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Home Technology Regulation NZ regulator knocks back Fairfax-NZME merger

New Zealand's Commerce Commission has decided that media companies Fairfax and New Zealand Media and Entertainment should not be allowed to merge their operations in the country.

The merger would have resulted in New Zealand's two biggest newspaper networks and their websites being owned by one company, a statement from the Commission said.

The Commission's preliminary view, issued in November last year, was that such a merger would substantially reduce competition in both the advertiser and reader markets - – specifically Sunday newspapers, online news and community newspapers in 10 regions.

It also indicated at the time that the merger would not benefit the public to the extent that it should be allowed.

Both views were more or less unchanged in the decision issued on Wednesday.

NZCC chairman Dr Mark Berry said while the Commission recognised that both NZME and Fairfax faced "a challenging commercial environment as they seek to transition from their traditional print products to a sustainable online model", the NZCC did not agree with some of the scenarios advanced about their respective futures without the merger.

“Following our draft determination the applicants significantly altered their submission on what the state of the market would look like without the merger. The details of those submissions are confidential; however, we do not consider the scenarios presented to be likely outcomes," he said.

"In our view, without the merger NZME and Fairfax will be increasingly focused on their online businesses as their print products diminish in number and comprehensiveness over time.

“We accept there is a real chance the merger could extend the lifespan of some newspapers and lead to significant cost savings anywhere between NZ$40 million to around NZ$200 million over five years. However these benefits do not, in our view, outweigh the detriments we consider would occur if it was to proceed.”

Had the merger gone through, the single resultant entity would have had direct control of the biggest network of journalists in New Zealand, employing more editorial staff than the next three largest mainstream media organisations combined, the statement said.

The news media business of the single merged entity would include nearly 90% of the daily newspaper circulation in New Zealand and a majority of traffic to online sources of New Zealand news, a state Including its radio network, the merged entity would have a monthly reach of 3.7 million New Zealanders.

“This merger would concentrate media ownership and influence to an unprecedented extent for a well-established modern liberal democracy. The news audience reach that the applicants have provide the merged entity with the scope to control a large share of the news consumed by a majority of New Zealanders," Dr Berry said.

"This level of influence over the news and political agenda by a single media organisation creates a risk of causing harm to New Zealand’s democracy and to the New Zealand public.”

He said that after a review of all the evidence, "our primary concerns remain that this merger would be likely to reduce both the quality of news produced and the diversity of voices (plurality) available for New Zealanders to consume".

"Competition between NZME and Fairfax leads them to produce higher quality content than would otherwise exist with the merger. This competition incentivises investment in editorial resources, motivates journalists and editors in their day-to-day work and acts as a safeguard to plurality.

“In our view, the merged entity’s competitors would not be able to constrain it in any real way from making cost-cutting decisions that reduce quality and plurality. The extent of internal plurality is also discretionary on the part of the media owner and we do not regard promises to maintain current levels as a sufficient safeguard on future editorial decisions.

“While we cannot weigh in dollar terms the net benefits against the detrimental societal impacts we expect to see, in our assessment this is not a finely balanced decision. We decline to grant authorisation."

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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.

 

 

 

 

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