Bryce Edwards is a lecturer in Politics at the University of Otago.

Political roundup: Congratulating and condemning media merger rejection

In rejecting the proposed media merger of the two big newspaper companies, did the Commerce Commission help save New Zealand democracy or has a chance for the media to enhance democracy been lost, asks Bryce Edwards.
Commerce Commission chairman Dr Mark Berry announcing the decision to decline the merger of media businesses NZME and Fairfax New Zealand. Photo / Mark Mitchell
Commerce Commission chairman Dr Mark Berry announcing the decision to decline the merger of media businesses NZME and Fairfax New Zealand. Photo / Mark Mitchell

There's been a polarised reaction to the Commerce Commission's rejection last week of the proposed media merger between NZME and Fairfax. Much of the reaction has rested on the implications for the health of New Zealand's democracy. After all, media and politics go hand-in-hand, and the merger would reduce the diversity of voices, or save those voices from disappearing, depending on who you asked. So, is democracy is the winner or loser from last week's decision? And what will happen next?

For the most interesting take on the decision, see Toby Manhire's thoughtful piece published on the Spinoff: The NZME-Fairfax merger is dead. So what does New Zealand journalism do now?. However, Manhire declares himself "ambivalent" on the issue. And so if you want the more polarised for-and-against reactions, read on further.

Congratulations for the media merger rejection

Long-time media watcher Gordon Campbell, was obviously ecstatic about the decision, saying "the whole judgment is worth reading. It is a brilliant and comprehensive piece of work that is a credit to those in the Commission who consulted widely, weighed the issues carefully and put the arguments together with clarity" - see: On the killing of the Fairfax/NZME merger.

And in case this might suggest the issue is some sort of left-right one, it's worth noting that a poll of National Business Review readers found that "just over two-thirds think the Commerce Commission got it right in its decision rejecting the merger" - see Chris Keall's Two CEO reactions to Fairfax-NZME decision: one inspiring, one useless (paywalled).

In this piece, Keall gives a bouquet to NZME chief executive Michael Boggs for his measured and stoic reaction, and delivers a brickbat to Fairfax's Australian-based chief executive, Greg Hywood, who rather negatively spoke of the doom and gloom that would now eventuate in his company.

Business writer Rod Oram also wrote in yesterday's Sunday Star Times newspaper about his approval of the Commission's decision, saying it was "robustly based on evidence, analysis and law" - see: Commission made the right call on media mega-merger - the real hope is in news. Oram expresses hope that an "appetite for excellent journalism" will save the newspaper companies.

Other experts agreed. Public law specialist, Edward Willis blogged to say "I think this is a credible, defensible decision from the Commission" - see: StuffME - A confidential, credible decision. And economist Donal Curtin blogged to say, Yup, as expected.

For a more comprehensive list of people who believe it is the right move, see Colin Peacock's report, Fallout from the media merger knockback. The most interesting response is from highly-experienced newspaper man, Rick Neville, who declared "My heart has said 'no' to the merger but my head has said 'yes.'"

Condemnation of the media merger rejection

You'll struggle to find a more cutting reaction to the Commerce Commission's ruling than Steve Braunias' merciless parodying of its boss - see: Secret Diary of Mark Berry. Incidentally, Braunias' Herald piece was also published in Fairfax newspapers in the weekend - a very rare case of the newspaper rivals sharing a column.

The NZME and Fairfax newspapers hit back at the merger rejection with a number of editorials. The New Zealand Herald very simply said: "The commission's decision is wrong, we believe, because it appears to believe the status quo is an option. It is not" - see: Blocking this merger is a big mistake.

Democracy would now be in a worse position: "The range of views available to a democracy is much more likely to depend on the range of news media available to it, than whether most of those media are owned by two companies or one. Sadly, fewer newspapers might now survive than a merger might have sustained."

And furthermore, the business of news production might suffer: "It is news a democracy cannot afford to lose. Reliable news - factual information published under the name of news services that have a reputation to protect. Without them, democracy will be left with rumour, speculation and political and commercial promotions. That is our fate if the news business fails."

The Press labelled the Commission's decision "naive and mistaken" - see: Rejection of Fairfax NZ/NZME merger makes fight for quality journalism tougher. It "means that Fairfax New Zealand and NZME are left to fight on separately in an increasingly desperate battle to preserve all that is good about New Zealand journalism. It is going to be an increasingly hard battle to win. Journalism is a tough business that got tougher over the last few years as the digital revolution took hold. It got so difficult that two companies which had been competitive rivals for decades decided that their best option would be to join forces."

Likewise the Dominion Post complained that the Commission "has not properly grappled" with the realities of changing technology, and "It ought to have seen how massive the media challenge ahead is - and allowed the companies to join, to give them a fighting chance of pushing on for years to come. Instead, it looked to the past" - see: The Commerce Commission doesn't get it.

But in case it seems that all newspaper editorials have the same line, it's worth reading the Otago Daily Times editorial, The future of journalism, which seems to point the finger at Fairfax for pushing its online strategy "with the one-way vision of a religious zealot, banked on its digital transformation."

