John Drinnan: Big deal - beginning or ending?

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The NZME- Fairfax merger looks likely to get the all-clear. But with what conditions?
It remains unclear how NZME's Focus streamed news service would fit in with stuff.co.nz. Photo /Jason Oxenham
It remains unclear how NZME's Focus streamed news service would fit in with stuff.co.nz. Photo /Jason Oxenham

Some will see the proposed merger of Fairfax New Zealand and NZME as the beginning of the end of an era for New Zealand media.

That era began with Aussie parent APN News and Media purchasing Wilson & Horton in 2001 and Fairfax buying INL two years later.

But in my opinion the merger is the end of the beginning for the media revolution.

It means New Zealand will be facing off against the globalised media industry, not acting as a revenue earner for overseas owners.

For the past three years we've seen the convergence of radio, newspapers and digital media, and the development of streamed video news on nzherald.co.nz and the Stuff website.

In my view, a merger will probably mean more job cuts, some sales of assets such as community papers and a different approach to content.

There are bound to be numerous issues with such a big demerger from Australian corporates and the subsequent merging of assets.

Given the pressures facing print media, the valuation of newspaper assets has already created issues with the sale of APN papers in Queensland, according to the Australian Financial Review this week.

Few doubt that the Commerce Commission will clear the merger of NZME and Fairfax into a new super media company.

But in my opinion, the issue will be whether the commission imposes conditions on the deal, or obligations on the new company.

And fundamental to that will be the commission examining the merger's impact on news content, not just ensuring that competition is maintained in the advertising market.

The Association of New Zealand Advertisers' chief executive Lindsay Mouat indicated to me last week that ANZA has few concerns about a newspaper monopoly. After all, the two existing companies seldom compete directly, except in the Sunday newspaper market.

There is a territorial crossover between the Herald and the Waikato Times, and I believe there would likely be some rationalisation of distribution in the lower half of the North Island, where NZME owns papers in Hawkes Bay, Whanganui and Masterton.

It is a major merger - not least because of the complexities of the newspaper production process and the nuances of the different cultures and publishing systems.

New Zealand politicians have avoided specific rules such as cross-media ownership restrictions. This merger proposal comes at a time when Australian media are waiting for the relaxation of ownership rules - something which has been delayed by the impending election.

The public reaction to the proposed merger is muted, so far.

In my view, the main issue for the public will be ensuring there remains competition in news and in opinion, given the media's importance to democracy.

The Australian rules require a multiplicity of voices - at least for now - but there are no such requirements in this country.

AUT associate professor of communications studies, Wayne Hope, said a major issue was the conditions, if any, that are placed on the merger.

Diminished resources

Media commentator and former Herald editor in chief Gavin Ellis believes it is vitally important that we retain competition for news.

But there are tough times ahead for media companies and the focus is on fighting off the global invaders for advertising.

Diminishing media resources were brought into sharp relief last week, when Radio NZ and TVNZ worked together with Nicky Hager to cover the Panama papers.

Radio NZ chief executive Paul Thompson said the pooling of resources was timely, given the stresses facing the media.

Overseas, media collaborations have become commonplace, but in New Zealand, I wonder whether collaborations might have the effect of further reducing competition in newsgathering.

As for MediaWorks

There has been a relationship between MediaWorks and Fairfax, and given the radio competition between MediaWorks and NZME, you have to wonder how MediaWorks will fare after a merger.

Former MediaWorks chief executive Mark Weldon - for all his challenges with staff relations - quickly identified the fact that the digital offering needed urgent investment. Previous controlling shareholder Ironbridge had underfunded digital and it was outpaced by TVNZ.

There has since been significant spending. But the job of building up MediaWorks' digital arm will be even tougher if a merger of nzherald.co.nz and Stuff goes ahead. Meanwhile, TVNZ has focused on a stellar OnDemand offering, and its One News Now website has done well.

TVNZ chairwoman Joan Withers rejected my suggestion that TVNZ had pulled back from an even bigger development of One News Now, due to expectations of a Fairfax-NZME deal.

TVNZ recently formed a joint venture to provide a video news bulletin for Stuff, and it shares talent with NZME's Newstalk ZB.

It is not clear how the new venture with Stuff will fit with the Focus streamed news service now running on the nzherald.co.nz site.

- 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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