The New Zealand Commerce Commission says it will reject a proposed merger between NZME and Fairfax NZ over concerns it could lead to the second highest level of print media ownership in the world, behind only China.
In a draft determination, the New Zealand government’s corporate regulator says the merger would mean that one media outlet would control almost 90 per cent of NZ’s print media market.
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.
Chairman Dr Mark Berry said 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.
The merger deal would see NZME pay $NZ55 million to take majority control of Fairfax NZ.
“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,” says Berry.
“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.”
The decision has been welcomed by the New Zealand journalists’ union, E tū. “Our members believe they made a strong case for rejecting this merger and now they feel they’ve been heard,” says E tū’s national media organiser, Paul Tolich. "The commission has got it absolutely right and our members are delighted with the draft decision.
“It would be a monopoly situation if the merger went ahead but it’s still quite amazing that the commission came out so strongly on those issues of market domination and the role of the news media in a free society, while making comparisons to the situation in China," says Tolich.
“A very powerful position has been stated about the Fourth Estate and the role of a free press to hold the powerful to account in our society.”
Tolich dismissed suggestions that a final decision to reject the merger could be overturned in the High Court. “Obviously there’s still a lot of water to go under the bridge before the final decision is due in March next year but anyone who’s read the draft decision can see it will be a very high bar.”
The Commission is now seeking submissions on its draft determination by the close of business on Tuesday 22 November 2016.
Submissions can be sent to registrar@comcom.govt.nz with the reference Fairfax/NZME in the subject line of your email or to PO Box 2351, Wellington 6140.
Under the Commerce Act, the Commission may determine to hold a conference prior to making a final determination.
We have currently scheduled a conference in respect of this matter for three days in Wellington: Tuesday 6 - Thursday 8 December 2016.
Fairfax operates the New Zealand’s largest print media network, featuring nine daily and three weekly newspapers, 61 community publications, 10 magazine titles and six websites, including stuff.co.nz. It also has a minority shareholding in social media site, Neighbourly.
NZME owns eight daily and two weekly newspapers, 24 community publications, six magazine titles, 10 radio stations and 38 print and radio-related websites, including nzherald.co.nz, as well as a number of individual sites including Grabone, Shop Green and Adhub.
A final NZCC decision is expected on or before March 15, 2017.