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Stuff the laggard among Fairfax businesses

Stuff has been the laggard among Fairfax Media Group's trans-Tasman businesses in recent months and may be sharpened up for divestment if a merger with Australia's Nine Entertainment Co goes ahead.

The Australian media companies gave a trading update today before lodging documents detailing the A$2.2 billion merger which will put TV channel Nine in the driver's seat.

While Fairfax group revenue since June 30 was down 5 percent, the New Zealand business was the worst performer with a 15 percent decline in New Zealand dollar terms and 16 percent in Australian dollars. Australian community newspaper sales were next, down 10 percent.

Stuff isn't considered core for the merged entity, having previously been touted by Fairfax group chief executive Greg Hywood as a potential growth engine. Last year he said the hyper-local Neighbourly website had turned profitable and had created a compelling digital platform with Stuff's strong online audience.

Fairfax's New Zealand arm this year formally adopted the website's Stuff moniker as its registered name.

The Australian firms are aiming to effect their merger before the end of the year. Annual savings of A$50 million are expected within two years.

Fairfax still has the option of pursuing a Supreme Court appeal to clear a merger with its New Zealand rival NZME, although other tie-ups have been touted as alternatives, such as a deal with MediaWorks. Stuff chief Sinead Boucher last month said consolidation remained essential for the wider industry.

Under Boucher's watch, Stuff has accelerated its digital-first approach, closing down or selling a third of its largely unprofitable community and regional publications. She's also overseen the move into new services including retail broadband, streaming video and electricity retailing.

The New Zealand unit accounted for A$16.2 million of the A$36 million the group spent on restructuring and redundancies in the June year. Stuff's earnings before interest, tax, depreciation and amortisation shrank 27 percent to NZ$40.5 million. Revenue fell 7.5 percent to NZ$301.4 million

Among Fairfax's other activities, revenue at its metro media arm was down 1 percent and flat at metro publishing. Online real estate listings firm Domain posted a 6 percent increase in digital revenue, although total revenue was down 1 percent. Revenue at Macquarie Media rose 3 percent.

The Australian community newspapers division is also seen as ripe for a sale if the merger gets approval. Fairfax said it's still cutting costs.

In contrast, Nine's free-to-air TV advertising was broadly flat in a slightly softer market while digital revenue rose 10 percent. Nine still expects annual earnings before interest, tax, depreciation and amortisation of A$280 million to A$300 million

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