Nine Entertainment has announced Fairfax Media has come on board as a joint partner for new subscription video-on-demand (SVOD) service StreamCo.

The companies will each inject up to $50 million into the venture over a “multi-year period” which will include advertising and marketing costs.

StreamCo is expected to launch in the 2015 financial year and will be headed by chief executive Mike Sneesby and operated independently of Nine’s and Fairfax’s existing media businesses. NEC CEO David Gyngell and Fairfax boss Greg Hywood will both sit on the board.

Confirmation of the JV follows several days of speculation after reports emerged last week that negotiations had been taking place for three months. Sources told Mumbrella on Friday that while details had yet to be thrashed out, the deal was likely to proceed.

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“Having two of Australia’s pre-eminent media companies as StreamCo’s shareholders strengthens the base of our experience, whilst providing an amazing marketing and promotional platform for our new service. I look forward to revealing more details about our offering in the near future,” Sneesby said.

StreamCo will offer a range of local and international programming to subscribers for a fixed monthly fee and no minimum term commitment. No subscription fee has been disclosed although it is understood it will be around $10 per month.

A joint Nine and Fairfax statement said StreamCo will take a “leading position” in the development of SVOD in Australia and offer a “substantial catalogue” of programs including TV series, movies, kids and family content and local and international documentaries, as well as content from Nine.

“Nine’s deep background in the television industry in Australia and understanding of Australia’s viewing preferences will be complemented by Fairfax’s experience and strength in subscription services and digital products,” the companies said. “The StreamCo service will benefit from the combined marketing and cross promotional capabilities of two of Australia’s leading media brands.”

The technical infrastructure of StreamCo is in the final states and a “number of cornerstone content deals” have already been concluded, the statement added.

The agreement will give both media companies an important foothold in subscription video on demand market which is expected to grow significantly over the next few years. Speculation continues to mount that Netflix will launch in Australia in 2015, while Foxtel already operates Presto in the local market.

Nine chief executive David Gyngell described the JV as a “ground breaking opportunity”.

“The combination of our two businesses will provide the joint venture with unprecedented distribution and awareness. I look forward to building one of Australia’s greatest new media businesses,” he said.

Fairfax chief executive Greg Hywood added: “We’re delighted to join Nine in developing a compelling subscription video service. SVOD is a proven business model overseas, and we look forward to offering this service to our subscribers, and indeed all Australians.

“Fairfax will continue to seek innovative ways to engage and expand our audiences, and this is an opportunity to create value through participating in the next wave of media evolution. Nine is a fantastic partner and we look forward to working with them on StreamCo.”

News of the deal is certain to increase speculation that Nine and Fairfax could pursue a merger, although Fairfax today rejected it was interested in buying a strategic stake in the TV network.

Steve Jones

(Declaration of interest: Nine are currently advertising on this website.)