Fairfax and Macquarie to merge radio networks

Fairfax and Macquarie Radio will merge their networks, which will include the leading talkback stations in both Sydney and Melbourne.

Macquarie owns Sydney's dominant 2GB talkback station and 2CH easy listening, while Fairfax owns Melbourne's leading 3AW station, as well as 2UE, 4BC, 6PR and music stations Magic 1278 (Melbourne), Magic 882 (Brisbane) and 96FM (Perth).

Fairfax will receive 54.5 per cent of Macquarie Radio Network (MRN) stock as part of the merger, with MRN's existing shareholders - including advertising magnate John Singleton who owns 71 per cent of the company - owning the remaining 45.5 per cent.

In addition, Fairfax will receive around $18 million in cash as part of the deal.

In a separate transaction, Fairfax will sell its Perth-based 96FM station to APN News & Media for $78 million.

To comply with regulatory requirements of the merger MRN will sell 2CH and the Macquarie Regional Radio Network.

Fairfax chief executive Greg Hywood said the deal should generate cost savings as well as a more attractive proposition for advertisers.

"The merger creates a genuine national talk radio network that was not previously available to advertisers," he said in a statement.

"The merger provides both cost and revenue synergies from enhanced network and sales opportunities that will create a more efficient and effective network for news, talk and sports radio along with music stations."

The managing director of Fusion Strategy, media analyst Steve Allen, agreed that there are a lot of potential cost savings.

"I think there are a good deal of back office economies that they can work out of this," he said.

"Maybe news sharing ... there certainly are some real possibilities."

Mr Allen also noted that it could be the first step on a road for Fairfax to clear the way for a potential merger with the Nine television network.

""It's looking more logical that if they clean up this radio asset business that there is a real potential for Fairfax and Nine Entertainment to merge their interests," he added.

The merged network will be led by MRN's current chief executive Russell Tate as executive chairman, with another MRN nominee, two Fairfax nominees and one independent director rounding out the board.

FRN's managing director Adam Lang will be chief operating officer.

The deal will require MRN shareholder approval, as well as agreement from the Australian Communications and Media Authority.

The companies hope to finalise the merger by March 2015.