NZ WATCH­DOG BLOCKS ME­DIA MERGER PLAN

De­ci­sion will force NZME and Fair­fax unit to find al­ter­na­tive strate­gies to stay afloat

New Straits Times - - Business World -

WELLING­TON/SYD­NEY

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

AP PIC

Fair­fax Me­dia Ltd’s New Zealand unit pub­lishes main pa­pers in Welling­ton and Christchurch as well as pop­u­lar web­site stuff.co.nz.

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