NZ Commerce Commission signals it will block NZME-Fairfax NZ merger due to diversity of voices concerns
The New Zealand Commerce Commission has signalled it will not allow a merger between NZME and Fairfax’s New Zealand assets due to concerns it would result in one outlet controlling nearly 90% of NZ’s print media market.
The NZCC’s draft determination outlines concerns around the impact of the merger on competition in both advertising and reader markets.
Both companies argue the merger is vital for the sustainability of some of the biggest media assets in New Zealand. The deal would see NZME pay NZ$55m to Fairfax to take majority control in the company.
“The proposed merger would bring together New Zealand’s two largest newspaper networks and two largest news websites. The Commission has assessed the impact of the merger on competition in both advertising and reader markets for a number of media platforms as well as the overall impact on quality and plurality (diversity of voices),” a release from the NZCC stated.
“It is the NZCC’s view that the merger would “be likely to substantially lessen competition in a number of markets, including the markets for premium digital advertising, advertising in Sunday newspapers and advertising in community newspapers in 10 regions throughout New Zealand”.
The NZCC also was concerned the merged entity would likely increase subscription and retail prices for Sunday newspapers and introduce a paywall for at least one website.
Chairman Dr Mark Berry said the merger would result in one media outlet controlling nearly 90% of New Zealand’s print media market.
“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,” 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.
“We recognise that the merger would achieve net financial benefits through organisational efficiencies. However, while we cannot quantify the detriments we see with respect to quality and plurality of the media, we consider that detriments resulting from increased concentration of media ownership in New Zealand would outweigh the quantified benefit we have calculated. In particular, the potential loss of plurality has weighed heavily in our draft decision. On this basis, we propose to decline the application.”
Fairfax Media has responded to the preliminary report arguing the NZCC has “failed to properly take into account the diversity of opinions that will continue post-transaction in an increasingly converged digital world”.
NZME’s assets include the New Zealand Herald and six regional daily papers, the NZME radio network and e-commerce and digital classified sites GrabOne, HeraldHomes and driven.co.nz.
Fairfax New Zealand’s assets include stuff.co.nz, a share of neighbourly.co.nz and more than 60 metro, Sunday, regional and community newspapers.
The NZCC are seeking submissions on the merger by November 22 with a three day conference scheduled for early December where the Commissioners will consider the proposed merger before making a final decision.
A final NZCC determination is expected on or before March 15, 2017.
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