Investment banks UBS and Macquarie Group are in the running to handle a possible merger between Fairfax Radio and John Singleton's Macquarie Radio Network (MRN).
Sources say UBS could be appointed to advise MRN, while Fairfax may tap Macquarie Group to handle the potential deal, exclusively revealed in last week's Media.
The moves towards a possible radio merger come as insiders claim Bain & Company, the management consulting firm that Fairfax is using for its company-wide strategic review, has placed key titles - including The Sun-Herald - on a "watchlist", as it continues to look for cost savings in the wake of the axing of the print edition of BRW.
The Australian Competition & Consumer Commission is said to be monitoring the mooted radio merger, and may scrutinise the prospect of a lessening of competition in the advertising market.
It has been proposed that a merger of MRN and Fairfax Radio would capture more than $10 million in synergies, mainly though the creation of a national sales proposition that could offer advertisers a must-buy: the No 1 talkback program in every city.
If an agreement is reached, it will also attract the interest of the Australian Communications and Media Authority.
Current ownership rules forbid radio networks from owning more than two commercial broadcast licences in the same area.
This would mean that the enlarged radio group would need to offload a station in the Sydney market, where it would control Fairfax's 2UE, MRN's 2GB and over-50s station 2CH.
Under the plan being considered, Fairfax would spin out its holding in a combined group through an in specie demerger and distribution of the business into a new listed vehicle.
Fairfax and MRN responded to last week's story by issuing statements to the Australian Securities Exchange that acknowledged "recent market speculation about the potential merger of its radio business".
The statements suggested talks had been taking place without reaching agreement. Sources said the main issues were price and management control.
ASX-listed MRN, in which ad man Mr Singleton has a 71.15% stake, owns the 2GB network, home to popular broadcasters Alan Jones and Ray Hadley.
Morgan Stanley has estimated Fairfax Radio has a standalone value of $167 million to $297 million.
The combined entity would have earnings before interest, taxes, depreciation and amortisation of $32m.
Meanwhile, Fairfax sources said management had placed Sydney's Sun-Herald and the AFR Weekend on a list of print products that could be up for review, after BRW's print offering was closed on Friday.
Bain & Company identified BRW after recommending the end of newspaper-inserted glossies, the(Sydney)magazine and the(Melbourne)magazine.
Bain was also behind the decision to make the AFR's quarterly magazine Capital a section, and is believed to have added the Sun-Herald and the weekend Financial Review to what insiders are calling its "hit list".
Fairfax executive Allen Williams, managing director of Australian Publishing Media, is implementing many of the changes, and is said to be advocating a move to a single newsroom in Sydney and Melbourne across its metro and business publications by 2015. This follows the consolidation of business journalists across The AFR, SMH and The Age.
A spokeswoman for Fairfax chief executive Greg Hywood yesterday denied the company had any plans to mandate investment banks for a Fairfax Radio/MRN merger.
On the Bain hit list, she said: "Every single product in the group is being reviewed. We have no plans to change the printing of the Sun-Herald or AFR Weekend."