What: Shares in television network owner Nine Entertainment Co Holdings Ltd (ASX: NEC) and newspaper publisher Fairfax Media Limited (ASX: FXJ) have failed to inspire buyers this morning despite the Sydney Morning Herald (SMH) reporting that an investment bank representing Nine Entertainment made an approach to Fairfax to explore the possibility of a merger.

So What: According to the SMH article the talks did not last long, with Fairfax apparently not interested. Despite the article suggesting disinterest from Fairfax, the potential for media industry consolidation should the Turnbull government follow through with proposed media regulatory reforms remains.

Now What: Nine Entertainment is obviously jockeying for pole position in any media sector shakeout with the broadcaster snapping up a 9.99% stake in Southern Cross Media Group Ltd (ASX: SXL) recently.

Given Nine Entertainment’s cashed-up balance sheet, the company is well placed to drive ahead with a consolidation agenda, however, it won’t be without significant competition from billionaire Kerry Stokes. Stokes is the controlling shareholder in Seven West Media Ltd (ASX: SWM).

For investors looking to profit from the beaten-up media sector there are a few things to consider.

Firstly, while media reforms appear likely, they are far from certain given the nature of politics.

Secondly, the long-term benefits of consolidation may be muted considering the structural challenges facing “old world” media businesses.

For investors looking to position themselves for potential near-term upside, the immediate beneficiaries from consolidation are more likely to be the regional media operators who could attract merger or acquisition offers from their larger peers.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.