The New Zealand competition regulator has rejected the proposed merger between NZME and Fairfax Media’s New Zealand arm.
The New Zealand Commerce Commission Chairman (NZCC) said the deal would damage the quality of New Zealand news by reducing competition and concentrating ownership of 90% of the country’s print media to one company.
Fairfax CEO Greg Hywood criticised the decision and said the media company would have to cut jobs to remain viable in the New Zealand market.
“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,” Hywood says.
“In light of the NZCC decision, an even greater focus on cost efficiency will be necessary.
“We believe that the NZCC has failed New Zealand in blocking two local media companies from gaining the scale and resources necessary to aggressively compete now and into the future.”
NZCC chairman Mark Berry acknowledged the merger could extend the lifespan of some newspapers due to significant cost savings, however concluded the benefits did not outweigh the detriments.
The regulator said that if the two operations were combined, each company would lose its largest competitor, prices would rise and quality would fall.
“The merger would concentrate media ownership and influence to an unprecedented extent for a well-established modern liberal democracy,” Berry said.
“This level of influence over the news and political agenda by a single media organisation creates a risk of causing harm to New Zealand’s democracy and to the New Zealand public.”
The deal to bring the two companies together would have seen NZME pay NZ$55 million for Fairfax’s New Zealand operations, with Fairfax securing a 41% share in the merged entity.
To facilitate the deal with Fairfax, NZME demerged from APN News in June last year.
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