Online news at risk, court told
The quality of the Stuff and NZ Herald websites would probably decline substantially within two years if Fairfax New Zealand and NZME were allowed to merge, lawyers representing the Commerce Commission say.
Continuing his High Court defence of the competition watchdog’s decision in May to decline authorisation for the merger, Jim Farmer, QC, said competition between NZME and Fairfax was a ‘‘substantial driver’’ of quality.
The loss of that competition would result in a higher level of rationalisation ‘‘with the result that over the next two years there would be likely to be a substantial reduction in the quality of online New Zealand news’’, he said.
But Fairfax and NZME say the commission had not properly taken into account the impact that cutting quality would have on their advertising revenues or on their ability to compete with other media businesses.
Fairfax NZ and NZME said in written submissions that a merger would provide a ‘‘much stronger financial foundation’’ for their businesses.
Farmer noted Fairfax and NZME’s argument that the merger would provide them with ‘‘a longer period of positive cashflow to allow them to maintain the number and quality of [their] journalistic coverage’’ while growing their digital revenues to the point that they could cover their fixed costs.
But the commission believed the detriments to media diversity would far outweigh the benefits, he said.
Commission chairman Mark Berry said in May when the watchdog declined the merger that concerns about media plurality had been central to the commission’s thinking.
Farmer said the commission acknowledged it was possible there might be increased ‘‘internal plurality’’ within the combined firm if the merger went ahead, but thought that was unlikely.
The commission accepted in its merger ruling that there was ‘‘ some degree of internal plurality already within NZME and Fairfax’’.
But it also said there was ‘‘no guarantee that current or increased levels of plurality would continue post-merger’’.
Fewer journalists and ‘‘more retrenchment’’ meant a more centralised editorial structure was likely, Farmer said.
Lawyers representing Fairfax, NZME and the commission are expected to wrap up their cases by the end of the week. However, it may be months before Justice Robert Dobson and lay adviser Professor Martin Richardson hand down their decision.