Media giant Utusan Melayu has given an assurance to the National Union of Journalists (NUJ) that a proposed merger with New Straits Times Press (NSTP) will not result in retrenchment of staff.

Similarly, the publication also promised that it will not reduce the benefits as agreed under the existing NUJ-Utusan collective agreement.

The assurance to maintain the status quo for NUJ members was given by the Utusan group executive chairman Hashim Makaruddin during a briefing on Monday.

The briefing was attended by NUJ president Norila Mohd Daud and NUJ-Utusan branch committee members.

Utusan, which is owned by ruling party Umno, is the publisher of Utusan Malaysia and Kosmo .

"The NUJ is holding the Utusan management to its promise that its proposed merger with NSTP would not result in retrenchment or the reduction of benefits in the existing collective agreement," said NUJ general secretary Hong Boon How in a statement today.

He added that the union also welcomed Hashim's assurance at the briefing that Utusan will continue to retain its editorial independence under the merger.

"We also urged the Utusan management to fully study the viability of the merger as not to affect the profitability of the group and the welfare of the workers in the long term," he added.

The proposed merger between the two media giants is still under negotiation and a decision is expected early next year.

Being reviewed by Umno

The Edge daily today quoted Mayban Securities Research as saying that Utusan and NSTP would become subsidiaries under a new holding company under the proposed merger plan.

The research house said that the proposals were presently under review by the Umno supreme council - the party's top decision-making body.

A decision on the merger was expected to be announced last Monday but it hit a snag after reservations made by several Umno leaders who were worried that Utusan might suffer as a result of the merger.

They feared that the merger would affect the identity of the Malay daily and backfire on the party, despite Umno continuing to control it.

The Edge reported that under the new proposals, all present newspapers will be maintained and the management team of the new listed entity will comprise the senior management of both NSTP and Utusan.

"Should the merger get the go-ahead, the merger process is expected to be completed in six to nine months' time, that is sometime in second half of 2007," it quoted the research house.

At present, Umno controls about 50 percent equity interest in Utusan Melayu, which the party took over after an acrimonious battle with the then newspaper's editors and journalists in 1961.

However, the party's control over NSTP has always been through nominee business groups such as Media Prima, which has a 43 percent stake in NSTP.

NSTP publishes the English dailies New Straits Times and Malay Mail as well as Malay newspapers Berita Harian and Harian Metro .

The merger could also pave the way for the ruling party to directly control all the private free-to-air TV stations - TV3, ntv7, 8TV and Channel 9 - which are currently under Media Prima.

Media Prima's initiative

Mayban Securities Research was also quoted as saying that Media Prima and NSTP held a conference call for analysts on Dec 5 to clarify the current status of the merger, including the assurance editorial independence that all the newspapers will be maintained.

It was also revealed that Media Prima's senior management approached Umno, as the controlling shareholder of the Utusan group, to explore the possibility of a merger between the two largest Malay-language newspaper groups.

"We understand that the proposed merger would enable Media Prima to reduce its shareholding in NSTP from 43.3 percent to less than 20 percent, as NSTP shareholders will receive a combination of cash and shares in the new holding company," it said.

With the uncertainties over the merger talks, the shares of the companies took a beating yesterday as trading resumed.

When the market closed at 5pm, both companies saw their share prices dropping by around 14 percent.

Shares of NSTP closed at RM2.53, a drop of 13.6 percent - or 40 sen - from the Friday price of RM2.94 when the shares were suspended pending the expected merger.

Meanwhile, Utusan shares was hit a little harder - closing at RM1.56, a drop of 14.75 percent - or 27 sen - from the last traded price of RM1.83.

The trend continued today with NSTP dropping a further RM0.01 and Utusan down by five sen.