The biggest shake up in NZ media has been rejected by the country’s competition regulator in a “draft’ decision declining to greenlight the merger of NZME and Fairfax Media’s Kiwi newspapers and websites. NZME is the spin off of APN News and Media’s New Zealand print and radio interests. News Corp was the largest shareholder, but revealed yesterday in its quarterly results that the 14.9% stake had been sold.
The proposed merger, announced mid-year would have seen Fairfax emerge as the biggest shareholder with around 42%, plus two board seats and $A55 million in cash. Now that looks like it will be blocked, unless the partners can come up with radical proposals to change the regulator’s mind.
The rejection will worry Fairfax. Coming after the weak trading update last week, especially for its Domain Australian property website, Fairfax shares are under pressure and so is the $2 million CEO, Greg Hywood. This rejection won’t make life any easier with NZ revenues down 4% in the first quarter of 2016-17. But Fairfax shares rose 1.2% to 81.5 cents.
The draft rejection won’t so much worry APN (it was please News because it extends its dominant position in the Australian print media across the Tasman).
But it could if the Australian competition regulator, the ACCC, uses the Kiwi decision as a template to reject APN’s proposed sale of its regional daily and other papers in northern NSW and Queensland to News Corp for $36.6 million.
And there is every likelihood the ACCC will find plenty to interest it in the NZ decision, especially on the control of News in Queensland that News Corp would have and the impact on media diversity, which emerged in the draft determination as a key factor behind the rejection.
"The Commission’s preliminary view is 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. It also considers the merged entity would be likely to increase subscription and retail prices for Sunday newspapers and introduce a paywall for at least one of its websites,” the Commerce Commission found.
Commission chair, Mark berry said in the statement "the merger would result in one media outlet controlling nearly 90% of New Zealand’s print media market. This would be the second highest level of print media ownership in the world, behind only China. The merged entity would also control New Zealand’s two largest news websites – nzherald.co.nz and stuff.co.nz – which together have a population reach more than four times larger than the next biggest domestic news website. Further, the merged entity would own one of New Zealand’s two largest commercial radio companies. All this would result in an unprecedented level of media concentration for a well-established liberal democracy.
“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,” Dr Berry said.
"NZME and Fairfax each play a substantial role in influencing New Zealand’s news agenda," it said.”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,” the Commission said.
News Corp dominates the Australian news agenda, especially in Queensland, in areas such as Brisbane, Townsville and Cairns. While the ABC and Seven Network, and commercial radio networks exist as competitors, the newspapers have the greater resources and journalists to cover local, regional and national issues, especially the state’s dominant paper, the Courier Mail.
And from 2017, News Corp will dominate pay TV news when it takes control of Sky News. Lachlan Murdoch controls another, smaller East Coast network
