Paywall wouldn't happen under media merger, court hears

NZME and Stuff are challenging the Commerce Commission's decision to turn down the merger.

A paywall to force readers to pay to read news online in New Zealand would not happen under a merger between Stuff and NZME, the High Court at Wellington has been told.

Opening remarks began today as the two media companies challenge the Commerce Commission's decision earlier this year to turn down their merger proposal.

The commission turned it down on the grounds that a challenge to combat the likes of Google and Facebook for advertising revenue wasn't enough to outweigh the detriments of reduced media "plurality".

David Goddard QC, representing NZME and Stuff, the new name for the New Zealand arm of Fairfax Media, said the commission was wrong to conclude a paywall would be introduced.

"There is absolutely no support in the evidence of a New Zealand Herald paywall," he said.

"That is not a real prospect, because the cost of losing readers' attention is too great."

Goodard said the commission made "a number of significant errors" in declining the merger.

These included a reduction in quality of the news a merged company would create and the narrow approach the commission took to the issue of lessening of competition in the media market, he said.

"The commission's approach was speculative that plurality is detrimental but it is unsupported by evidence."

Goddard said the potential benefits from the merger could be up to $200 million a year, which would benefit New Zealand.

Opening remarks are expected to take all of Monday, with James Farmer, QC, representing the commission.

Both lawyers have already agreed with Justice Robert Dobson that some of the hearing will be held in confidential sessions, due to the nature of some of the evidence.

NZME and Fairfax have five lawyers set up to argue the case, the same number as the Commerce Commission.

The hearing is set down for two weeks.