In what could be a template for similar deals around the media world, New Zealand’s Commerce Commission has outlined what it sees as the main issues in the proposed merger of the NZ print and radio assets of APN News and Media, and NZ print assets of Fairfax Media. And it is clear the primary focus will be on the digital/website business of both media giants, Fairfax’s stuff.co.nz and APN’s (NZME’s) nzherald.co.nz websites. Digital is increasingly the focus of all media companies around the world via paywalls, free access, advertising, the rise of ad blockers and the monster that is Facebook (all issues discussed on last night’s excellent edition of Media Watch).
In its statement the commission singled out issues including whether there are separate print and digital news and advertising markets (would a merger allow a reduction in competition?).
The commission will look at the most obvious issue — whether there’s a material overlap in online advertising and the supply of news and entertainment via stuff.co.nz and APN’s nzherald.co.nz websites.
APN and Fairfax Media are pushing the idea that they can’t compete in the online ad space against the likes of Google and Facebook without combining their resources, and that audiences and advertisers don’t care which platform they use to get information. Both companies have adopted a “digital first” strategy prioritising online editorial and advertising over their traditional print businesses (as Fairfax has in Australia, along with the likes of the Financial Times internationally and a host of big UK dailies).
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“We will examine the extent to which both advertisers and readers view different media as substitutes,” the regulator said. “As part of this assessment on the reader side, we will consider the extent to which content is created with a specific platform (print, digital or radio) in mind.”
The Commission says the main competition issues raised by the proposed merger include whether the companies would be able to increase prices or reduce the quality of services, it said. But it said it would also have to consider what would happen if the merger did not go ahead.
The approval of APN’s shareholders would also be required for the merger, as might the consent of the Overseas Investment Office (OIO). The OIO has yet to provide confirmation. Should the merger go ahead, the APN company, NZME, wouldfloat on the NZX and then acquire the New Zealand assets of Fairfax Media, which would end up with an expected stake of less than 50% in the combined media business.