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OIO approves Fairfax/NZME merger, ComCom decision still pending

Thursday 22nd September 2016

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The Overseas Investment Office has approved the proposed merger between Fairfax Media's New Zealand assets and NZME, although the deal still needs NZME shareholder and Commerce Commission approval to go ahead.

A month ago, the Commerce Commission delayed its decision on the proposed merger, saying the deal is complex and it needs more time to assess the impact on both news content and the advertising market. The regulator will release a draft determination in early November ahead of a possible public conference in December if needed.

"The commission would then consider all submissions and publish its final decision on or before 15 March 2017," it said at the time.

The commission received 50 submissions on the merger application, including many that opposed various aspects of the deal, although in response Fairfax Media and NZME said some submitters strayed from the competition framework of the Commerce Act to cite concerns that aren't relevant to the commission's assessment of whether the transaction would result in a substantial lessening of competition.

A merger would combine NZME's flagship New Zealand Herald newspaper and website, a portfolio of radio stations including Newstalk ZB and the GrabOne daily deals site with Fairfax's suite of newspapers including the Sunday Star-Times, The Press, the website and magazines including NZ House and Garden.

NZME listed on the NZX as a stand-alone New Zealand media company on June 27 after being spun off from APN News & Media through the issue of shares to APN's existing shareholders.

The shares listed at $1 but by July 13 had dropped to a low of 69 cents and last traded at 78 cents amid speculation some Australian shareholders aren't natural holders of a New Zealand media business and represent an overhang of stock in the market, while uncertainty about the final shape of the company and the downturn in advertising revenue in the media generally capped the pool of potential buyers.

Rupert Murdoch's News Corp is a 14.99 percent shareholder in NZME.

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