Big merger decisions soon to be revealed

New Zealand's laissez faire approach to media competition will reach two big crunch points in the next two months.

Crunch No. 1 will come on February 23, when the Commerce Commission is due to deliver its decision on the proposed merger of Vodafone and Sky TV.

Crunch No. 2 is on March 15, when the commission is to give its final word on the Fairfax-NZME merger.

The Sky decision will decide the future for pay television and the degree to which Sky's dominance of sports rights continues to hold sway in pay.

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New Zealand is unique in having no specific media competition laws. That means that for two decades, National and Labour effectively assisted Sky TV to develop a monopoly.

But Sky no longer has a monopoly, as it faces competition from new global players such as Netflix and Apple TV.

Spark has also set up Lightbox in competition. But issues remain with Sky's dominance of programming, and how far Lightbox and other competitors will be able to expand.

The commission's concerns about a merged Vodafone-Sky TV relate to the wholesale market for programming. There are concerns that a Voda-Sky programming linkup might shut out competitors.

Spark believes Lightbox has been hampered in buying content from Sky and the proposed merger would make matters worse.

More runway?

This looks set to be a huge year for news, but a hard one for the New Zealand news business.

Media companies are in trouble around the world - not least from Donald Trump and his campaign of bringing the press to heel.

In New Zealand, stark business issues are also ahead in 2017.

The March 15 commission decision will reveal whether it has changed its draft rejection of the Fairfax-NZME merger.

The common view among industry analysts is that the merger is unlikely to go ahead, partly because of the commission's strong rejection in its draft report back in November.

On the other hand, these are strange days, when bolts from the blue have become commonplace.

The merger would allow Fairfax and NZME an "extra runway", or more time to find new business plans, says NZME managing editor Shayne Currie.

All the while, Facebook and Google are ravenously eating into digital advertising revenue.

I'm from the Rogernomics generation, growing up with the idea that competition is the best way to create innovation. It does not sit easily to consider the alternative: allow us a sector monopoly, so we can have more time to find a new business plan.

But on a personal level, I can buy the idea that something special is at stake. If big, well-resourced local media companies are undermined, I fear for local journalism's ability to hold power to account.

At this point in history, that seems like a very bad outcome.

Getting stark

In my opinion, the challenges to New Zealand media are more stark than they are in the US or Britain.

That is due to our small scale and the unregulated market.

Media companies in the US can still offer advertisers scale to compete with social media.

Uniquely, we have no specific regulations to deal with the issues of plurality and ensuring diversity of views - issues identified in the commission's draft rejection of the merger in November.

New Zealand media have developed into duopolies in different sectors: NZME and Fairfax dominate news; TVNZ and MediaWorks in TV; NZME and MediaWorks in radio.

Fairfax and NZME insist there is no danger of a merger leading to fewer voices, and Currie says there seems to be a misconception of the way newsrooms work.

All news organisations have editorial leaders who make decisions independently of management and commercial considerations, he says.

There is no "Grand Poobah" directing editorial stances, says Currie.

If the merger is approved, the applicants have indicated there will be cost cutting, including reduction of staff to remove duplication.

If it's not approved, and NZME and Fairfax continue to compete, submissions suggest there will be more cost cutting to come.

State news

Given the issues facing local journalism, some news people are turning to taxpayers to give more.

You can argue that maintaining public service journalism is more worthy than funding reality shows. But NZ on Air is mostly about funding local entertainment, is already stretched and there is no enthusiasm for bankrolling news.

However, given the stress on the private sector, I believe the state needs to reassess its support for journalism.

Radio NZ has had some success in making content available to private sector organisations. The broadcaster has also experienced phenomenal growth in its online numbers - 13.2 million online users in 2016, up 67 per cent on the previous full year.

However, RNZ is hobbled by National's irrational dislike. On the one hand, it is damned as aloof, but then comes under political pressure if it is too popular and takes people away from the private sector.

More importantly, I believe the time is ripe for politicians to deal with the anomaly of TVNZ, which provides a comparatively low return on investment, competes with TV3 for diminishing ad revenue and takes a highly commercial, low risk approach to news and current affairs.