Former prime minister and treasurer Paul Keating has slammed the planned takeover of Fairfax by Nine, saying the "pus" from the "carbuncle" that is Nine's news culture will infect Fairfax and undermine quality journalism.

In a scathing written response to the announcement, Mr Keating said with a majority stake in the combined entity, "Channel Nine will run the editorial policy".

Speaking to 7.30, he said there had been "no moral compass in the guidance of [Channel Nine's] news management ever".

"Foot-in-the-door journalism, cheque-book journalism, you name it, they've been in it."

In his written statement, he said Channel Nine had "never other than displayed the opportunism and ethics of an alley cat".

"Through various changes of ownership, no-one has lanced the carbuncle at the centre of Nine's approach to news management.

"And, as sure as night follows day, that pus will inevitably leak into Fairfax.

Loading

"For the country, this is a great pity."

The Fairfax board of management "sold out", he told 7.30.

"They sold out the culture, they sold out the quality, they sold out their opportunity."

The Federal Government changed the media laws last year to allow such takeovers, ending a long-standing policy introduced by the Hawke government (in which Keating was treasurer), designed to maintain media diversity, which limited cross-ownership of television, radio and newspapers.

Communications Minister Senator Mitch Fifield argued on Thursday that the tie-up between Nine and Fairfax would put the combined entity in a "position to compete with the global giants".

"These matters are still subject to shareholder approval and still subject to regulatory approval," he noted.

"But what this proposition from Nine and Fairfax demonstrates is that our changes to media law are giving the opportunity for Australian media organisations to look at how they make themselves the strongest they can be.

"The whole reason, the whole purpose behind our changes to media law is because we want to see Australian news organisations be strong."

Prime Minister Malcolm Turnbull also welcomed Nine's takeover of Fairfax, arguing it provided a way to counter the collapse of advertising revenue for traditional media companies, and the challenges presented by streaming services such as Netflix.

"I think bringing them together will strengthen both of them … as television and online and print journalism," he said.

Mr Turnbull cited the difficulties newspaper companies have faced from the collapse of advertising revenue, as well as the challenges to television stations posed by streaming services such as Netflix.

"It's a very tough competitive environment nowadays," he said.

"The arrival of all the online news services has made the media so much more competitive than it used to be."

'An exceptionally bad development'

However, Mr Keating wrote that the removal of cross-media ownership laws was "an exceptionally bad development".

"The kind of merger announced today between Channel Nine and Fairfax was bound to happen the moment the cross-media legislation introduced by the Hawke government 30 years ago was suspended," he said.

"The so-called cross-media rule gave Australia 30 years of media diversity, especially between Australia's major television networks and its capital city print.

"Those barriers in the wholesaling of news, underwrote diversity of opinion, guaranteeing an altogether better informed and livelier public debate.

"The absence of those legislative barriers … [will] result in an effective and dramatic close down in diversity and, with it, opinion."

Speaking to 7.30, he said the new laws were "a disgraceful piece of legislation".

"Has everyone ever heard people say, 'We're not getting enough news', 'We don't get diversity of news'? This didn't happen by accident.

"This is all Turnbull and the Liberal Party going back to monopolies. They believe in monopolies at best and duopolies at worst."

He said the new laws were not the best way to respond to the threat to media revenues posed by the rise of international digital companies such as Google and Facebook.

"The big truth is that Facebook and Google have cut a massive swathe out of the revenues, the advertising, of traditional media companies, including television and radio and print businesses. That is true," he told 7.30.

"What is definitely not true is that the news we have locally about our electricity prices, our education, our schools, the state of the parties, the personalities of the political leaders, all these issues are never going to come via scatty websites on the internet.

"Yes can clock on to the New York Times but that's not going to tell you about the railway to Bankstown or what's happening in the suburbs of Melbourne.

"In other words, the argument that the advent of the internet means that people are getting their news, their important, major news, local news, via the net and not via the major wholesaling organisations in print and television is a furphy."