Now or never to avoid 'aggressive' cuts to journalism, media firms warn merger regulator

A final decision on the media merger should be made by the Commerce Commission by March 15.
TOM PULLAR-STRECKER/FAIRFAX NZ

A final decision on the media merger should be made by the Commerce Commission by March 15.

Fairfax New Zealand and NZME have warned it may be now or never for their proposed merger, and refusal will mean "aggressive" cuts to journalism.

Responding to a draft ruling from the Commerce Commission that the merger should be declined, the two companies said the "status quo" could not persist.

Print advertising revenues were falling worldwide by at least 15 per cent a year and the circulation of New Zealand daily newspapers was on track to nearly halve in the 10 years to 2020, to an average of 321,000 papers a day, they said.

A merger means more newspapers for longer, Fairfax and NZME have told the Commerce Commission.
TOM PULLAR-STRECKER/FAIRFAX NZ

A merger means more newspapers for longer, Fairfax and NZME have told the Commerce Commission.

"Given the pace of change the industry is facing, there is unlikely to be a 'next time' for this transaction."

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The companies said they had nearly exhausted opportunities to cut costs in administration. If the merger was rejected they were likely to "aggressively consider cuts to frontline news functions such as reporting".

Cuts would be felt deepest in "regional and local coverage and minority issues", they said.

The commission said in its draft ruling that it was minded to reject the merger because of concerns over media diversity, saying it would leave 90 per cent of the print newspaper industry in the hands of a single owner.

If the merger is ultimately approved, Australia's Fairfax would own about a 41 per cent stake in the merged business.

But the media companies said no "single shareholder" would ultimately own more than 9 per cent of the merged firm, given Fairfax is itself listed on the Australian stock exchange and has a diverse range of shareholders.

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Campaign for Better Broadcasting (CBB) chairman and Victoria University media lecturer Peter Thompson said it was up to the two companies to show how editorial independence and "plurality" would be sustained.

"If the merger goes ahead, we don't know who might buy [the firm] at some point in the future. It could be a Rupert Murdoch."

Thompson said "some but not all" of the concerns surrounding media diversity could be removed if a cap was placed on the number of shares an individual could control in the merged firm.

"I did a 'quick and dirty' content analysis of NZME and Fairfax's coverage of the merger so far and although there are a variety of voices, there is a bit of a skew towards giving voices to Fairfax and NZME management.

"If there is some other public policy issue, do you want an entity with that level of editorial clout – on radio and across the daily press and online news – possibly being able to dictate and shape the direction of editorial content?"

Fairfax and NZME appear to be paving the way for a possible legal challenge if the merger is rejected.

They sent the commission a "legal submission" that argued the regulator had stepped outside its jurisdiction in its draft ruling by proposing to reject the merger based on what they said was "a social policy judgment".

They pointed to a statement the commission made in 1986 that said it did not have the power to reject a merger or takeover based on the independence of the press or editorial freedom.

The Commerce Commission will hold on a conference on the merger on Tuesday and Wednesday, which might also stretch to Thursday morning. A final ruling is not expected until March. 

 - Stuff

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