Peter Thompson: NZME-Fairfax merger decision leaves a regulatory challenge

Kevin Stent/Fairfax NZ

Commerce Commission chairman Mark Berry answers question on the decision not to allow the Fairfax merger with NZME.

The Commerce Commission's decision to uphold its draft determination and decline to authorise the merger between NZME and Fairfax NZ was an important decision, which ultimately upholds the Commerce Act's aim of protecting the interests of New Zealanders. 

The merger would have seen the creation of a news corporation controlling almost 90 per cent of the daily newspapers in New Zealand, the two most popular news websites (Stuff and nzherald.co.nz), and half the commercial radio sector.

There would have been an inevitable loss of news media plurality and a risk of allowing a media operator such an unprecedented concentration of editorial agenda-setting power. The Commerce Commission acknowledged these concerns in its decision. However, it is still possible NZME and Fairfax will seek to challenge the ruling through the courts. 

Peter Thompson: The NZME-Fairfax merger proposal would have been unthinkable in virtually any other democratic society.
VUW

Peter Thompson: The NZME-Fairfax merger proposal would have been unthinkable in virtually any other democratic society.

The NZME-Fairfax merger proposal would have been unthinkable in virtually any other democratic society, including Australia. The fact that the Commission's ruling required such a protracted series of complex legal deliberations is symptomatic of just how weak New Zealand's media regulations and competition laws are. The Commerce Act urgently needs revising to ensure that issues such as media plurality, which are fundamental to the fourth estate and healthy democratic functioning, are no longer issues of contestation by opportunistic corporations.

The Commission's decision to decline the merger, nevertheless, leaves NZME and Fairfax in a precarious situation. The business models of NZME and Fairfax are in difficulty and there has been an overall decline in hard copy revenues, as well as a significant loss of online advertiser revenues, to social media and search engine. 

READ MORE:
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* Fairfax may cut newspapers after merger with NZME denied

030517. News. KEVIN STENT/FAIRFAX NZ. Commerce Commission chairman Mark Berry announces the decision to block the ...
Kevin Stent

030517. News. KEVIN STENT/FAIRFAX NZ. Commerce Commission chairman Mark Berry announces the decision to block the Fairfax and NZME media merger

That said, it is important to note that their newspapers are still making money. The problem is they're not profitable enough to keep their shareholders happy. The big problem online news media faces is the loss of revenue to Google and Facebook, which have co-opted the online audience's discovery of news content despite contributing nothing to the cost of its production.

NZME and Fairfax are important contributors to the news media ecology in New Zealand, and given the Commission's rulings they cannot be left to wither while Facebook and Google suck them dry. It is ncumbent on the Government to explore ways in which a healthy Fourth Estate can be maintained.

Here are three suggestions:

NZME / Fairfax merger generic
TOM PULLAR-STRECKER/FAIRFAX NZ

NZME / Fairfax merger generic

- Review and revise the Commerce Act to deter opportunistic merger proposals and anti-competitive practices, which undermine the public interest, and to reconfirm the Commerce Commission's obligation to take account of a full range of public benefits, both tangible and intangible.

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- Review the regulatory frameworks for news media in New Zealand, with a view to ensuring that the social media and search engine operators, which control the online audience's discovery of content, are obliged to contribute to the cost of providing that content.

- Recognise that the converged digital media ecology is not a cornucopia where the free market ensures everyone can access everything they want, whenever they want, and through whatever device they want. There are still important market failures, especially in respect to investment in high quality local journalism. The need for independent, non-commercial, publicly-funded media services on all platforms remains the core of the Fourth Estate and the cornerstone of our democracy.

- Peter Thompson is a senior lecturer in media studies at Victoria University of Wellington, and chair of the Coalition for Better Broadcasting

 - Stuff

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