APN and Fairfax merger talks confirmed

NBR reports:

News & Media has today confirmed plans to demerge NZME and revealed it is in discussions with Media about a potential merger of their New Zealand businesses.

“If completed, the combined company will be a leading New Zealand media business, offering depth of news, sport and entertainment coverage across a diverse mix of channels including print, digital and radio,” an ASX announcement says.

The two entities have been in preliminary discussions about a potential merger, which will be subject to approval by both companies’ boards, shareholders and the . The merger is expected to be completed by the end of 2016, subject to all necessary approvals.

I suspect Commerce Commission approval will take longer than six months.

Another NBR story reports:

A merger of New Zealand’s two largest media organisations could be approved on a counterfactual basis, despite competition concerns, a leading competition lawyer says. …

Competition lawyer Andy Matthews says while other countries have rules about media ownership to ensure a diversity of views in the media, “New Zealand’s never had that.”

“From a pure competition perspective, what’s going to happen if these guys don’t get together? Will they survive? It would be inappropriate to stop this because this is how industries respond to change,” he says. …

“It’s a highly fragmented market. I would have thought on the face of it a merger wouldn’t be anti-competitive. It’s an industry in crisis. Do you look at newspapers and online news separate or the same? Does the platform even matter anymore?” he asks.

The merger is undesirable, but the status quo may be even more undesirable as without it one or both companies could shrink significantly.

But the merger would also lead to huge job losses. Estimates I have seen suggest perhaps 1,000 or so.

One key issue for the Commerce Commission might be whether the Herald and Stuff websites would merge.On the print side there is almost no competition already. Radio has plenty of competition. But the websites may be the area where they have competition issues.

Also parliamentary reporting may suffer, as if the two offices merge, then you lose the competitive tension of each office trying to develop exclusive stories.

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