More activity on both sides of the Tasman in the dead tree business.
Fairfax Media has confirmed it has received interest from an unnamed party in buying the New Zealand print arm, but says it is not in discussions.
In a statement to the ASX yesterday Fairfax said it had received a letter of interest in its NZ newspapers and websites.
New Zealand’s National Business Review had earlier reported on Thursday a potential offer of up to $NZ120 million had been made for Fairfax New Zealand if a proposed merger with NZME fails.
"The letter contains no offer capable of acceptance and Fairfax is not engaged in any discussions in relation to the letter," Fairfax said. The company said remains focused on its merger talks with NZME which are before the Kiwi competition regulator, the Commerce Commission.
The Commission has confirmed Fairfax lawyers had told it about the offer on yesterday morning.
Fairfax said the merger agreement with NZME had provisions which prevented the parties from entertaining offers from a third party. The merger was binding and only subject to regulatory approval in New Zealand, it said.
"Consistent with its exclusivity obligations under the merger implementation agreement (MIA), Fairfax is continuing to work with NZME to satisfy the conditions under the MIA and is not engaged with any third party."
Fairfax is expected to end up with about a 41% share in the combined New Zealand media firm if the merger is allowed is given the OK, which seems unlikely without a significant change in approach by the Commerce Commission.
That would make it by far the largest shareholder in NZME is listed on the NZX.
But the commission said in a draft ruling in November it proposed to decline the merger, primarily because of concerns about media diversity, though it is not expected to finalise its decision until March.
Fairfax Media shares rose 1.1% yesterday to 87.5 cents.
But in Australia yesterday the greenlight for separate merger. The ACCC, Australia’s competition regulator said it had approved the $36.6 million purchase by News Corp for the regional dailies and weekly papers of APN News and Media (of which News owns 14.9%).
The Commission’s decision (http://www.accc.gov.au/media-release/accc-will-not-oppose-news-corporation’s-proposed-acquisition-of-apn’s-australian-regional-media-division-–-arm) ignored what will be the creation of a newspaper monopoly in Queensland and northern NSW for News Corp. But the ACCC found reasons to approve the deal, despite that.
“Declining readership and reduced advertising revenues for hard-copy publications were important factors in the ACCC’s assessment, as it was with the investigation of Seven West Media’s acquisition of The Sunday Times. Advertisers and readers are increasingly turning to other sources of news and advertising opportunities, particularly digital, which is having a significant impact on the print industry,” Commission chair, Rod Sims said in the statement.
In other words, newspapers are losing readers and sales and advertising) and approving this deal won’t change that, even in Queensland. The grim reality is that newspapers are past their use by date and are a dying industry.
The Commission said it had invited feedback from readers and advertisers after releasing a Statement of Issues in October. The focus was on how ARM’s paid regional newspapers and News’ The Courier Mail compete for readers, and the extent of competition between overlapping News and ARM community newspapers in south-east Queensland.
“The ACCC reviewed the acquisition very closely, as News and ARM are the two largest newspaper publishers in Queensland. However, feedback from readers raised very few concerns and suggested that there is not close competition between the paid daily Queensland papers published by News and ARM. This transaction will mean that readers in those areas who still value a community newspaper format are likely to face reduced choice.
"However, the ACCC concluded that, overall, a sufficient range of local news choices and advertising options would remain available in these areas, with Fairfax and independent local newspapers in some local areas, competing online options, as well as local radio news,” Mr Sims said.
In other words, readers and news consumers know they can get their news elsewhere – online, from the Seven Network, from the Nine and Ten Networks, from the ABC in TV and Radio and also from some commercial news outlets. It actually strengthens the importance of the ABC.
But we shouldn’t be too hard on the regulator because the newspapers in this deal have only a few years left before they are revamped, restructured, merged and eventually killed off.
News Corp will be the last owner of all these papers, unless the Murdochs succumb to growing pressure from shareholders to separate the newsprint based assets from the faster growing book publishing and online real estate businesses (REA Group and Move) in Australia and the US respectively.
While News Corp is spending $36.6 million on this purchase, it is also cutting another $40 million from costs by June next year, taking the cuts in the past two years to around $120 million, and dozens of journalists and printers jobs.
A reported 42 journalists are being cut from the News Corp papers (and dozens will go from the APN papers once they are in house).
News Corp shares rose 1% to $16.36 in Australia.
