Fairfax NZ merger with NZME in doubt after draft NZCC ruling

New Zealand’s competition watchdog has indicated it will oppose the merger of media groups Fairfax NZ and NZME.

The NZCC says in a draft determination it should decline the proposed merger between NZME and Fairfax New Zealand. Pic: Bloomberg

Fairfax Media’s plans to merge its New Zealand operations with APN News & Media spin-off NZME are in grave danger, after the NZ competition watchdog issued a draft determination against the scheme.

The long-mooted deal — finalised in September — was slated to see NZME acquire all of the shares in Fairfax NZ, with the latter to receive $NZ55 million ($52m) in cash and a 41 per cent shareholding in the enlarged company.

The combination of the two groups would fashion a giant in the New Zealand media landscape, given Fairfax (FXJ) operates the largest print network in the country as well as several high-profile magazines and websites, while APN’s NZME controls The New Zealand Herald, The Radio Network and deals website GrabOne, among other assets.

The New Zealand Herald

However, the extent of their reach in the media sector has put the New Zealand Commerce Commission off-side.

“The NZCC’s preliminary view is that, based on information it has received to date, it should decline the proposed merger between NZME and Fairfax New Zealand,” the regulator said.

“The NZCC has concluded, based on its standard test, that the public benefits arising from the merger outweigh quantified detriments. The NZCC has then indicated that its preliminary view is that it will decline the merger due to unquantified concerns relating to plurality of media.”

The rapidly changing media landscape has the merger parties adamant a tie-up would not significantly dampen competition, with NZME and Fairfax noting readers are readily able to visit a wide array of rival global and local news sites.

“The parties’ view is that the NZCC has failed to properly take into account the diversity of opinions that will continue post-transaction in an increasingly converged digital world,” the NZCC noted.

“The parties will be discussing this point further with the NZCC, including making further written submissions and submitting through the NZCC’s conference process.”

The draft determination will lead to further submissions from interested parties, with a final decision due by March 15, 2017. This date is seven months behind the original schedule and has killed off initial expectations the deal would be wrapped up by Christmas.