Fairfax, NZME merger rejected

Fairfax, NZME merger rejected

New Zealand’s Commerce Commission has refused the proposed merger between NZME and Fairfax NZ, in a decision that encompassed considerations on print future, advertising and reduced competition.

The merger would have brought together New Zealand’s two biggest media companies, who currently reach almost half of the population each month. Each argued that without the merger the future of print media in the country was uncertain, having significant financial implications for both companies.

A representative handing down the decision this morning. Photo: Shayne Currie via Twitter @ShayneCurrieNZH

A representative handing down the decision this morning. Photo: Shayne Currie via Twitter @ShayneCurrieNZH

In a document outlining the decision, the commission said: “Having now completed our assessment of the evidence, our final views are in most respects unchanged from the Draft Determination. We are not satisfied that a substantial lessening of competition is unlikely, nor that there is likely to be such a benefit to the public that authorisation should be granted. Our final decision is to decline clearance and authorisation.”

The commission believed that the merger would create a less competitive environment for advertisers which would lead to higher prices and poorer ad products.

It also said that reduced competition would lead to weakened journalism. The companies argued that the by combining newsrooms, the companies could shed duplicate staff and reallocate those funds to journalism projects. They also stated that the Press Council and newsroom ethics would ensure the quality of content.

The commission did not agree, believing that the reduced competition would reduce the quality, angles and voices of news that is produced.

“We consider that competition between NZME and Fairfax leads them to produce higher quality content than would exist with the merger. Competition incentivises investment in editorial resources, motivates journalists and editors in their day-to-day work, and ensures diversity of editorial approaches. Competition also leads to greater investment and innovation in the way that content is presented to readers,” the commission said.

It also believes that there are no other media organisations within the country that could be viable competition.

Fairfax CEO Greg Hywood condemned the decision, believing the commission’s scope of investigation was too restricted to traditional media.

“This decision does nothing to address the challenge of the global search and social giants, which produce no local journalism, employ very few New Zealanders, and pay minimal, if any, local taxes.

“We believe that the NZCC has failed New Zealand in blocking two local media companies from gaining the scale and resources necessary to aggressively compete now and into the future.

“Our impression from the outset is the NZCC seemed to be fixed in its assumption that the relevant competitive marketplace was restricted to only traditional media. No amount of market data, comparable decisions or studies from similar markets overseas could move them from that,” Mr Hywood said.

Sinead Boucher, Fairfax NZ executive editor and group digital editor since 2007.

Sinead Boucher, Fairfax NZ executive editor and group digital editor since 2007.

Following the decision, executive editor at Fairfax NZ Sinead Boucher took to Twitter calling out the decision.

“Fairfax NZME merger declined. Very disappointing for nz journalism.

Personally I think it beggars belief the @NZComCom does not see Facebook as competition for the $$ that funds newsroom.

@NZComCom says it doesn’t believe the scenarios for future of NZ media laid out by NZME and Fairfax without a merger. Unreal,” Ms Boucher said.

Former NZME managing director Simon Tong agreed, replying to Ms Boucher’s tweet saying: “Agree. Any outfit sucking up 80%+ of the revenue in your market = competitor??”

The Commerce Commission handed down a draft determination in November 2016 with the same findings. The final decision had been pushed back several times since March 2017.

The full public determination can be viewed here.

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