Riding the Brexit wave
Martin Hawes on investor choices
Fairfax and NZME tell a sad story in their merger application to the Commerce Commission. Voracious competitors are stealing their audiences and advertising. Their very existence is threatened.
But if they are allowed to merge, they will fight back for the sake of all New Zealanders. They promise they will offer more, better and relevant news and entertainment.
Their commercial case for this is unconvincing, as last week’s column discussed. Their journalistic case is deeply problematic, as this column considers.
They say they are merely large operators in a crowded market. They devote almost 30 pages listing competitors from global media companies to local bloggers, and describing the opportunities for new entrants.
But the merged company would employ a large majority of New Zealand journalists, and have a near monopoly of newspaper readers and substantial audiences online and on radio.
Thus, it will have some power to shape what we learn and think. Moreover, who decides how to use that power will be concentrated in fewer hands.
The Commerce Commission is equipped by law and resources to examine hard data such as share of advertising markets. But it does not have the laws and expertise it needs to examine the soft power exercised by media companies. Yet, public confidence in its merger ruling will hinge on its analysis and judgements on those media issues.
That won’t be easy. The two companies don’t know how the merged entity will operate. They say they have scrupulously avoided discussions while still deemed competitors. Even internally, speculation is rife but strategising minimal.
Over time, however, commercial logic dictates journalists will work in one highly integrated national organisation. Some will still be based in regional offices and smaller towns. But they will draw heavily for their local print and online publications on centrally supplied news and features on politics, business, sport, lifestyle and the like.
This would be the most costeffective structure. Logically, there would only be one integrated national newsroom for digital, print, and radio, and only one subordinate newsroom in each region, plus local bureaux.
It would also be the best commercial structure, allowing the company to customise content and advertising across digital, print and internet radio down to an individual audience member, based on what it knows about his or her reading, viewing and listening habits. This is the secret of Facebook and Google’s success.
This unified national structure will inevitably mean fewer journalism jobs, and fewer people making editorial decisions. The losses would be far steeper if the merged company fails commercially.
The outlook is grim. Globally, the internet has blown apart publishers’ lock on readers and advertisers. The winners are specialised content creators at the beginning of the value chain and the likes of Facebook and Google that dominate content discovery at the other. Providers of content delivery, such as websites and print publications, are floundering in the middle.
Two insightful articles on this by Ben Thompson, a US analyst, are available at and .
There is one way the merged Fairfax / NZME could try to fight back. As a New Zealand company it could generate a far higher degree of trust with its audience, turning its loyalty into a competitive advantage against the likes of Facebook and Google.
To build high trust, the merged company must commit to a charter embracing its code of ethics, the data it collects on us, how it makes money from us, how it makes editorial decisions, what editorial influence it allows sponsors and native advertisers, where it stands on public issues, how it guarantees plurality of voices, how it deals with grievances, and how it prevents powerful shareholders dictating editorial positions.
If it won’t commit to such a charter, regulators must decline the merger.
The merged company would employ a large majority of new Zealand journalists