TPG a step closer to buying Fairfax papers

Fairfax Media has confirmed private equity company TPG Capital has made an unsolicited approach to buy its three key metro newspapers and online real estate arm Domain.

US-based TPG Capital has put forward a proposal to buy The Sydney Morning Herald, The Age and The Australian Financial Review along with Domain in a deal estimated to be worth about $2.5 billion.

Fairfax chief executive Greg Hywood held a meetings at the company’s Pyrmont headquarters on Sunday and wrote to staff in the evening confirming the proposal.

He said it was a “preliminary indicative” proposal and was still subject to a number of conditions including approval by the Foreign Investment Review Board, Fairfax reported on Sunday night.

The board is now “reviewing” the deal, Fairfax said in a statement.

The offer from TPG, which bought a five per cent stake in the media company in March, comes after Fairfax announced plans last week to shed 125 jobs to help save $30 million, prompting a week-long strike by its journalists.

“Left behind would be Fairfax’s New Zealand business, which had been seeking to merge with fellow publishing group NZME, Fairfax’s Australian regional newspaper unit, its stake in the Macquarie Media radio venture and a 50 per cent share of online streaming network Stan,” the AFR reported.

Last Thursday Fairfax revealed revenues from its news operations had dropped 11 per cent since Christmas.

The only Fairfax business units that managed to significantly lift revenue were Domain – up 10 per cent – and its digital businesses, up 18 per cent.

Fairfax has been planning to spin off Domain into a separate stock market listed entity later this year.

Last week, huge numbers of Fairfax journalists walked off the job for seven days in response to management’s plans to slash a quarter of newsroom jobs.

The media group has been struggling for years with falling revenues as a result of a drop in income from advertisers and declining circulation figures.

TPG was reported in late March to be interested in making a play for Fairfax, but a spike in the media company’s share price at the time apparently forced it to back away.

Speculation about TPG’s latest offer to Fairfax comes a day after the federal government announced a range of changes to Australia’s media laws, including long-awaited plans to scrap the two-out-of-three ownership rule that prevents a company controlling more than two of three radio, television and newspapers in one area.

The government also plans to axe the rule stopping a media proprietor from controlling a TV licence that reaches more than 75 per cent of the population.

If the proposed changes are approved by parliament they are expected to open the way for a raft of consolidation within the media industry.

Source: TPG a step closer to buying Fairfax papers | Perth Now