Editorial: The Commerce Commission doesn't get it

Commerce Commission chairman Mark Berry said the decision to block the Fairfax and NZME media merger was not "finely ...
KEVIN STENT/FAIRFAX NZ

Commerce Commission chairman Mark Berry said the decision to block the Fairfax and NZME media merger was not "finely balanced".

OPINION: The ground is moving under journalism companies everywhere. Readers are migrating in their hordes to the web, with its endless flood of information.

Newspapers are fighting for survival, and news websites, even the most prominent, struggle to compete with the ravenous global attention-grabbers – the Facebooks and the Googles.

These are all banalities by now. It is a shame for New Zealand that the Commerce Commission has not properly grappled with them.

The Commission has again rejected a merger application by Fairfax (publisher of The Dominion Post and stuff.co.nz) and NZME (publisher of the New Zealand Herald).

It ought to have seen how massive the media challenge ahead is – and allowed the companies to join, to give them a fighting chance of pushing on for years to come. Instead, it looked to the past.

For instance, the Commission's take on competition for online readers, a decisive part of its analysis, was limited to Fairfax, NZME and the major TV and radio broadcasters.

But focusing on this small pool ignores how profoundly media consumption is changing. With a phone in every pocket, more diverse and democratic forms of news are exploding. Facebook, especially, is unparalleled as an arbiter of news. For a growing number of people, it's the sole source. To pretend that it isn't competition for New Zealand journalism – that it's in a "different zone", as the Commission's Mark Berry put it – is nonsense.

The Commission did at least accept that Facebook, Google and co are competitors for advertiser spending, which has always been vital to keeping the news media afloat. That's good. After all, the Commission itself spent more than 45 per cent of its advertising budget on Facebook and Youtube in 2015/16, confirming the scope of the challenge. 

But its analysis of why this matters was thin. The point is not just that Facebook and Google are gobbling up the revenue, though they are. It is that this dominance makes paying for journalism vastly harder – and harms their hunt for readers.

The Commission made great noise out of its defence of democracy and media "plurality". Leave aside the feeling that this is more appropriate work for lawmakers (who have required no such plurality) than a regulator. The point, again, is that high ideals won't stand in for healthy companies – those are the only way to a boisterous news media.

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The Commission took a far too rosy view of the near future, banking on newspapers' survival, lethargy from the broadcasters, and the continued success of the companies' websites. But the market is in a state of near-constant upheaval. These are bold assumptions. Fairfax is already experimenting with change in Marlborough and chief executive Greg Hywood says, "further publishing frequency changes and consolidation of titles are an inevitability."

Finally, the Commission accepted that a merged company would have saved up to $200 million in the next five years, an enormous amount that could have aided journalism substantially. Yet Berry breezily declared that the decision was not "finely balanced" at all. Where else will such savings come from? How dim will the outlook have to be to justify change?

The Dominion Post will of course keep striving to produce outstanding journalism, in print and online. But at a crucial juncture, this was an opportunity missed.

 - The Dominion Post

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