NZME, Fairfax NZ get another month to convince regulator on merger

Friday 10th March 2017

NZME and Fairfax New Zealand have got another month to convince the Commerce Commission that allowing a merger of the country's two dominant news publishers is in the public interest.

The regulator today said it had agreed with the companies to extend the deadline on making a final decision on their merger application, which was to have been announced next Wednesday. The decision has been pushed out to April 11.

"The extension was required in order for the commission to properly assess and account for the further information it has obtained and received following its draft determination and conference," the regulator said in a statement. "The commission will not be accepting any further public submissions on this authorisation application."

The extension comes a day after Fairfax NZ chief Simon Tong announced his departure to take a job with ASB Bank, although Australian parent Fairfax Media says it's looking for a permanent replacement. In the interim, chief operating officer Andrew Boyle is filling in, as he did in 2013 before Tong's appointment.

The media companies want to stitch their businesses together in an effort to aggregate their resources and run a leaner and more efficient organisation as global digital rivals like Facebook and Google, which don't generate their own content. gobble the advertising revenue previously available to print publishers.

In a letter to commission chairman Mark Berry last month, Tong and NZME boss Michael Boggs said they were heartened by the regulator recognising the convergence of media in its decision to reject a tie-up between pay-TV operator Sky Network Television and telecommunications group Vodafone New Zealand, and said that framework should also be used in the Fairfax/NZME merger.

They said the difference between the two deals was that Sky owned premium sports content, but that news doesn't have a similar protection with "no copyright in the facts" and that "stories can easily be rewritten and published by competitors".

The regulator's draft decision was that authorising the deal's impact on the diversity of media coverage outweighed the size of expected financial gains. The Commerce Act can authorise anti-competitive deals, provided it's satisfied "the acquisition will result, or will be likely to result, in such a benefit to the public that it should be permitted".

Fairfax and NZME have previously downplayed the size of editorial job cuts if a merger gets the go-ahead, saying of the $136.5 million to $218.7 million of quantified benefits over five years in the draft decision, only 10-to-13 percent of that total would come from "a reduction in duplicated journalist roles". More recently, they talked up the benefits of allowing a merger as creating a sustainable business that supports local journalism and contributes to New Zealand's tax base.

In a separate statement, the media companies said they received a request from the regulator for the extension, which they agreed to as being consistent with "typical practices" of the Commerce Commission.

"There has been a significant amount of information provided to the NZCC by NZME and Fairfax since the Commerce Commission issued its draft determination on the merger in November 2016," the companies said. "NZME and Fairfax believe this information further substantiates the key arguments set out in the original merger application, which support a clearance or authorisation being granted in respect of their application."

BusinessDesk.co.nz

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