News merger talk mere ‘speculation’

Talk of a possible merger between Stuff Ltd and television and radio business MediaWorks is speculation, Greg Hywood, chief executive of Stuff’s Australian parent company Fairfax Media, says.

Stuff’s revenues fell 7.5 per cent to $301 million in the year ended June 25, as an $8m jump in its digital businesses failed to offset a $35m decline in print advertising and newspaper sales, Fairfax reported yesterday.

Fairfax and Australian television company Nine Entertainment Co Holdings last month announced their intention to merge.

That prompted discussion among media commentators of the possible benefits of a similar merger between Stuff, publisher of Stuff, and TV3 owner MediaWorks in New Zealand.

Hywood would not say whether he saw any logic in such an alliance, saying it would not be appropriate or smart for him to ‘‘speculate on speculation’’.

The planned merger of Fairfax and Nine did not constrain Fairfax from advancing any plans with regard to Stuff, he said.

‘‘It is business as usual and we are open to anything that would improve the New Zealand business. We consider all the best options for New Zealand, whatever they may be.’’

Hywood said Stuff’s digital revenues rose 21 per cent thanks to strong growth at its internet provider Stuff Fibre and community website Neighbourly, and now accounted for 18 per cent of Stuff’s total revenues.

Stuff’s operating profit fell 27 per cent to $41m. Its print operations were still profitable, Hywood said. But he said Fairfax was ‘‘resetting’’ Stuff to take advantage of its digital platform.

‘‘The pain of the restructuring efforts will prove worth it as the benefits start to flow in future years and bring forward the time when increases in digital revenue will outweigh declines in print.’’

Fairfax’s total revenues – which dwarf those of Stuff – fell 3 per cent to just under A$1.7 billion (NZ$1.85 billion), with underlying net profit down 12 per cent at A$125 million.

Its result after including oneoff significant items was a loss of A$189m.

The result may be the last before Fairfax is merged with Nine Entertainment.

The companies have said the deal could be completed before the end of the year, though it is still subject to approvals from Australia’s competition regulator and from shareholders.

Under the terms of the merger, Nine shareholders would own 51.1 per cent of the combined entity, which would be led by Nine chief executive Hugh Marks.

Britain’s Financial Times suggested an agreement might not yet be in the bag, noting a decline in Nine’s share price since the deal was first proposed made it less attractive to Fairfax shareholders – who would need to vote 75 per cent in favour of the transaction.

Hywood suggested such talk was premature. ‘‘There is no point speculating whether a share price is appropriate in August when you are not going to be putting something to a vote until nearly the end of the year.’’

There had been no specific discussions with Nine about how it might want to see Stuff managed in the lead-up to the possible merger, Hywood said.