High Court rejects media merger plans

NZME and Fairfax NZ’s merger can’t go ahead, the High Court says.

The media companies wanted to merge their operations but the Commerce Commission refused to approve the deal.

NZME and Fairfax took the regulator to the High Court in October, but Justice Robert Dobson upheld the commission’s position in a decision released yesterday morning.

NZME owns the New Zealand Herald, nzherald.co.nz, a string of North Island newspapers, and radio stations such as Newstalk ZB, The Hits and ZM.

Fairfax owns Dominion Post, the newspapers.

Justice Dobson and lay member Professor Martin Richardson rejected the dominant publishers’ appeal to overturn the regulator’s decision, saying the commission was within the law in leaning on the loss of media plurality in turning down the transaction and agreeing that a substantial loss of that diversity of voice would be “virtually irreplaceable”.

“We cannot be certain that a ma- Stuff.co.nz, the Press and other terial loss of plurality will occur because of the factors we review that would hopefully assist in maintaining it,” the judgment said. “However the risk is clearly a meaningful one and, if it occurred, it would have major ramifications for the quality of New Zealand democracy.”

NZME and Fairfax argued the reliance on the loss of media plurality was outside the regulator’s legislative framework, and that even if it was within it, the quantifiable benefits of the deal were such as to warrant approval.

Justice Dobson disagreed, saying the statute didn’t constrain the regulator and that a balanced approach was needed in weighing up the benefits against the detriments.

NZME chief executive Michael Boggs said he was disappointed with the decision as the company believed the merger was in the best interests of shareholders and the media industry as a whole.

He said NZME remained committed to its strategic priorities that include growing audience reach, retaining print revenue, returning radio to growth, boosting new revenue streams, managing costs and continuing to develop people and talent.

“While the Fairfax merger offered us benefits, we have not been resting on our laurels in the last 18 months as we pursued the transaction. We will continue to examine shareholder value enhancing strategic initiatives, while enhancing the competitiveness of content generation and distribution,” Boggs said.

NZME will review the full judgment, including its option to appeal the High Court’s decision.

NZME’s shares closed steady at 87c yesterday.

Commission chair Mark Berry said: “The court’s ruling confirms we have the jurisdiction to consider detriments beyond those which are economic and that we can consider the wider public benefits when assessing merger authorisation applications.”

The commission is entitled to seek court costs of the appeal.