The viability of New Zealand’s newspapers may be threatened if a proposed merger of the country’s two biggest news media companies is rejected, Fairfax Media boss Greg Hywood has warned.Without the corporate and back office synergies made possible by a merger of Fairfax Media NZ and NZME, “it will inevitably mean deeper cuts into journalism”, he said.
Mr Hywood’s remarks follow signals the merger will be rejected by New Zealand’s competition watchdog, which is wary of consenting to the creation of a company controlling 90 per cent of the newspaper sector.
The New Zealand Commerce Commission (NZCC) is also concerned the merger may result in price increases, reduced advertising competition and a reduction in the quality and quantity of news content with potential flow-on effects to TV and radio.
After these concerns were outlined in a Draft Determination published last week, Mr Hywood branded the NZCC “massively myopic” for failing to “look at the present and future reality of the likes of Google and Facebook”.
“Global search and social giants are taking the bulk of media revenue and yet they produce no local journalism and pay minimal, if any, local taxes,” Mr Hywood said.
“We put journalists into local communities each and every day, and in order to sustain that journalism, our New Zealand business needs to be free from restrictions on it becoming a modern media network with the scale and resources necessary to aggressively compete … Nobody, not least us, wants to see New Zealand’s social fabric shredded by misguided thinking that the status quo is immune from market realities.”
NZCC will hold a public forum about the matter in December and make its final decision on or before March 15.
Competition vs. fourth estate issues
Its chairman, Mark Berry, has previously raised concerns about the merger’s impact on media diversity, however these considerations may fall outside the competition-analysis remit of the NZCC.
NZME and Fairfax could pursue legal action if they believed the NZCC was “acting outside of its jurisdiction in considering those matters”, according to media academic and former New Zealand Herald editor-in-chief, Gavin Ellis.
However Mr Ellis is “far from unhappy that the Commerce Commission is venturing into that territory because these are important considerations”.
“In the absence of the Commerce Commission, there doesn’t appear to be any other body that would consider those requirements,” Mr Ellis said.
Mr Ellis also believed the “together they thrive, apart they die” argument of the Fairfax-NZME merger is an overstatement.
“Certainly they both face great challenges, particularly with their print publications, but there are many business strategies that will be available to them, business strategies emerging in the media generally,” he said.
“If the merger doesn’t take place it’s incumbent on the boards of each company to pursue those innovative strategies to ensure they do have a future.
“It’s incumbent upon them to assure the advertisers that they still represent viable platforms and I believe they most certainly do.”
Fairfax is New Zealand’s largest print media network, featuring nine daily and three weekly newspapers, 61 community publications, 10 magazine titles and six websites, including stuff.co.nz. It also has a minority shareholding in social media site Neighbourly.
NZME owns eight daily and two weekly newspapers, 24 community publications, six magazine titles, 10 radio stations and 38 websites, including nzherald.co.nz. As well as websites related to its print and radio offerings, NZME owns a number of e-commerce ventures including Grabone, Shop Green and Adhub.
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