Jamie Gray is a business reporter for the NZ Herald

NZME, Fairfax merger plan: 'No material overlap'

NZME and Fairfax, in their merger application to the Commerce Commission, said there was "no material overlap" between their respective New Zealand publishing businesses but said there was overlap in the digital provision of news.

The parties are seeking to merge their operations which, if successful, would create New Zealand's biggest stand alone media company.

Fairfax Media mastheads. Photo / Jason Oxenham
Fairfax Media mastheads. Photo / Jason Oxenham

Separately, NZME's owner - Australia's APN News and Media - wants to split the company off from the parent.

READ MORE:
Plan to create NZ's biggest media company
Merger plan: What you need to know

"Even looking solely at the way the businesses were historically structured, before their respective reconfigurations as 'digital-first' businesses, in the areas of newspapers, community publications and radio, the transaction gives rise to no material overlap," they said in their application to the competition watchdog.

In paid daily papers, in almost every New Zealand region, there is only one "masthead", because consumers have already picked their winner.

The New Zealand Herald is Auckland's paid daily, The Dominion Post is the paid daily for Wellington, The Press is the paid daily for Christchurch.

In Waikato, the Herald does have some circulation in the same area as the Waikato Times, and in the lower North Island The Dominion Post has circulation in the same area as NZME's Hawke's Bay Today.

However, there is no region in which there is head-to-head competition between two strong incumbent paid dailies focused on the same region, the parties said in the application.

"As a result, the constraint on the subscription/cover price of a daily paper is, and will remain, the fact that any price increase would necessarily reduce circulation," they said.

The application said there was some overlap in distribution area between the parties' Sunday papers in the North Island.

The Herald on Sunday, however, has its primary circulation volumes in Auckland, while the Sunday Star-Times has its primary circulation volumes in the balance of the North Island (and the South Island).

Both Parties have a number of free community publications. Those will remain constrained on the consumer side by over 80 independently owned community papers, and on the advertising side by online and other media alternatives, other community papers, advertising flyers, and the strong countervailing power of advertisers, the application said.

There was no overlap in radio, as only NZME has radio assets, which compete with MediaWorks' radio assets and with RNZ, as well as with a range of independent radio stations and online radio streaming alternatives.

The parties also said there was no substantive overlap in the subject matter magazines, other than the overlap between Cuisine and the Herald weekly insert magazine, Bite.

NZME and Fairfax said that in the digital advertising space that they compete against an "almost limitless" number of other websites and platforms for online advertising spend.

The parties acknowledged that, in the online provision of news/information, there was overlap between NZME's nzherald.co.nz and Fairfax's stuff.co.nz.

"However ... those sites compete for consumers with strong local and global content providers, including TVNZ's One News Now, MediaWorks' Newshub, Radio New Zealand, NBR online, ODT online, the Spinoff, Googlenews, Yahoo, The Daily Mail, MSN, CNN, BBC, and The New York Times, and social media platforms such as Facebook, Twitter, Instagram, and YouTube.

Additionally, they must compete against all other types of websites/platforms for consumers' attention (as news/information is just one type of content that attracts consumer attention and drives advertising revenue).

"The parties compete in a crowded, converged print/digital advertising market, with a large number of other providers of advertising services," the application said.

Looking only at print publications, there will be no material change to the constraints on subscription prices. There was limited "head-on" competition for subscription dailies today, the application said.

The Commerce Commission's decision on the application is expected to take some months.

- NZ Herald

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