Fairfax not interested in APN

Fairfax Media chief executive David Kirk is ruling out buying a large stake in rival publisher APN News & Media, which owns The New Zealand Herald.

"We don't have any intentions with APN and we won't be part of the [sale] process," Mr Kirk said yesterday. He was in Wellington to speak to clients of sharebrokers First NZ Capital.

Earlier this month, Irish media magnate Tony O'Reilly put his 39.1 per cent stake in APN News & Media up for sale.

Australian sharemarket-listed APN owns The New Zealand Herald, several provincial newspapers, magazines including the New Zealand Listener, and 50 per cent of the Radio Network, as well as Australian assets.

Australian and New Zealand media giant Fairfax owns The Dominion Post and The Press newspapers. Mr Kirk said Fairfax was happy with its media assets in Australia and New Zealand.

"There were no assets [in APN] that we were particularly seeking," he said. He ruled out Fairfax buying The New Zealand Herald alone should it be sold in a break-up of APN.

Mr O'Reilly's Independent News & Media said the move to sell its stake in APN, worth about A$470 million (NZ$560 million) on yesterday's share price, would reduce its debt.

Fairfax has about A$2.5 billion of interest-bearing debt. But if it made a bid for 39.1 per cent of APN it would also have to make an offer for the rest of the company, which would be worth more than A$1 billion.

A fortnight ago, Fairfax Media's BBB minus credit rating was affirmed by Standard & Poor's Ratings Services. But the agency said it thought that Fairfax did not have scope to make large purchases and keep its rating, particularly as advertising was heading into a more difficult period in the economic cycle.

Fairfax wanted to retain an investment grade rating and spare cash would go to pay debt as a priority, Mr Kirk said. Fairfax recently sold assets in Britain and planned to sell a television production business in Australia.

Mr Kirk said the company's gearing was "fine", though it would benefit significantly from falling interest rates. The average interest rate for Fairfax debt is about 8.2 per cent, though the debt is divided into a variety of different terms and rates.

With such a low share price at present, Fairfax would not be "remotely interested in raising equity for an acquisition", Mr Kirk said. "Our share price is much too low for that," he said.

Fairfax Media's shares have been hammered this year, trading at A$1.33 yesterday, down from about A$4.50 at the start of the year.

Its shares fell most recently after Fairfax reported a drop in the first and second quarter earnings at the company's annual meeting in Australia last week.

Asked about the share price, Mr Kirk said the only things Fairfax could control were the earnings and underlying performance of the business, with 8 per cent earnings-a-share growth last year.

"It was a solid performance," he said.

The Australian Financial Review has speculated that Rupert Murdoch's News Corporation might be interested in acquiring the APN stake.

- © Fairfax NZ News