Not all media operators from outside of the NZME-Fairfax sphere were unsympathetic to the situation of those giants. The editor of The Spinoff, Duncan Greive, was very strong in his condemnation of the Commission's decision: "Today executives at Fairfax and NZME must be sitting with a sense of disbelief at what has been announced, and the misguided reaction to it. Tomorrow, if not sooner, they will have to start assessing which parts of their vast and complex businesses can stand alone, and which will fall. Job losses are inevitable, and will in my opinion be far larger and more destabilising than had they happened in a controlled style in a merged entity" - see: News is a privilege, not a right: why the NZME-Fairfax merger decision is so catastrophically wrong.

Similarly, see former head of TVNZ news, Bill Ralston's Saying no to Fairfax NZ/NZME merger will hurt NZ journalism: Bill Ralston.

Where to next for the media?

Clearly the New Zealand public needs to think about what sort of media environment it now wants. And according to Fran O'Sullivan "Remarkably, our politicians have been loath to express their own opinions" - see: We need to debate NZ media's future. She says that "having a vigorous healthy New Zealand-owned media - with a strong focus on innovation and growth - is an aim worth striving for."

The question is a highly-political one according to Victoria University of Wellington Media Studies lecturer Peter Thompson, and he makes a number of suggested changes: "The NZME-Fairfax merger proposal would have been unthinkable in virtually any other democratic society, including Australia. The fact that the Commission's ruling required such a protracted series of complex legal deliberations is symptomatic of just how weak New Zealand's media regulations and competition laws are. The Commerce Act urgently needs revising to ensure that issues such as media plurality, which are fundamental to the fourth estate and healthy democratic functioning, are no longer issues of contestation by opportunistic corporations" - see: NZME-Fairfax merger decision leaves a regulatory challenge.

The media companies are going to have to make some big changes in how they operate according to Peter Griffin: "There's a strong argument for 'co-opertition' between the two companies to work together to generate the breaking and spot news coverage that readers need, but which involve a lot of duplication of resource. A return to the NZPA model may well make sense. That would leave the media players to focus on premium offerings, compelling content behind the paywall. It is time to adopt the best tricks of the tech sector, learn from the likes of Netflix, Spotify and Uber to deliver an experience that for the first time, sees consumers in this country willing to pay for news-related content online" - see: The great NZ media mega-merger was never a sustainable option.

The introduction of paywalls is a recurring theme, and the pros and cons are discussed by the NBR's Chris Keall in Survey finds $90m in potential paywall revenue for NZ news websites (paywalled). He says, "Today, NZME and Fairfax will be wary of one introducing a paywall ahead of the other. And even if they had combined and padlocked, their potential customers would still have had lots of free options for mainstream news in this post-print age, including TVNZ, RNZ and Newshub's websites. For a paywall to work for general news, massive scale is needed."

One former regional newspaper editor believes "The answers to the issues that bedevil media companies are more likely to be found in regions, albeit in small ways initially, rather than seeking to match or catch international behemoths with unlimited budgets. The two companies know the importance of their regional operations, of providing reliable and trustworthy information" - see Clive Lind's StuffMe solution lies in local news.

And one regional newspaper editor has expressed a determination to fight on, declaring, "We will continue to write great stories about the people in our region, attend council meetings, go to court, cover breaking news and take amazing images. Our staff are passionate about what they do and are determined to cover this region as best they can" - see Tracey Neal's
What now for the Nelson Mail?.

Other commentators are forecasting blood will be spilt. Former head of news at TV3, Mark Jennings says NZME and Fairfax will be in a "fight to the death", "Both sides will chop out costs, I think we will see lots of journalists go" - see TVNZ's 'I think we are going to see carnage between NZME and Fairfax now'. He makes a prediction: "Weekend newspapers will probably survive, but it's very hard for week day editions".

But will other mergers and buy-outs now occur? Ironically, with this particular merger ruled out, it seems that other mergers are more likely. Tim Murphy reminds us that Mediaworks (the owner of TV3 and RadioLIVE) has already declared it's intentions: "In October last year, it told the commission if the merger was rejected, either Fairfax Media or NZME might instead merge with MediaWorks, and that would be better for competition. It speculated that Television New Zealand might merge with the other publisher, creating two digital news organisations 'with similar market share'." - see: Forget StuffMe - other media relationships loom.

And writing in the NBR, Duncan Bridgeman also speculates on "what new deals are on the table, if any? The first reaction from many pundits is to say Fairfax NZ will probably be broken up and sold piecemeal to a variety of bargain hunters or equally desperate types, such as television broadcaster MediaWorks and its hedge fund owner, Oaktree Capital" - see: Time for some fresh thinking with media assets in play (paywalled). Amongst other options, he mentions "Sir Julian Smith, owner of Allied Press, which publishes the Otago Daily Times, also features in the speculation as a potential buyer of some of Fairfax's South Island assets."

Finally, it seems we are all to blame for the decline of the traditional media, and Raybon Kan explains why in his column, Visions of the future can confuse the best of us.

- NZ Herald

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Bryce Edwards is a lecturer in Politics at the University of Otago.

Bryce Edwards is a lecturer in Politics at the University of Otago. He teaches and researches on New Zealand politics, public policy, political parties, elections, and political communication. His PhD, completed in 2003, was on 'Political Parties in New Zealand: A Study of Ideological and Organisational Transformation'. He is currently working on a book entitled 'Who Runs New Zealand? An Anatomy of Power'. He is also on the board of directors for Transparency International New Zealand.

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