Fairfax Media and NZME merger will not go ahead, High Court rules
Fairfax Media and NZME Limited have lost their appeal in the High Court of New Zealand, which declined to authorise or clear the proposed merger of the two companies.
It comes seven months after the initial decision by the New Zealand Commerce Commission, which rejected the proposal on the basis it would greatly reduce competition in the market.
The lost appeal follows an 18 month process
The watchdog argued Fairfax NZ and NZME would control 90% of NZ’s print media market, but the two media companies argued the NZCC had failed to take into account other new and traditional media platforms available to audiences, including Bauer Media (NZ), syndicated news content, bloggers, businesses, politicians and government entities.
NZME’s assets include the New Zealand Herald, six regional daily papers, the NZME radio network and e-commerce sites GrabOne, HeraldHomes and driven.co.nz. Fairfax NZ’s assets include stuff.co.nz, a share of neighbourly.co.nz and more than 60 metro, Sunday, regional and community newspapers.
The Court declined the appeal against the refusal of the NZCC to give clearance, as well as the NZCC’s refusal to authorise the merger.
It said upon review, it had reached the same conclusion as the NZCC in four of the six markets which were subject to competition analysis, and upheld the jurisdiction of the NZCC to consider impact beyond financials.
The Court added: “In our analysis on the clearance application appeal we have recognised material barriers to entry in the market for production of New Zealand news. We agree with the Commission that a substantial loss of media plurality would be virtually irreplaceable.
It also dismissed criticisms made by Fairfax NZ and NZME on the process adopted by the Commission it its investigation and production of determination. The Court has said the Commission will be entitled to costs.
Fairfax Media chief executive Greg Hywood said the decision was “disappointing”.
“Whilst the merger brought synergies that would have sustained journalism at scale in New Zealand for many years, our New Zealand business has continued to implement its own strategy and shape a separate future,” Hywood said.
A disappointing result, says Fairfax’s Hywood
“We continue to look for partnerships and support growth into other new areas, as we have done with our ISP, energy and health insurance products.
“I would like to thank all our people for working so rigorously and effectively through a lengthy period of uncertainty. This shows the business is in the hands of talented, passionate people who will carve out a prosperous future for the company”.
NZME chief executive Michael Boggs, echoed Hywood’s comments, arguing the merger was in the better interests of both shareholders and the industry.
“While the Fairfax merger offered us benefits, we have not been resting on our laurels in the last 18 months as we pursued the transaction,” Boggs said.
“We will continue to examine shareholder value enhancing strategic initiatives leveraging our strong brands and audience reach, while enhancing the competitiveness of content generation and distribution.”
Both parties have said they will take the time to review the decision. NZME said it will look at the option to appeal.
Fairfax is the wrong owner of these NZ assets. Hywood is a loser, making a virtue of constant retreat, and is pushing the media brands he runs to the brink. This is a good decision by the nz court and the best outcome is that Fairfax divest to nz shareholders ASAP.
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