NZ papers seen as targets in media free-for-all

New Zealand newspapers owned by John Fairfax Holdings could be broken off and floated on the New Zealand stock market or sold to a private buyer in the frenzy of media buy-ups across the Tasman, analysts say.

Fairfax's open share register - dominated by institutional shareholders - meant it was one of three Australian media companies tipped as likely takeover targets.

Others were Austereo and Southern Cross Broadcasting.

The predictions followed the passing of laws through the Australian Senate this week that will lift the long-standing ownership restrictions in Australia.

Although the new laws will not take effect until 2008, investors are already jockeying for position ahead of the changes. Much of New Zealand's media - including the Herald - is owned overseas.

However, Australian analysts said they believed that Fairfax operations here - including the Dominion Post and the Press - were the most likely of the New Zealand media to be sold in the consolidation because its parent company was ripe for takeover.

Fairfax rival Rupert Murdoch's News Corp bought a 7.5 per cent stake in the company in a Thursday night raid in the latest of a string of media deals since Tuesday.

Analysts described Fairfax's Sydney Morning Herald and Melbourne's Age mastheads as valuable and said it was likely the company's Australian regional assets would be snapped up if they were broken off, with News Corp, APN News & Media and Rural Press among the likely suitors.

New players from the United Kingdom and other parts of the world could enter the market - and cast an eye to New Zealand.

Fairfax's New Zealand newspaper assets could be sold to a private equity buyer or floated on the New Zealand Stock Exchange if they split off, said the financial analysts.

Goldman Sachs JBWere media analyst Rodney Deacon expected the market to react positively, should the float eventuate. "Probably people here would respond quite positively to what is essentially a NZ business returned to being managed and run by New Zealanders and owned by New Zealanders."

Fairfax bought its New Zealand newspapers from NZX-listed Independent Newspapers for $1.2 billion in 2003.

Independent Newspapers was 45 per cent owned by News Corp.

Fairfax spokesman Bruce Wolpe said yesterday he would not comment on speculation.

He said in a statement that the company noted News Corp had indicated its shareholding was "an investment and friendly to the existing board".

"There is every reason for investors to see value in Fairfax and its future," he said.

Analysts said APN News and Media - whose New Zealand interests include the Herald, a range of other newspapers and magazines and the Radio Network - was a likely acquirer of assets. It is controlled by Sir Anthony O'Reilly's Independent News & Media group.

Meanwhile, Deacon said the majority owner of TV3's owner CanWest MediaWorks - Canadian firm CanWest Global - would control any deal involving the network.

"In theory someone could try to step in and buy a blocking stake.

"To buy 10 per cent of the 30 per cent free float in MediaWorks would actually be quite difficult without stumping up a pretty significant price - even then it would still be quite hard."

Some Australian analysts predicted CanWest Global was more likely to be a buyer - possibly of Austereo radio assets or parts of Fairfax - than a takeover target across the Tasman, where it has interests in the Ten Network.

Around four years ago it would have been a "desperate seller", said one, but its finances were largely repaired, it rarely sold assets and in Canada it owned almost every medium.