Nine and Fairfax Media have revealed how they will go about synergising costs once they become one.
In a scheme booklet released on the ASX on Friday, the two media companies said it had undertaken a review of the potential cost synergies that could result from the merger, which is yet to get the ‘go ahead’ from the ACCC (Thursday 8 November is D-Day).
According to the booklet, Nine’s takeover of Fairfax is expected to realise at least $50 million of annualised cost synergies within two years of implementation, excluding costs incurred to realise those synergies and in implementing the scheme.
Approximately $15 million in savings are expected from removing duplication across sales teams, as well as commercial operations.
A streamlining of technology and product-related functions within both businesses is anticipated to deliver a further $15 million in savings.
The consolidation of two publicly listed corporate functions into one, and the integration of Nine’s digital business with Fairfax’s Australian metro media business, is also expected to save around $15 million.
“This will remove or reduce duplicated costs including corporate/head office related costs (such as ASX listing costs and audit costs), corporate and divisional management (including key management personnel), and support-related functions,” the scheme booklet reads.
“Functional areas where duplication of resources is anticipated include finance, human resources, marketing and property services.”
Finally, the new entity plans to save approximately $5 million on content, principally relating to the sharing of lifestyle-oriented content used by different but similar website brands run separately by Nine and Fairfax.
None of the cost synergies expected to be realised depend on the consolidation of Nine’s and Fairfax’s newsrooms or reducing the number of journalists employed in the newsrooms, according to the scheme booklet.
Following the merger, the booklet says Nine will review its set-up to align with its strategic objectives and digital future. Subject to that review, it is intended that Fairfax’s businesses will continue to operate as part of the combined group, including print.
“There are no current intentions to consolidate the regional news operation of Nine and Fairfax under the combined group,” it says.
“It is expected that the combined group will focus on, amongst other things, the strategic benefits for Domain arising from being part of a larger media group with more diverse assets, and the ability to continue to grow Stan as a wholly-owned subsidiary.”
In circumstances where duplication of employee roles is identified, Nine intends to allocate alternative responsibilities to those affected employees within the combined group.
“However, it will not be possible for Nine to offer suitable alternative roles in all instances,” the booklet says.
“Where affected employees are unable to be allocated alternative responsibilities, those employees will receive payments and other benefits to which they are entitled on departure under their terms of employment.”
Fairfax shareholders will meet next Monday at Domain’s offices to vote on Nine’s proposed takeover of the publisher.
