As widely reported this morning, the Commerce Commission has declined the proposed merger of the country’s two biggest media companies.
See Tim Murphy’s backgrounder: Media merger D-day looms
If it is a No, the parties could challenge the decision in the courts. However that would be costly, and more importantly, time-consuming when both companies say they have too little time left in the battle for revenue against Facebook and Google. A challenge would most likely centre on the commission considering social good concerns beyond its Commerce Act remit.
Should no appeal be declared, the head of Fairfax Australia, Greg Hywood, has predicted his company in New Zealand would be entering the “end game”. That would initially see draft plans to close or cut publication of some newspaper titles. Those high on any list for urgent cost reduction could include the Waikato Times, Timaru Herald, Marlborough Express (already down to three day publication), the Sunday News and numerous small and marginally viable community titles. Expect the Southland Times, for example, to be sold (possibly to arch-rival Allied Press up the road in Dunedin).
For NZME, a No decision would mean cuts and closures as well, with the Daily Post, Rotorua, vulnerable as well as community papers. The company has talked down its prospects to the commission, to emphasise the need for merger relief, but has performed relatively well boosted by big cost cuts. Print advertising continues to dive and digital advertising is not growing as hoped. NZME’s radio business has been an under-performer, losing in the revenue and ratings war against MediaWorks in what should be a growth part of the media. Any standalone NZME operation would need to put those radio operations right to provide ballast against the print/digital declines.
A No decision could also see a new round of media mergers proposed. It is possible Fairfax could sell or seek part-mergers with Newshub, Spark or other tech firms. Parts of NZME would be a cheap feed for non-media players hungry for content.
Was a merger the answer? Nick Grant: Why the ‘StuffMe’ merger isn’t any solution at all
It’s tough watching them get distracted by the hope of merger, which really is a short-term band-aid. Instead, they should be focusing their attention and resources on tangible long-term solutions.
Explaining the decision, the Chairman of the Commission said:
“This level of influence over the news and political agenda by a single media organisation creates a risk of causing harm to New Zealand’s democracy and to the New Zealand public.”
Basically the @NZComCom couldn't believe a) the secret numbers Fairfax and NZME put up and b) the assurances they'd ensure quality/plurality
— Tim Murphy (@tmurphyNZ) May 2, 2017
A bad day for journalism, job losses to come… But that would have been the tweet either way. https://t.co/n6JT3iL0JX
— Tim Watkin (@Tim_Watkin) May 2, 2017
— Morning Report (@NZMorningReport) May 2, 2017