APN is in talks with Fairfax media about a potential merger of NZME with Fairfax's New Zealand assets to create "a leading New Zealand media business, offering depth of news, sport and entertainment coverage across a diverse mix of channels including print, digital and radio," the two companies said this week.
Analysts have 'buy' ratings on both companies and say exiting their New Zealand assets would allow them to better participate in consolidation of the Australian media sector, where media ownership laws are expected to be relaxed next year.
Salt Funds Management managing director Matt Goodson said it looked like the market was reacting to the "robust action" taken by APN.
"I think that you will see the Australian market put quite a high multiple on the remaining Australian businesses -- radio and outdoor advertising," he said.
"The second aspect is that, while a merger is still far from a done deal, there is potentially significant costs and revenue synergies to be had, so the market is feeling its way through the potential upside of those," he said.
- with BusinessDesk
