Media commentator Bill Ralston said the Commerce Commission's decision to decline the proposed merger between NZME and Fairfax NZ was "a bit of a disaster".

"Those two news organisations will have to strip their budgets. And when I say strip, they'll have to slash and burn.

"It will reduce the number of journalists out there, it will reduce the number of stories. It'll impact everything from travel budgets to accommodation to getting out and talking to contacts. It will have a very detrimental effect on the New Zealand media."

The Commerce Commission acknowledged that NZME and Fairfax "face a challenging commercial environment" but it disagreed with some of the scenarios the media companies suggested about their respective futures without the merger.


NZME CEO Michael Boggs and Fairfax Media CEO Greg Hywood said they were disappointed with the decision.

Boggs said NZME's strategic focus was to be continued in six key areas: growing audience reach, retaining print revenue, returning radio revenue to growth, growing new revenue streams, ensuring effective cost management and developing people and talent.

"We have progressed a number of initiatives aligned with these priorities including implementation of the Washington Post Arc content management system, launch of the Salesforce singular CRM system, progressing the redesigned site, and the nationwide launch of the new The Hits radio breakfast shows."

Ralston said Fairfax and NZME's online model would need to change.

"Fundamentally, they're giving their content away for free so they've got to figure a way around that. The convergence of most major websites into being not just print but having visual and audio and social media attached to it, it's expensive to do.

"There are a lot of different editorial voices out there and I think the merger would not have actually badly set back the New Zealand media. However, it's going to have that effect because they can't survive financially."

Ralston said he believed Fairfax should explore a deal with Mediaworks.

"But I think the first thing we're going to see is a reduction in staff numbers, certainly at Fairfax. We're going to see a reduction in news content; regional newspapers I think will either be closed down or have the number of days they're published restricted to maybe two or three times a week. And that's sad."


Fairfax's Hywood believed the Commerce Commission had failed New Zealand.

"In light of the NZCC decision, an even greater focus on cost efficiency will be necessary," Hywood said.

"Moving to the next stage of our New Zealand publishing model will involve reshaping how we deliver our journalism to local communities.

"Further publishing frequency changes and consolidation of titles is an inevitability.

"This decision does nothing to address the challenge of the global search and social giants, which produce no local journalism, employ very few New Zealanders, and pay minimal, if any, local taxes."

NZ Herald media columnist John Drinnan believed there were always going to be cutbacks in newspapers no matter what the commission decided.

Watch: Michael Boggs, CEO of NZME, discusses media merger with Leighton Smith

The Commerce Commission says it doesn't want NZME and Fairfax to join forces.

"The question now is whether the degree will be less dramatic given the ComCom has rejected the merger and in such strongly worded terms. An appeal is possible but would be a time-consuming process and wording of decision suggests the commission is confident of the legal basis. It is already facing an appeal in the High Court over another media merger- between Vodafone and Sky," Drinnan said.

He said both companies need to act swiftly to address the upheavals facing media and journalism.

"In particular Fairfax has indicated it would be closing some titles or maybe something more dramatic than that. With a diminished infrastructure in this country Fairfax may look for different ways to operate its in the New Zealand market."

Mediaworks, a competitor to NZME and Fairfax, said the merger refusal was the right outcome and ensured New Zealand could continue to have plurality of media and the widest range of viewpoints available to the audience.

TVNZ chief executive Kevin Kenrick said it was good to have clarity around the future of NZME and Fairfax.

TVNZ recently underwent a big restructure, which involved some job losses and taking on a more regional focus.

Kenrick said NZME and Fairfax would be thinking about how they could remain competitive and profitable.

"I think everyone's going to be turning their minds to, 'What other options are there? Partnering? Commercial arrangements? Redesigning their own businesses as standalone entities? I think all the local players need to find a way to compete against global scale competitors."

Communication Agencies Association New Zealand (CAANZ) CEO Paul Head said the decision was shortsighted.

"I think the law of unexpected consequences will apply here and we might look back through the lens of history in a few years time and see this was a bad decision for New Zealand."

E Tu Union has welcomed the commission's decision, which it said recognised there were more than just commercial interests at stake.

Senior industrial officer for the union Paul Tolich said any concentration of the media industry would likely lead to a decline in diversity, the quality of news gathering and the reporting of opinions.

Tolich said he expected the decision would spur a realigning of media ownership in New Zealand particularly within the print and radio sectors.

AUT media ownership expert Merja Myllylahti said there was no winner in the decision.

"The merger would not have been a salvation for the companies. There was no guarantees that this merger would have solved their fundamental revenue problems.

"The decision is in the public interest as no one single company controls most of the online and print news in New Zealand. However, there will be negative consequences including job cuts, potential closure(s) of businesses and recycling of content. We may see rapidly emerging news deserts in regions."