How ACCC came to its conclusion

How ACCC came to its conclusionACCC chairman Rod Sims

The prospective purchase of APN’s news media division (ARM) will mean that News Corp Australia will dominate print and digital news and news-related advertising channels in northern NSW and Queensland.

In handing down its determination that there is no competition or consumer issue sufficient to reject the likely $36 million takeover, the Australian Competition and Consumer Commission (ACCC) broke down the key areas of its determination.

It said its review focused on the likely effects of the proposed acquisition on:

Local News Supply + Advertising Channels

It identified delivery of news by both companies in the following areas:

  • Caboolture/Bribie Island, south west Brisbane, Brisbane northern bayside, Logan, and Tweed Heads/southern Gold Coast (together referred to as the local overlap areas).
  • Mackay, Rockhampton, Gladstone, Bundaberg, Hervey Bay, Gympie, the Sunshine Coast, Toowoomba, Ipswich, and Warwick (together referred to as the regional overlap areas)

Impact on local markets

The ACCC took into account the two-sided nature of media markets. The ACCC did not reach a concluded position on the delineation of the consumer-side market. In particular, the ACCC did not form a final view as to whether newspapers and online news sites were in the same or separate product markets from a consumer perspective.

Instead the ACCC focused on the degree of constraint the print newspapers and online sites provide on each other for different types of readers.

Competition analysis    

In the local overlap areas, News and ARM are the main suppliers of print local news and information to readers.

The ACCC noted that despite the general decline in print newspaper readership, there were still readers who valued the print newspaper format and the convenient package of news and information it provides.

These consumers in particular would face reduced choice post-acquisition.

However, a sufficient range of local news choices would remain available, including some third party newspapers, such as the independent Tweed Valley Weekly (circulated in the Tweed Heads area) and Fairfax Media’s Jimboomba Times and Redland City Bulletin (circulated in the Logan area).

The ACCC also identified online sources of local news, such as dedicated local ABC Online pages and, to varying degrees, television and radio news.

The ACCC considered that, in the face of growing competition from alternative local advertising opportunities, and the need for News to maintain readership levels in order to ensure advertising revenues, News would be unlikely to decrease the quality of the local content as a result of the proposed acquisition.

Newspapers still Valued

Some categories of advertisers . . . valued the ability to access readers of community newspapers because of its older readership profile, the ability to place time-sensitive ads or to target potential purchasers (particularly of higher value items) who are browsing a newspaper rather than actively searching for a product.

Accordingly, the proposed acquisition would reduce the close competition that currently exists between News and ARM for the supply of local advertising opportunities in the local overlap areas.

The ACCC concluded that most businesses or individuals seeking local advertising opportunities would be willing to substitute to alternative media or advertising methods for some or all of their advertising if News attempted to increase advertising rates after the acquisition.

The ACCC considered that the various local advertising alternatives, including online, radio and television, would collectively impose sufficient constraint on News after the acquisition.

Impact of Courier Mail

Market feedback and other information provided to the ACCC indicated that most readers did not consider the ARM paid regional papers to be close substitutes for the Courier Mail.

ARM’s regional publications and the Courier Mail are generally considered to target distinct categories of readers.

The Courier Mail is generally not a suitable alternative source of news for ARM’s regional publications, due to its lack of local content. ARM’s publications are generally not a suitable alternative to the Courier Mail, as non-local news coverage in those publications is typically brief and sometimes delayed by a day.

Ad supply in regional Queensland

Market feedback suggested that the geographic overlap between the Courier Mail and ARM’s paid regional newspapers would likely make these publications substitutes for some advertisers. For example, an advertiser seeking to run a state-wide advertising campaign might choose between advertising in the Courier Mail or in the ARM regional newspapers when attempting to capture the regional audience.

However, ultimately the ACCC considered that:

  • The majority of advertisers in regional newspapers do not also advertise in metropolitan or national newspapers, due to the significantly higher advertising costs. This increased cost reflects the different geographic reach of these newspapers, which is not valued by most advertisers that advertise in the regional newspapers.
  • Advertisers who do advertise in both metropolitan and regional newspapers tend to be large state or national organisations, or businesses represented by large advertising agencies. These advertisers generally have some degree of bargaining power and other options to reach their audience, such as radio and television.

Content markets

In relation to the acquisition of news content from content providers, the ACCC considered that the removal of ARM as an alternative customer for content was unlikely to adversely affect competition, particularly given ARM is not a significant acquirer of content.

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