ACCC’s concerns over Fairfax-Macquarie deal

THE Australian Competition & Consumer Commission has raised concerns over the proposed $200 million merger.

THE Australian Competition & Consumer Commission has raised concerns over the prospect of the loss of quality of news services as well the potential for increases in advertising rates under the proposed $200 million merger between John Singleton’s Macquarie Radio Network and Fairfax Media’s radio assets.

The regulator has said it was reviewing the proposed deal, which will see the venture dominate talkback radio in Melbourne and Sydney.

Under the deal unveiled last month, Macquarie and Fairfax will put their assets under the one roof, combining talkback strongholds like 3AW in Melbourne and 2GB and 2UE in Sydney but Sydney station 2CH will be sold to comply with broadcasting rules restricting ownership of two radio stations per market.

“Of particular interest to the ACCC is the effect of the proposed transaction on the quality of news and other content provided to listeners and also whether the transaction would cause the price of advertising on radio stations to increase due to less competition,” the ACCC said in a market inquiries letter.

Following the planned deal, the radio venture would have “a particularly strong position” in serving the 65-year-old plus demographic in Sydney where it would own the two leading commercial radio stations serving that demographic,” the ACCC noted.

The venture would also have a strong position in serving the 55-64 year demographic in Sydney where it would own the leading radio station serving that demographic, it added.

The merger brings under one corporate roof some of the biggest names in radio, including 2GB’s Alan Jones, Ray Hadley and Steve Price and 3AW’s Neil Mitchell and breakfast titans Ross Stevenson and John Burns.

The 2UE and 2GB newsrooms will be merged, with up to 17 journalists’ jobs going, and agency sales, engineering, promotions and production teams merging for further job cuts in Sydney.

It is expected Macquarie and Fairfax will argue the internet, the rise of digital broadcasting and online streaming services have sharply increased competition for advertisers and substantially increased choice for listeners. Even so, the ACCC will examine whether advertising can move from radio to online or other channels, asking advertisers if they believe other mediums can reach their target audience.

“Do you consider other forms of advertising close substitutes to radio advertising and capable of reaching the audience at which your advertising is aimed?” the ACCC asked in its letter.

It will also examine whether Macquarie or Fairfax will be able to bundle advertising packages in a way that will cause anti-competitive harm in the market.

It is expected both the Macquarie and Fairfax stations will operate as separate entities until March at the earliest as the companies conclude financial, regulatory and structural processes and Macquarie Radio Network shareholders vote on the merger.

When the planned merger was unveiled before Christmas Macquarie Radio said by combining the two No 1 stations in the major advertising markets would lead to “opportunities for significant revenue growth”.

The ACCC will seek comment on the deal by February 3 with an end date for the review scheduled for March 5.