Fairfax’s Director of Corporate Affairs, Bruce Wolpe has told radioinfo it is “too early to say” whether the company will divest or retain its radio assets, and Rural Press Managing Director Brian McCarthy says it will be at least 5 to 6 weeks before the newly merged companies work out any details about the radio stations they own.

Wolpe has told radioinfo: “We have had no discussions to that level of detail yet. We have great regard for the radio stations, they are terrific… we look forward to continuing with them and achieving logical growth if that makes good sense, but it is impossible to say anything more about our strategy at this time.”

And McCarthy, who has been Rural Press’ Managing Director since 1994 and now becomes Deputy CEO of the new company, told radioinfo:

“Rural Press is very fond of its radio stations, we have been involved with the South Australian stations particularly for a long time, they are good stations, but now it is a matter for the Fairfax board, and what their attitude will be I just can’t say at the moment.”

radioinfo put to McCarthy the hypothetical scenario that Helen Coonan’s new media regulations encourage companies like Fairfax to diversify their audio visual offerings, and that radio stations would be able to generate audio and multi-media content to supplement the heavily print based content offered by the companies’ existing print and web products. McCarthy agreed that, hypothetically such a scenario makes sense when viewed with from the Communications Minister’s point of view, but that it would ultimately be a matter for the new board’s business strategy.

McCarthy says he is planning to stay on with the new company, but will not be a member of the new board.

Some analysts are guessing the company will offload its 9 radio stations in Queensland and South Australia, but a counter strategy could also make sense.

If the newly merged Fairfax company is only interested in print and online, then the stations are expendable and not part of its core business, but if expanding its digital and cross-media output is in the company’s future strategy, then not only could it keep its radio stations, but the impending new laws would give it the ability to grow its radio assets and leverage newsroom synergies in many rural markets. Fairfax would of course need significant capital to achieve that strategy and willing sellers offering stations.

Last year radio broadcasting contributed $5.2 million revenue to the company’s bottom line, a drop in the ocean compared with the nearly $300 million total earned by Rural Press in the last financial year.

Fairfax today rejected suggestions it merged with Rural Press to stop Fairfax from being a takeover target. The deal will make the combined group the largest integrated media company in Australasia, worth about $9 billion. The Rural Press board has backed the cash and scrip offer, but the process will still have to go through a number of approval stages within both companies before it is completed.

Announcing the intention to merge John Fairfax Holdings, a public company with an open share register once owned by the Fairfax family, with Rural Press, controlled by majority shareholder John B Fairfax, the company says its strategy is to create “Australasia’s largest integrated metro, regional and rural print and digital media business,” with “operational synergies, revenue diversification and enhanced growth opportunities.”

The company expects to achieve $35 million per year in savings from synergies, being able to offer an expanded network for national advertisers and other enhanced national/local offerings.

A threefold strategy will be employed as the companies move towards completion of the merger by April 2007:

1. Defend and grow our publishing business by:
Continued diversification and expansion;
Strong cost control disciplines;
Continuing to set the news agenda;
Building on Fairfax Media’s recent circulation successes.

2. Rapid growth in digital by: Building deep local news and information sites; Extension of strong positions in classifieds, dating and holiday rentals; Development of new categories and online services.

3. Conversion into a digital media company by: Continued integration of news gathering and story management for multiple media; and further development of capacity to distribute across multiple platforms.

Shares in Rural Press closed up 14% and Fairfax shares closed down 3% on heavy trading today.