Media merger canned by ComCom

The Commerce Commission yesterday confirmed it would not allow the merger of Fairfax and NZME. There was a quick and anguished response from many journalists, with some exceptions – understandable when their jobs and the future of journalism and news in New Zealand is at stake.

NZ Herald’s editorial today unsurprisingly complains about the decision: Blocking this merger is a big mistake

The Commerce Commission’s refusal to permit a merger of New Zealand’s two newspaper-based media companies is a fateful one for the supply of news and information in this country.

The commission’s decision is wrong, we believe, because it appears to believe the status quo is an option. It is not.

The merger proposed between our proprietor, NZME, and Fairfax, owner of other metropolitan dailies, was a considered response to a rapidly changing commercial environment.

But it’s not clear what a combined media company would have done to address the huge challenges facing traditional media, apart from allowing them to cut some staff and make some cost savings. If they did nothing else it would have probably just delayed the inevitable.

Everywhere in the world, companies that have invested in gathering and publishing news and information of public interest have been losing advertising revenue to the internet, with its facility for targeting audiences more precisely and offering auctions online.

If this revenue was going instead to support online journalism it would be less of a worry, though online advertising has yet to produce the earnings required to maintain the news gathering resources that newspaper advertising so long sustained.

The greater problem today is that too much of the advertising is going to the likes of Google and Facebook that do not do any news gathering of their own.

In fact they cannibalise the costly news gathering, features and investigative work of newspapers, broadcasters and websites that create their own content.

But a larger company would  have done nothing to deal with how Google and Facebook are siphoning off a large amount of advertising revenue without spending much on news gathering or journalism.

The merger was proposed for that purpose. Blocking it does not remove the problem or make it any less necessary for the industry to cut costs and find news to survive.

So they admit the merger didn’t really address the problem.

This newspaper will survive in print as well as digital form so long as readers value it, but that cannot be said for all newspapers in New Zealand.

Sadly, fewer newspapers might now survive than a merger might have sustained.

That seems to signal a threat to the smaller regional newspapers owned by NZME.

Reliable news – factual information published under the name of news services that have a reputation to protect.

Without them, democracy will be left with rumour, speculation and political and commercial promotions. That is our fate if the news business fails.

A problem is that rumour, speculation and political and commercial promotions are rife in media already. When the going got tough to much media got trashier and more opinionated.

Blaming the Commerce Commission won’t address that.

Also at the Herald Fran O’Sullivan says Media merger should be buried:

The proposed NZME-Fairfax merger is effectively dead and should now be buried instead of chewing up more time and funds in legal appeals.

Then both NZME and Fairfax Media can concentrate on their own quite divergent media strategies and examine other partnership options to reach the scale that is necessary to successfully play in the big pond with Facebook and Google.

NZME is also in a stronger position than in was when the merger application was announced a year ago. It has disengaged from its former Australian parent company, listed on the stock exchange in both countries and posted credible financial results.

This does not shield the company from the challenges posed by Facebook and Google. But it does place it in a stronger position for the next marriage attempt.

Why look for another marriage? A lot more radical thinking is required, propping up a dead media model won’t work.

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