Nine Entertainment and Fairfax Media have announced plans for a $4 billion merger, creating Australia’s largest integrated media player.

The combined entity, which will keep the Nine name, will see Nine shareholders hold a 51.1% share and Fairfax shareholders owning the remaining 48.9%.

The proposed merger still requires shareholder approval.

“The Proposed Transaction for Fairfax reflects the success of Fairfax’s transformation strategy which has created value for shareholders through targeted investment in high growth businesses, such as Domain and Stan, and prudent management of our media assets,” said Fairfax CEO Greg Hywood.

“The combination with Nine provides an exciting opportunity to continue to drive incremental value well into the future.

“We are confident that the strength of the combined management team and staff will ensure the continuation of our quality journalism.”

In a release to shareholders, the soon-to-be joint companies revealed the move would deliver cost savings of $50m annually.

Nine’s Chairman Peter Costello, who will Chair the proposed entity, said the merger will leverage the previous success of both companies.

“Both Nine and Fairfax have played an important role in shaping the Australian media landscape over many years.

“The combination of our businesses and our people best positions us to deliver new opportunities and innovations for our shareholders, staff and all Australians in the years ahead.”

The new business will see Nine’s free-to-air network, Domain, Stan, 9Now, The Age, The Sydney Morning Herald, 2GB, Macquarie Sports Radio and many other digital entities all under the same holding.

The changes that allowed the merger

In September last year, the coalition’s media ownership law changes passed the Senate.

These changes removed restrictions such as the “two out of three” rule, which prevented one company from owning newspaper, radio and television stations in the same city and the “reach rule”, which blocked any one TV broadcaster from reaching more than 75% of the population.

It was this relaxation around media ownership that essentially paved the way for the Nine Fairfax merger.

Speaking on Thursday, Minister for Communications Mitch Fifield reminded the press that this legislation had industry support at the time.

“Last year, the Government secured passage through the Parliament of historic media reform legislation with the intention of unshackling Australian media organisations as they face competition from global online media giants,” he said.

“That legislation was supported by Nine, Seven, Ten, WIN, Prime, Southern Cross Austereo, News Limited, Fairfax, Free TV, Commercial Radio Australia and Fox.”

Fifield noted that independent media regulator ACMA had not yet seen any issue with the combined entity, while he anticipated the ACCC to undertake a public inquiry because “this is what the ACCC does.”

Stan and Domain

“I think it's important to recognise that we can't pretend that we're still in the 1980s. We can't pretend that the internet doesn't exist,” Fifield explained.

And it was the internet that led to the inception of one of the lynchpins in this merger – Stan.

Stan was announced in 2014 as a 50:50 joint venture between Nine and Fairfax.

The move came largely in response to the growing popularity of subscription video-on-demand services such as Netflix and viewers shifting away from traditional television broadcasting.

The streaming service recently ticked over one million subscribers and now produces original content.

Under the new agreement Nine will acquire the remaining 50% of Stan.

In light of the decline in print media, Fairfax has also poured resources into its digital property portal Domain in recent years.

Speaking to Fairfax staff, Hywood credited these new businesses with the company’s survival.

“We’ve had some tough times. We all know we’ve had some tough times,” he said.

“But we’ve built these new businesses [Stan, Domain] that have sustained us and grown us through what is an incredibly difficult time that threatened the company.”

It is suspected by some that Stan and Domain were Nine’s primary motivation for the merger.

Pending approval, the merger is expected to be completed by the end of this calendar year.