It is time for a uniquely Kiwi solution to stabilise NZME's share registry and keep private equity's hands off a prime New Zealand media asset.
NZ Super Fund boss Adrian Orr and ACC boss Scott Pickering take note.
Turning a blind eye while private equity players and global hedge funds - swoop in (as The Australian newspaper forecast this week) - to gobble up NZ media assets and slash costs "to extract high levels of cash in the short term" is hardly in our national interest.
New Zealand media is stretched enough as it is.
Yet, that could well be the upshot if the Commerce Commission in its final determination turns down the application for NZME and Fairfax NZ to merge their interests.
I would argue that the sustainability of New Zealand media is of just as much - if not more - importance to the national interest as having Government-associated funds propping up Kiwibank, or, in the Super Fund's case investing in and establishing an NZ-owned downstream fuel business such as Z Energy.
If Orr and Pickering are not already considering the option, they should be.
And while former Prime Minister John Key shirt-fronted Mark Zuckerberg over Facebook's tax delinquency - neither he nor the National-led Government - considered whacking the Facebook and Google duopoly with anti-trust measures to stop their siphoning away the advertising revenues that the local media companies need to stay viable.
In Australia, South Australian senator Nick Xenophon has advocated that the two internet giants should be compelled to pay a content fee to local media producers to offset their revenue grab.
NZME boss Michael Boggs yesterday unveiled a creditable result for the company's financial year.
The company, which owns the New Zealand Herald, Newstalk ZB and a suite of entertainment radio brands including ZM and The Hits, made a pro forma net profit after tax of $27.8 million for the year to December 31, up 1 per cent on the prior year.
Analysts who dialed into a teleconference with Boggs praised the result which was above expectation. NZME is clearly on a return to revenue growth.
But it needs time to firstly realise the benefits of the integration of its print assets (like the NZ Herald), the Radio Network and GrabOne and invest in and grow new businesses to provide additional earnings to offset the challenged parts of the business.
Fairfax Media chief executive Greg Hywood has argued in front of the commission that if the merger is disallowed it would "become end game" for Fairfax NZ's media assets.
"We don't have the capacity of deep pockets of private money to subsidise journalism," Hywood told a commission hearing in December.
"There are many proprietorial models where wealthy individuals and families, for social and political influence, own media companies, but we have shareholders and they demand that these publishing businesses stand on their own feet."
The sanest solution is for the Commerce Commission to allow the merger to proceed. It has arguably indulged in over-reach in its draft determination by giving too much weight to the effect of the merger on the plurality of editorial voices over ensuring financial viability in the first place.
If the commission believes private equity will rate such plurality considerations above financial viability it needs to join the real world.
Such considerations can in any case be addressed through behavioural undertakings.
The Commerce Act can authorise anti-competitive deals, provided it's satisfied "the acquisition will result, or will be likely to result, in such a benefit to the public that it should be permitted."
If the merger does proceed, NZME will acquire all of the shares in Fairfax NZ from its Australian parent for $55m. Fairfax Media will have a 41 per cent shareholding in the enlarged NZME.
On the surface this is attractive.
NZME would acquire an experienced media company as a major shareholder and ought to be able to editorially leverage the Australian firm's media assets like the Australian Financial Review.
Trouble is Fairfax Media is already under strong shareholder pressure to sell non-core assets. It is hard to see a 41 per cent stake in NZME being considered part of its long-term core business.
Enter the Super Fund and ACC.
I've proposed an NZ inc media investment before - notably at the Infinz Awards (the annual shindig for bankers, investment bankers, brokers and analysts) when I suggested it was time the financial community got behind a drive to bring our prime media companies back into New Zealand ownership.
NZME has moved down that track following the decision by its former owner APN News & Media to list the company on both side of the Tasman.
But it still requires a long-term major shareholder which won't be subject itself to its own shareholder pressures or a private equity raid as speculated in the Australian media.
The Super Fund under Orr's leadership has taken a nationalistic approach.
Apart from Kiwibank and Z Energy, it has invested in NZ farms and other assets. It has also helped to ensure the long-term viability of our capital markets.
When the Super Fund and ACC struck their deal over Kiwibank (the Super Fund has 25 per cent and ACC 20 per cent) they agreed not to onsell shares outside of the existing (Government) shareholding base within five years.
The Government in any case retains pre-emptive rights.
A similar deal could give the combined NZME and Fairfax NZ a much needed window to stabilise and diversify their businesses.
One of the key questions analysts had for Boggs yesterday related to earnings hedges; whether NZME had plans to develop its real estate and jobs offerings.
The questions would have been prompted by the stellar performance of Fairfax Media's cash cow Domain - which will be spun off into a separate property listing later this year.
Diversification is clearly under discussion. But again it needs time to emerge.
But will NZME be given the chance? The Australian reported that private equity funds are hovering to launch an on-market takeover of NZME in the event the merger does not proceed - so "they can extract several years' worth of valuable cash flow from the asset at a cheap price before the earnings streams decline".
This potential reality is one that should concentrate the minds of the commission.
But is it too wedded to process to take a hard look?