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Fairfax-NZME merger declined

NZ Newswire logoNZ Newswire 2/05/2017
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The Commerce Commisson has declined the merger of media companies NZME and Fairfax, citing a likely rise in advertising and subscription costs, and loss of quality in journalism as key reasons.

The competition watchdog also pointed to an "unprecedented" influence over news and political agendas by a single media group.

The two companies last year proposed a merger, saying advertising competition from the likes of Googe and Facebook meant they would struggle to survive independently. 

The new NZME building in Graham St. © Fiona Goodall/Getty Images The new NZME building in Graham St.

But rejecting the proposal on Wednesday, Commerce Commission chairman Mark Berry said the Sunday newspaper market, online news and community newspapers would have been adversely affected by the merger.

Between them, NZME - whose chief masthead is the New Zealand Herald newspaper in print and online - and Fairfax, owner of the Dominion Post newspaper and the Stuff website, dominate 90 per cent of the country's news landscape.

Dr Berry said the loss of plurality should the companies merge would be "significant".

"We accept there would cost savings [to them] of $40 million to $200 million over five years," he said.

"However, these benefits do not, in our view, outweigh the detriments we consider would occur if the merger was to proceed."

The merger would lead to media ownership and influence on an unprecedented scale for a well-established, modern, liberal democracy and the political influence could harm New Zealand's democracy, he said.

NZME and Fairfax bosses say they are disappointed, with Fairfax group executive editor Sinead Boucher scathing of the commission in a tweet: "Hypocritical that [the NZCC] spent 45 per cent of its own ad budget on the non-taxpaying Facebook, YouTube it says aren't Fairfax/NZME competition?"

There has been mixed reaction from other journalists online. However, journalists' union E tu lauded the commission for realising there were more than commercial interests at stake.

"The decision acknowledges monopolies are unacceptable in the media, in large part because of its vital role in our democracy," said the union's Paul Tolich.

The decision would likely lead to a realigning of media ownership, particularly in print and radio, he said.

The union supported a special tax on global giants like Google and Facebook, "which take the lion's share of the advertising, but produce no news themselves", Mr Tolich said.

"This is the only way we will make news media and journalism a viable business and occupation in New Zealand." NZME and Fairfax have 20 working days to appeal the decision in the High Court.

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