Fairfax Media seeking permanent NZ replacement after Tong's exit

Thursday 9th March 2017

Fairfax Media says it's looking for a permanent replacement for New Zealand managing director Simon Tong, who has resigned just days before a Commerce Commission ruling on the proposed merger with NZME, a step the media companies say they need to survive a changing industry.

Tong, who joined Fairfax NZ in September 2013, will leave next Friday and begin as ASB Bank's executive general manager technology, innovation and payments on March 27, making him part of ASB’s executive leadership team. Andrew Boyle will be acting Fairfax NZ managing director, the media company reported. Boyle last stepped up as acting chief in 2013 when Allen Williams returned to Fairfax in Australia.

A Sydney-based spokesman for Fairfax confirmed to BusinessDesk that the company will run a replacement process for the role, but wouldn't speculate on what kind of skillset the publisher would be seeking.

Tong's exit comes when Fairfax's New Zealand business is at a crossroads, with an NZME merger seen as the best way to create a dominant news organisation better equipped to compete with online businesses that piggyback on its content. The merger decision is due next Wednesday.

However, the regulator has already rejected such a move in its draft determination, which competition lawyers see as a good steer on the final ruling, meaning Fairfax may have to come up with a 'plan B'. Group chief executive Greg Hywood has warned a formal rejection would spell "end-game" for its kiwi assets because they need to stand on their own feet, and the Australian parent has previously confirmed the New Zealand business has attracted a low-ball offer from a secret suitor.

The regulator's draft determination in November rejecting the merger said it would "result in an unprecedented level of media concentration for a well-established liberal democracy" with the potential loss of multiple media voices a major part of the decision.

The counterfactual - if the commission does not approve the merger - will involve cost-cutting "in a way that will affect the coverage and quality of the news products that these parties produce today" the two companies said in a letter from their lawyers, Russell McVeagh, after the draft decision was published.

The regulator held a public conference in December. In NZME and Fairfax's public response to questions raised during the conference, the companies argued that reducing duplication in news coverage would be "efficiency enhancing and will not materially detract from the volume or quality of news coverage", and that Television New Zealand, MediaWorks' Newshub and Radio New Zealand are and will remain a serious competitive constraint if the merger is allowed.

In the lawyers' letter to the Commerce Commission, the publishers said understanding the competitive media market required the recognition "that mobile and video is where the market for news and entertainment is growing rapidly" and free-to-air operators have considerable advantages in producing this. The regulator did so in its recent rejection of the Sky Network Television/Vodafone New Zealand merger, the letter says.

"Simply put, there is no exclusivity in the creation of news content, it is freely available," the lawyers said. "There are no barriers to entry or expansion in the creation of news content, journalists can be hired. There are no barriers to switching for consumers, especially in the digital space where consumers can switch between sources of information with a click or a Google search."

BusinessDesk.co.nz

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