The ComCom has issued a draft determination rejecting the bid by Fairfax and NZME for a merger of the two companies.
The Commerce Commission says a proposed merger of New Zealand’s two biggest media companies will substantially lessen competition and lead to reduced editorial quality.
In draft decision published this morning, the regulator said its preliminary view was to decline to authorise the merger.
The two companies had sought clearance or authorisation to combine their businesses in New Zealand, which include the two biggest news websites stuff.co.nz and nzherald.co.nz.
NZME owns eight daily and two weekly newspapers, 24 community publications, six magazine titles, ten radio stations and 38 websites.
Fairfax operates the largest print media network in New Zealand, featuring nine daily and three weekly newspapers, 61 community publications, ten magazine titles and six websites.
Commission chairman Mark Berry said a merger of the two companies would lead to one company controlling nearly 90% of the print media market, a level of media concentration second only to China.
“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. 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.
“We recognise that the merger would achieve net financial benefits through organisational efficiencies. However, while we cannot quantify the detriments we see with respect to quality and plurality of the media, we consider that detriments resulting from increased concentration of media ownership in New Zealand would outweigh the quantified benefit we have calculated. In particular, the potential loss of plurality has weighed heavily in our draft decision. On this basis, we propose to decline the application.”
Great news, the plans for media domination appear to have been thwarted.
There will be plenty of people poring over the entrails of this to see if there is an escape route. One suspects if there was it may well be rather expensive.
From a quick glance it appears that they will either have to divest some significant assets or there needs to be some significant competition across multiple areas.