NZ WATCHDOG BLOCKS MEDIA MERGER PLAN
Decision will force NZME and Fairfax unit to find alternative strategies to stay afloat
NEW Zealand’s competition regulator blocked the planned merger of the nation’s two largest publishing groups, saying the deal would have led to unprecedented local media influence and built the world’s most concentrated newspaper market outside of China.
The decision will force NZME Ltd and Fairfax Media Ltd’s New Zealand unit to find alternative strategies to deal with heavy competitive pressure and the loss of advertising dollars to digital rivals such as Alphabet Inc’s Google and Facebook Inc.
NZME and Fairfax control nearly 90 per cent of New Zealand’s newspapers and clearance for the deal could have set a precedent for increased concentration in the future in Australia, where Rupert Murdoch’s News Corp and Fairfax are the dominant players and both are under similar financial stress.
New Zealand Commerce Commission (NZCC) chairman Mark Berry said the planned merger would have concentrated media ownership and influence to an “unprecedented extent” for a well-established modern liberal democracy.
“Having reviewed 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,” he said in a statement yesterday.
The competition watchdog had twice delayed its final decision.
NZME owns the Aucklandbased New Zealand Herald, the country’s top-selling newspaper, and Fairfax publishes the main papers in the other major cities, Wellington and Christchurch, as well as popular website stuff.co.nz.
Under the proposed deal, NZME would have paid NZ$55 million for Fairfax’s New Zealand operations. It would also have issued new shares to allow Fairfax to hold a 41 per cent stake in NZME. Combining the assets would have helped to cut costs by up to NZ$200 million (RM600 million) over five years, said the firms.
Fairfax chief executive Greg Hywood said the company would focus on cost cutting in New Zealand after NZCC’s decision.
NZME chief executive Michael Boggs said the company could consider buying some of Fairfax’s smaller papers if they were divested.
Meanwhile, staff at Australia’s Fairfax walked off the job for a week yesterday in protest at more hefty job cuts as it the leading publisher struggles to cope with slumping revenues.
The strike action by journalists, including those from the Sydney Morning Herald and The Melbourne Age, followed an announcement that Fairfax will cut another 125 editorial jobs, a quarter of its newsroom, as part of a revamp to save money. Agencies
Fairfax Media Ltd’s New Zealand unit publishes main papers in Wellington and Christchurch as well as popular website stuff.co.nz.