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Nov. 8 — The proposed merger of New Zealand’s top two news media companies, NZME Ltd. and Fairfax NZ Ltd., will reduce competition, the country’s antitrust regulator concluded and proposed to block the deal.
The merger would result in one media outlet controlling nearly 90 percent of New Zealand’s print media market, the New Zealand Commerce Commission Chairman Mark Berry said in a Nov. 8 statement. “This would be the second highest level of print media ownership in the world, behind only China,” he said.
The merged company also would control New Zealand’s two largest news websites and would own one of New Zealand’s two largest commercial radio companies. “All this would result in an unprecedented level of media concentration for a well-established liberal democracy,” the commission said in its Nov. 8 preliminary determination.
The commission said that the proposed merger of NZME and Fairfax would reduce competition and is unlikely to benefit the public. The merger would lead to higher prices or lower quality in several markets, including premium digital advertising, online news and information services, Sunday newspapers and community newspapers, the commission said.
The commission acknowledged that the companies are responding to declines in print advertising revenue and profound shifts in the media landscape, accepting that the merger would create “significant cost savings for the parties.” However, the likely financial benefits of the merger do not outweigh the detriments that “arise from the reduction in content quality and plurality (diversity of views)” likely to result from the merger.
“Our view is that competition post-merger would not be sufficiently robust to constrain a multi-media organisation, potentially with a single editorial voice, that would be the largest producer of national, regional and local news by some margin in New Zealand,” the commission said.
The commission will take written comments on its draft determination through Nov. 22, and will hold a conference in early December on the proposed deal before making a final decision.
The companies signed a formal deal in September. The two parties said at the time that NZME would acquire all of the shares in Fairfax in exchange for $NZ55 million ($40.5 million) in cash and a 41 per cent share in the enlarged company. The parties had notified the commerce commission in May 2016, however, that they proposed to merge.
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The public version of the commission’s draft determination is at http://src.bna.com/jWx.
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