Will Nine + Fairfax Merge? Stream Co Deal On The Table

Written by David Richards     28/07/2014 | 10:48 | Category: IPTV

Days after Netflix said that they will not invest in Quickflix, Nine Entertainment who forked out $1M to buy an 8% share in the content syndication group has approached Fairfax Media with a view to partnering with them in their new Stream Co subscription service that will compete head on with Netflix in 2015, there is also speculation that Fairfax and Nine may merge.

Will Nine + Fairfax Merge? Stream Co Deal On The Table
Fairfax who are left leaning media group who has recently led an anti, Tony Abbott and anti, Coalition campaign in their print titles are being wooed to become joint venture partners in the Nine Entertainment service. 

According to the Australian newspaper the Fairfax board will discuss the proposal when it sits for a board meeting on Wednesday. In the past rumours have surfaced that Nine and Fairfax may merge, if this happened it would see the merged group compete head on with News Limited and Foxtel which is 50% owned by News Limited. 

Earlier this year Nine chief executive David Gyngell played down the possibility of any imminent corporate activity at the company's half-year result, but Fairfax Chairman Roger Corbett is known to be enthusiastic about the idea of merging the publisher of The Age and The Sydney Morning Herald with a free-to-air broadcaster.

The Australian which is owned by News Limited said that If Nine and Fairfax team up on Stream, Nine would gain greater scale and the potential to capture more paying customers by streaming its movies and programs on Fairfax's websites.

Fairfax who are struggling to hold onto print customers delivered a half year result in February in what Crikey described as a "miserable" result compared to the glory days of six years or so ago.

They also reported that some analysts reckon that the Fairfax result a far healthier position than News Limited, which lags behind Fairfax in making the deep cuts to business.

The Australian said that a joint-venture model would enable advertisers to buy cross-platform packages as media companies seek to aggregate as many eyeballs as possible in a disrupted media sector dealing with audience fragmentation.

A partnership with Fairfax would also reduce the cost of Nine's investment, after the media company revealed at an investor day recently that costs relating to their Stream Co-operation could blow out to $65 million, from $40m, which raised concerns among some media analysts.

The Netflix-style service which will take on Foxtel and Netflix will charge consumers for movies and TV programs delivered over the internet and is due to launch in the third financial quarter with users charged $10 a month with no fixed contract for unlimited access. 

This is significantly cheaper than the $19.50 that Foxtel is charging for their Presto service. Nine will not lock users into a contract unlike Foxtel which has a minimum 12 month contract requirement.

The investment by Nine Entertainment in Quickflix provides a means by which Quickflix can market their services to a larger audience using the Nine Network TV stations.This will put further pressure on Foxtel and retailers still selling DVD's via kiosks or retailers such as JB Hi Fi.