Hamish Fletcher: Silver lining of NZME/Fairfax merger decision

The Commerce Commission has proposed to decline the NZME/Fairfax merger. Photo / Jason Oxenham

The Commerce Commission indicating that it may decline the NZME and Fairfax merger is hardly what the leaders of either company would have wanted to hear.

However, the regulator's 195-page draft decision this morning does contain a silver lining for both sets of executives and their newsrooms.

Importantly, the commission highlighted that both organisations set the news agenda for online news in this country.

While many would already have thought this was the case, it is a welcome point from an official regulatory body.

About half way through the lengthy draft decision, the commission considers how merging NZME and Fairfax - which operate nzherald.co.nz and stuff.co.nz respectively - would impact online news.

Fairfax and NZME told the commission that this market would remain "highly competitive post-merger" and that the likes of TVNZ, MediaWorks and RNZ were rivals in this space.
It is hardly a surprise, however, that the commission considers NZME and Fairfax to be each other's closest competitor for online news in this country.

Between them, nzherald.co.nz and stuff.co.nz notched up 285 million page views during September.

On the other hand, the combined page views for tvnz.co.nz, newshub.co.nz, radionz.co.nz was 28 million - less than 10 per cent of the Big Two.

The commission, in assessing this data, did not consider that NZME's and Fairfax's existing rivals were well placed to replace the competition that it says would be lost as a result of the merger.

It also suggested that competition between both companies improved the quality of news and promoted accuracy in reporting.

"We are not satisfied that the proposed merger would not be likely to result in a substantial lessening [of] competition from a reduction in the quality of online New Zealand news content," the commission said this morning.

"Further, we consider that the reduction in quality of online New Zealand news would likely have flow-on effects into other markets.

"We consider that NZME and Fairfax play a particular role in setting the agenda for online New Zealand news provided by other publishers, as evidenced by TVNZ, MediaWorks and RNZ monitoring and following up on stories published by the applicants.

"Therefore, a reduction in the quality of news produced by the merged entity could also have the effect of reducing the quality of TVNZ, MediaWorks and RNZ's source of news.

"In addition, given the digital-first strategies of the main media companies in New Zealand, a reduction in quality of online New Zealand news may have flow-on effects to the news that is then published across other platforms, such as newspapers, TV and radio," it said.

So while the pair would have wanted a different steer from the commission this morning, it at least contains a vote of confidence in the role both play in the industry and in the increasingly important battleground of online news.