NZME-Fairfax merger plans in peril

NZME-Fairfax merger plans in peril

Multimillion dollar plans to merge Fairfax Media NZ with NZME are in jeopardy after the New Zealand Commerce Commission indicated it would not approve the proposal.

The historic consolidation proposal would unite New Zealand’s two largest news media companies and be likely to substantially lessen competition in a number of markets, the Commerce Commission said in a 195-page Draft Determination released today.

Among the Commission’s concerns are price hikes, lessened advertising competition and a reduction in the quality and quantity of news content with potential flow-on effects to TV and radio.

While the Commission recognised the financial benefits of the merger, it said the “detriments resulting from increased concentration of media ownership in New Zealand would outweigh the quantified benefit”.

NZME and Fairfax previously argued the merger would create a strong local player better able to compete against international digital giants like Facebook and Google.

The companies said in response to the Draft Determination that the Commission had “failed to properly take into account the diversity of opinions that will continue post-transaction in an increasingly converged digital world”.

“(NZME and Fairfax) will be discussing this point further with the NZCC, including making further written submissions and submitting through the NZCC’s conference process (held in December),” the companies said in a joint-statement.

A final decision on the merger will be made on or before 15 March 2017.

The Commission said markets where the merger is likely to lessen competition include premium digital advertising and advertising in Sunday and community newspapers in certain regions.

The Commission is also concerned the merged entity may increase subscription and retail prices for Sunday newspapers and introduce digital subscriptions on at least one of its news sites.

Fairfax’s Stuff.co.nz and NZME’s NZHerald.co.nz together have a reach four times larger than the next biggest domestic news site.

Chairman Mark Berry said the proposed merger would result in one media outlet controlling almost 90 per cent of the country’s print market, the second highest level of print media ownership in the world after China.

Dr Berry said this combined with the merged entity’s digital presence and radio assets would result in an unprecedented level of media concentration.

“Our preliminary view is that competition would not be sufficiently robust to constrain a multi-media organisation, potentially with a single editorial voice, that would be the largest producer of national, regional and local news by some margin in New Zealand,” Dr Berry said.

“NZME and Fairfax each play a substantial role in influencing New Zealand’s news agenda. Competition between the parties drives content creation, increases the volume and variety of news available in New Zealand and assists with objectivity and accuracy in reporting. Our view is that the removal of this competitive tension would likely lead to a reduction in the quality and quantity of New Zealand news content both online and in print, with potential flow-on effects in television and radio.”

The commission is accepting submission on the Draft Determination until November 22.

A conference to discuss the merger will be held in Wellington between December 6 and 8.

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