ACCC boss Rod Sims earlier this week promised that the competition regulator would consider the quality of news before giving the Nine-Fairfax merger a green light.
One of the biggest concerns is what will happen to both companies’ journalism under the deal. The MEAA, the journalists’ union, and other commentators have been calling on the ACCC to block the deal in the name of quality, independent news. In reality, it’s unlikely the ACCC would do so based on whether journalism would suffer, although Sims has promised they would consider it.
“Ours is a competition view, and so competition in advertising, competition as it affects consumers, but one way it affects consumers is the quality and diversity of their media,” Sims told Perth’s 6PR radio. “We will take that into account, because it’s part of what you are getting here, the quality of news and the breadth of news.”
IbisWorld senior industry analyst Andrew Ledovskikh told Crikey it would be difficult for the ACCC to stop the deal — announced last week, and the first major deal since the government’s media reform bill went through last year — based on what the effect might be on journalism.
“This is exactly the kind of merger that was encouraged by the legislation that got through last year … The ACCC can’t really block the merger unless there’s a legitimate issue with competition, and quality of news is hard to quantify,” he said. “Nine and Fairfax don’t have a lot of assets that overlap — they would have to look at whether Nine would change the way Fairfax operates, and translate that into a tangible effect on consumers.”
Last year the New Zealand competition regulator blocked a deal between two of the country’s biggest media companies, Fairfax NZ (now called Stuff) and NZME. One of the reasons was the potential effect on the quality of journalism:
We consider that competition between NZME and Fairfax leads them to produce higher quality content than would exist with the merger. Competition incentivises investment in editorial resources, motivates journalists and editors in their day-to-day work, and ensures diversity of editorial approaches. Competition also leads to greater investment and innovation in the way that content is presented to readers.
But those two companies are more similar than Nine and Fairfax — they both own newspapers in the same markets, and have products that are in direct competition for readers.
Ledovskikh said the ACCC would also consider how much worse off Fairfax would be without the merger.
“What does it do to media diversity if it doesn’t go through? It would potentially make them worse off and be worse for media diversity,” he said.
Ledovskikh said that one consideration for the ACCC would be whether Nine might keep the very profitable businesses such as real estate listings business Domain and full ownership of Stan, and sell off the newspapers further down the track.
“I think if they’re looking to slim Fairfax down the first target would be regional newspapers … One thing the ACCC will have to look at is — maybe not in the short term because it’s bad publicity — but in the long term whether Nine takes on the successful businesses and then dumps the newspapers.”
He said that even though the regional newspaper business was the most obvious target because it wouldn’t be as noticeable as if the metro papers were closed or sold off.
“If you were looking to quietly dump assets, the regional papers would be it. They’d be easier targets than, say, The Age or the Australian Financial Review. That would be front page news.The regionals are very small assets.”
Ledovskikh wasn’t as pessimistic about what would happen to Fairfax’s newsrooms under the deal as some commentators have been.
“It’s very possible that Nine changes the way it goes about news because of Fairfax,” he said.
The ACCC said in a statement that the review, once it’s received relevant documents, would take about 12 weeks and include discussions with relevant stakeholders.
“When reviewing mergers in the media sector, the ACCC considers the competition impact on consumers (both readers and viewers), advertisers and content creators/sellers. The impact of technology on the media sector will be a critical part of the competition analysis.”