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New Zealand regulators reject media merger in initial ruling

Associated Press Associated Press 8/11/2016 By NICK PERRY, Associated Press

WELLINGTON, New Zealand — New Zealand regulators on Tuesday made a preliminary decision to reject a merger between the country's two main newspaper groups.

The Commerce Commission said the proposed merger would result in one company controlling nearly 90 percent of the nation's print media market and would decrease the quality of stories and opinion.

The proposed merger would have combined the New Zealand newspapers, radio stations and websites owned by NZME and Fairfax Media. NZME publishes the nation's largest daily newspaper while Fairfax publishes the next two biggest dailies. The companies also own two of the nation's largest news websites: stuff.co.nz and nzherald.co.nz.

The companies are facing declining print revenues and changing reader habits, and had argued they needed to pool resources to compete with online giants like Google and Facebook.

But the commission said Facebook and other social media companies don't generally hire journalists or produce news, and therefore aren't competitors when it comes to creating news content.

Commission chairman Mark Berry said in a statement that a merger would put New Zealand behind only China when it came to a concentration of ownership in print media.

"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," he said.

Fairfax said the two companies would take time to review the decision and provide more information to the commission. A final decision is expected by March.

E tu, the union representing journalists, said it welcomed the preliminary decision.

NZME shares were trading down 23 percent Tuesday, putting the company's total valuation at about $100 million New Zealand dollars ($73 million).

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