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Australia’s Nine Entertainment is to buy rival Fairfax Media. The move creates Australia’s largest integrated media group, spanning television, streaming video, print and advertising, with a roughly $3 billion (A$4 billion) valuation.

The move was announced Thursday (local time) and caught many by surprise. The companies describe it as a merger, though in practice Nine shareholders will control 51% of the enlarged group. Hugh Marks and Peter Costello, both from Nine, will head the new group, which will retain the Nine name. Fairfax CEO Greg Hywood will leave the business after six months.

The deal sees Nine offer a mix of cash and shares, valuing each Fairfax share at A$0.77, or 22% above its Wednesday closing price. Fairfax directors say they have unanimously agreed to the bid, unless another group comes in with a higher offer. The companies said that combining the two will lead to annual cost savings of $37.5 million (A$50 million) per year, implemented over the next two years.

The deal is subject to regulatory scrutiny by the Australian Competition and Consumer Commission. The commission is expected to take three months to publish its ruling.

The combined group will include the Nine free-to-air TV network, streaming platforms Stan and 9Now, newspapers Sydney Morning Herald and The (Melbourne) Age from Fairfax, as well as stakes in real estate portal Domain, and Macquarie Media’s radio interests.

“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,” Nine chairman Costello said in a statement that was part of its regulatory filing.

“We are confident that the strength of the combined management team and staff will ensure the continuation of quality journalism,” said Fairfax’s Hywood.

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Courtesy of Greg Hywood on Twitter

Australia’s print, free-TV and pay-TV sectors have all been in a state of turmoil and consolidation for several years. They have suffered a combination of high costs and a challenge from online media. Netflix has been notably successful Down Under.

Challenges to the old media order last year forced the Australian government to reduce restrictions on cross-media ownership, cut foreign ownership restrictions, and remove license fees for free TV channels. Annual licenses were replaced with spectrum usage fees instead.

Earlier this year, News Corp. took control of pay-TV leader Foxtel from Telstra and merged it with Fox Sports Australia. Last year, the U.S. network group CBS bought control of Australian commercial channel Ten Network. Ten had tumbled into (bankruptcy) administration after media moguls James Packer and Lachlan Murdoch withdrew their financial support. In another cost-saving measure announced this month, News Corp. and Fairfax agreed to share their newspaper printing presses.