Merger hopefuls give social media lesson
The High Court in Wellington was given a lesson in how people access news through social media as media companies Fairfax New Zealand and NZME fought to overturn a Commerce Commission block on their merger.
Fairfax NZ and NZME won the right to show a video explaining the mechanics of accessing news through sites such as Facebook and Twitter on the first day of the trial yesterday, after nearly 45 minutes of legal argument.
Jim Every-Palmer, QC, representing the Commerce Commission, had objected to the screening of the video, arguing it provided a ‘‘very slanted view’’ of the way people consumed news.
‘‘People might stumble across a news item’’ on Facebook or Twitter but neither provided a concentrated news-viewing experience, he said.
The changing nature of news consumption was a key theme on the first day of the trial, in which Fairfax and NZME are seeking to overturn the commission’s refusal in May to grant authorisation for their merger.
David Goddard, QC, representing Fairfax and NZME, said the commission’s concern with the merger appeared to be that ‘‘the number of voices discussing issues of importance to New Zealand’’ would be diminished.
But it had failed to appreciate the speed of change in media consumption, the importance of social media, and the fact the merged firm would still have to compete hard for people’s attention to win a share of the advertising dollar.
Goddard quoted a remark by US President Donald Trump that ‘‘having a Twitter feed was like owning The New York Times but without the losses’’.
The commission estimated in its May ruling that the merger would deliver economic benefits worth between $41 million and $204m over five years, but commission chairman Dr Mark Berry said a loss of ‘‘media plurality’’ was a fundamental concern.
Had the merger been allowed, Fairfax NZ would have been folded into NZME, and Australian-based Fairfax Media would have been cleared to become the largest shareholder in the combined business, with up to a 50 per cent stake.
Goddard said the commission’s assessment of the risk to media plurality was ‘‘essentially speculative’’ and outside its areas of responsibility and expertise.
A clause in guidelines issued by the commission in 2013 state that when assessing the public benefits and detriments of a merger authorisation it must quantify them ‘‘to the extent that it is reasonably practical, rather than rely solely on qualitative judgments’’.
The commission erred in assuming an online paywall was likely if the merger went ahead, Goddard said.
Fairfax NZ and NZME said in a written submission there was ‘‘no scenario in which the merged entity could profitably introduce a paywall for general online news content as a result of the merger’’.
Fairfax NZ’s publications include the Stuff website and newspapers The Sunday StarTimes,
The Dominion Post and The Press. NZME is listed on the New Zealand stock exchange and owns the New Zealand Herald as well as a large number of radio stations.
The High Court hearing is scheduled to last two weeks.
Fairfax NZ and NZME are expected to flesh out their case over the next three days, with the commission expected to begin its defence on Thursday or Friday.
Some of the arguments in the High Court are expected to be held behind closed doors as Fairfax NZ and NZME each set out what they expect might happen to their respective businesses if the bar on the merger remains.