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Commerce Commission rejects Fairfax/NZME merger bid

A union between the two biggest media companies in New Zealand is not to be.

The Commerce Commission has rejected a merger bid between New Zealand's two main news media chains, saying it would have concentrated media ownership and influence to "an unprecedented extent".

The Commission released its final decision on the proposed Fairfax-NZME merger this morning, after several delays.

Read the full decision here.

The commission gave an initial thumbs-down to the proposal last November, saying it would reduce the "plurality" of voices and would give the new entity too much market power in areas like advertising.

It confirmed that decision this morning, saying its views since November were "largely unchanged".

"This merger would concentrate media ownership and influence to an unprecedented extent for a well-established modern liberal democracy," commission chair Mark Berry said.

"This level of influence over the news and political agenda by a single media organisation creates a risk of causing harm to New Zealand's democracy and to the New Zealand public."

Fairfax owns many of New Zealand's metropolitan newspapers, including the Sunday Star-Times, The Press and The Dominion Post; magazines including Cuisine and NZ House & Garden, and the website Stuff. NZME owns The New Zealand Herald, regional and community papers and a stable of radio stations, including Newstalk ZB and ZM.

The companies had argued that a rapidly changing media market driven by digital technology was eroding the economics of their businesses and they needed to merge to survive in the long term.

They said the biggest issue was the emergence of Facebook and Google as news competitors.

Both companies have threatened to cut back their investment in front-line journalism if the merger was knocked back, including regional and community reporting.

Commission chair Mark Berry said the commission recognised that both companies faced a challenging commercial environment.

"However, the commission disagreed with some of the scenarios they put forward about their respective futures without the merger," Dr Berry said.

"In our view, without the merger NZME and Fairfax will be increasingly focused on their online businesses as their print products diminish in number and comprehensiveness over time."

There was a "real chance" a merger could have extended the lifespan of some newspapers, Dr Berry said.

"However these benefits do not, in our view, outweigh the detriments we consider would occur if it was to proceed."

A merged entity would have employed more editorial staff than the next three largest mainstream media organisations combined, he said.

Including its radio network, it would have had a monthly reach of 3.7 million New Zealanders.

The commission was originally due to give its decision in mid-March but delayed doing so twice, after the two companies provided extra submissions.

Its decision could still be appealed to the High Court.

The Commission has already turned down one major proposed merger this year, rejecting a bid from pay television operator Sky TV and telecommunications company Vodafone.

 

 

This article was originally published by RNZ.