediately went on a seven-day strike against the cuts, which Fairfax says will result in $30 million in annual savings, but an unsigned editorial that appeared in the Financial Review on Saturday called their efforts “futile.”
Job cuts, of which there have been over 2,000 at Fairfax since 2012, have kept the company’s cost structure in line to turn profits: The company earned $132.5 million in 2016, down from $143.6 million in 2015.
Why the OTPP is eyeing the struggling newspaper business in 2017 is unknown, but Fairfax’s Domain.com.au real estate advertising portal has seen strong growth in the midst of an Australian housing boom. Fairfax announced in February that it was working to spin off Domain into a separately listed company by the end of 2017.
The OTPP, with total assets worth $175.6 billion, is also no stranger to major media deals, most famously selling its 75 per cent stake in Maple Leaf Sports and Entertainment to BCE Inc. and Rogers Communications Inc. in 2012 for $1.07 billion.