Commerce Commission delays decision on 'complex' Fairfax-NZME merger

Monday 22nd August 2016

The Commerce Commission has delayed its decision on the proposed merger between NZME and Fairfax Media's New Zealand assets, saying the deal is complex and it needs more time to assess the impact on both news content and the advertising market.

The regulator had been scheduled to make a decision on the merger today but said it 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.

"The commission is continuing to assess the effects of the proposed merger on areas such as the provision of national, regional and local news content and information, including the impact on the quality, accuracy and range of the news media in New Zealand," it said. "In addition, the commission is assessing whether the proposed merger would enable the parties to increase prices to advertisers and consumers."

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.

They also argued that there was little objection from advertisers, suggesting a competitive advertising market will remain if the two media groups are allowed to combine. And they said that in a "two-sided market" where media companies had to attract audiences with content in order to be attractive to advertisers, whose spending, in turn, funded the content, there were economic reasons to maintain the quality and diversity of content.

A merger would combine NZME's flagship New Zealand Herald newspaper and nzherald.co.nz 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 stuff.co.nz 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 were last at 84 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.

BusinessDesk.co.nz

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