NZME and Fairfax Media will appeal to New Zealand's High Court to challenge the decision by the Commerce Commission to reject a merger between the two media companies.
In an announcement to the ASX, NZME said the Commerce Commission’s determination contained errors of fact and law and did not properly consider the current media environment. After careful review and analysis of the NZCC’s reasons, the companies believe the NZCC was wrong in fact and wrong in law to decline clearance or authorisation for the merger.
In its final decision handed down on May 3, the NZ corporate regulator said the merger “would concentrate media ownership and influence to an unprecedented extent for a well-established modern liberal democracy.” The Commission’s preliminary view, published in November last year, was that the merger would be likely to substantially lessen competition in advertising and reader markets – specifically Sunday newspapers, online news and community newspapers in 10 regions. It also indicated that the merger would not be of such a benefit to the public that it should be allowed. Those views remain largely unchanged.
In a High Court appeal notice, the appellants, NZME, Fairfax Media and Fairfax NZ, say the Commerce Commission’s belief that the merger would have limited the choices of advertisers in the online media environment is 'incorrect'. The appeal also says the commission also did not properly weigh the impact of Facebook and Google on traditional news media in the determination.
Following the May 3rd rejection, Fairfax chief executive Greg Hywood spoke out against the decision. “This decision does nothing to address the challenge of the global search and social giants, which produce no local journalism, employ very few New Zealanders, and pay minimal, if any, local taxes,” Hywood said. “We believe that the NZCC has failed New Zealand in blocking two local media companies from gaining the scale and resources necessary to aggressively compete now and into the future."
The proposed merger would have combined NZME's flagship New Zealand Herald newspaper and nzherald.co.nz website, a network of radio stations and the GrabOne deals site with Fairfax titles including the Dominion Post, Sunday Star-Times, The Press, the stuff.co.nz website and magazines.