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Media merger gets thumbs down

NZN 2/05/2017

Fairfax's chief executive Greg Hywood says publishing frequency changes and consolidation of newspaper titles is inevitable after the Commerce Commission declined the merger of NZME and Fairfax.

The Commerce Commission made its decision public on Wednesday morning, citing a likely rise in advertising and subscription costs, and loss of quality in journalism as key reasons for turnings the merger down.

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

Mr Hywood says "an even greater focus on cost efficiency will be necessary" in the face of competition from NZME and global competitors Google and Facebook.

"We believe that the NZ Commerce Commission has failed New Zealand in blocking two local media companies from gaining the scale and resources necessary to aggressively compete now and into the future."

Victoria University media studies lecturer Dr Peter Thompson says the Commerce Commission's ruling has "prioritised the interests of the public over corporate shareholders".

"The NZME-Fairfax merger would have been unthinkable in virtually any other democratic society."

Dr Thompson said the Commerce Act needed to be reviewed and revised in order to deter merger and acquisition proposals which undermine the public interest, and public funding, at arms length from the Government, was required more than ever before.

NZME and Fairfax proposed the merger last year.

However, 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.

NZME's share price had fallen more than 11 per cent by 1pm on Wednesday to 79 cents.

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