John Drinnan: Merger talk a sign of the times

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Two media giants into one? Changed market makes NZME-Fairfax tie-up a real prospect.
The mooted merger would create a near-monopoly in newspapers, but that is already a fact of life in many individual markets. Photo / NZME
The mooted merger would create a near-monopoly in newspapers, but that is already a fact of life in many individual markets. Photo / NZME

When Australian companies bought INL and Wilson & Horton 13 and 15 years ago, a merger of the local news organisations would have seemed laughably unlikely.

New Zealand already had extraordinary cross-media ownership, and such a move would create a major media company with vast influence over mainstream access to news and information.

But now, the merger of the Fairfax and APN New Zealand assets looks likely to go ahead - by the end of the year, if the players' hopes are met.

Joan Withers' viewpoint of the planned merger is more nuanced than that of the players themselves. She is chair of TVNZ, a former CEO and chair of Fairfax NZ and a former member of the board of its Australian parent company.

She says it would change everything for New Zealand media.

"This is big," she says.

By world standards, New Zealand already has an astonishing level of cross-media ownership, and as a result, the local scene is dominated by duopolies in mainstream TV and newspapers. Meanwhile, nzherald.co.nz and Stuff - which will be part of the planned merger - dominate online news.

The merger would turn the newspaper duopoly into a virtual monopoly.

But it's not as simple as that. Times have changed, and mainstream media are battling for survival against Facebook and Google - global giants eating into their advertising revenue.

A merger that would have seemed impossible 10 years ago now looks highly plausible.

The question will be whether the competition watchdog, the Commerce Commission, understands the new dynamics of a domestic media industry that is under siege.

Withers says the rest of the industry will be watching carefully, as the commission deliberates on what constitutes media market dominance in 2016.

The big news

As soon as July, APN's New Zealand operation, NZME - publisher of the Herald and owner of many radio stations, among other things - could be demerged and set up as a stand-alone listed company. It would then buy the assets of Fairfax New Zealand, subject to Commerce Commission clearance.

Matt Goodson of Salt Funds Management - which has $1.4 billion invested in New Zealand - welcomed the prospect of a local media stock, meaning Sky TV would no longer be the only listed local media company.

What is not yet clear is how consumers would fare from the deal.

Two issues affect merger clearance deliberations: whether a merger reduces competition; and whether it increases the cost of goods and services.

One question will be whether a merger would harm competition in the advertising market, increasing the cost of advertising.

The other question is the impact on consumers, including whether it will reduce the number of voices and opinions available to the public. And that will be influenced by the degree to which the two online media brands - nzherald and Stuff - maintain their distinctive writers and features. That sort of detail has not been worked out.

The reality is that mainstream media companies are awash with competition from new players and many people now read news and get opinions from several places - not just locally, but from around the world.

This merger would almost create a newspaper monopoly, but that is already a fact of life in many individual markets. Fairfax and NZME compete in the Sunday newspaper market - with the Sunday Star-Times and the Herald on Sunday - but otherwise, markets are split between NZME in the north of the North Island, Hawkes Bay, Wairarapa and Wanganui, with Fairfax dominating the rest of the country except Otago, where the independent ODT is the dominant player.

But newspapers are in decline internationally and nobody would be surprised if the merger led to the closure of a regional title. Across the Tasman, Fairfax in Australia believes the days of the seven-days-a-week paper are numbered.

Excited

The state broadcaster's decision to attach itself like glue to Nicky Hager has gone down poorly with the Government, I am told.

Prime Minister John Key doesn't like Hager, going back to the days of the Dirty Politics scandal. Partly due to Key's outbursts against Hager, in my opinion, views on the investigative journalist have become polarised.

So the decision by state media to join with Hager in investigating the Panama Papers is a good sign of editorial independence at a time when we need it most.

A Wellington source said RNZ chairman Richard Griffin was comfortable about the ongoing joint investigation involving TVNZ, RNZ and Hager. But he is said to be "disappointed" by the focus on Hager in the RNZ coverage.

Now, you have to be very careful here. Just because the PM loathes an investigative journalist, it's no reason why he should be hidden away.

This is New Zealand, not Zimbabwe.

Hager is a proven researcher and journalist who has had a bigger impact than many traditional journalists.

However, this item on RNZ leaves me wondering if the broadcaster might have been a little too caught up in the excitement.

I asked RNZ chief executive Paul Thompson whether the focus on Hager took anything away from RNZ's independence.

He said "our audiences have relished the coverage and I'm not aware of any adverse feedback from them about Nicky's involvement.

"RNZ has full editorial control of our coverage and the team's work has been of high quality.

"This type of collaboration is an exciting and positive development for journalism at a time when the news media are under intense pressure," Thompson said.

Scouting about

I'm told MediaWorks director Julie Christie has displayed renewed zeal after the departure of chief executive Mark Weldon last week.

Insiders say Christie was close to Weldon in the early days, but I'm told she withdrew somewhat as he established himself in the role, as did the board.

Some staff will now be wondering if Christie might eventually be selected for the chief executive's job.

As a sidelight, when a new permanent CEO is appointed, there will be interest in their support for the Scout website, co-owned with gossip writer Rachel Glucina. Weldon was always Scout's biggest fan. Alternatively, I can see Scout having a role in the new American glamour channel Bravo, that takes over from Four in July.

Debate on this article is now closed.

- NZ Herald

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John Drinnan has been a business journalist for twenty years, he has been editor of the specialist film and television title "Screen Finance" in London, focussing on the European TV and film industry. He has been writing about media in New Zealand since the deregulation of the television industry in the late 1980s.

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