NZME versus Stuff gets messier, heading to court

Media have been increasingly under pressure over the past decade due to loss of revenue, with a lot of advertising being siphoned off by international Internet companies such as Google and Facebook.

An application for approval for a merger between the two largest New Zealand media companies, NZME and Stuff (Fairfax), was declined by the Commerce Commission in 2017 – details here.

Last year (November 2019) NZME tried again – StuffMe is back, but will the Commerce Commission play ball?

News that NZME has initiated a second attempt to acquire Stuff, after its first was shot down by the Commerce Commission and the Court of Appeal last year, underlines the exacting position the modern media finds itself in.

It’s been clear for some time that the media industry is in trouble. It’s also clear that the media and competition regulators have been even slower than the companies they regulate to fully appreciate the scale and scope of the change.

When the Stuff-NZMEmerger was first rejected by the Commerce Commission, it said that the synergy benefits of between $40 million and $200m a year did not outweigh the loss of a “plurality” of voices and quality in the news media.

Those questions look to be set to rest by a new proposal that would ring fence the editorial operations of the two companies, keeping them independent and competitive, whilst taking advantage of backroom synergies.

This means we could be headed back to the Commerce Commission, which is under new leadership after Mark Berry, the previous chairman, left last year.

Stuff (December 2019): Minister won’t intervene with regulator over media merger, but deal could help

Commerce Minister Kris Faafoi won’t intervene to encourage or advise the Commerce Commission to look again at the case for allowing NZME and Stuff to merge, a spokesman for the minister says.

However, he said the Government could look at a “Kiwi Share” undertaking floated by NZME that would commit the company to maintain certain, unnamed mastheads and “protect journalists’ jobs” if a takeover was allowed.

With the added pressures of the Covid-19 pandemic the possibility of a merger came up again but it has become very messy.

RNZ (11 May): NZME makes offer to buy rival Stuff for $1

NZME is insisting a deal for it to purchase media rival Stuff is still on the cards, despite Stuff’s owner saying it has wrapped up talks with no deal.

NZME said this morning it was asking the government to allow it to buy Stuff for a nominal $1.

Stuff’s owner, Australia’s Nine Entertainment, responded that it had terminated talks with NZME over a purchase plan last week and no deal was in place.

In the latest twist, NZME has since told the NZX that it believed it was still in a “binding exclusive negotiation period with Nine and does not accept that exclusivity has been validly terminated.”

NZ Herald (14 May): NZME seeks interim injunction against Stuff-owner Nine Entertainment

NZME’s bid to buy rival Stuff is heading to the High Court as it locks horns with Stuff’s Australian owner amid an increasingly bitter process.

NZME – owner of the NZ Herald – has applied to the High Court at Auckland for an interim injunction against ASX-listed Nine Entertainment to enforce exclusive takeover negotiations.

The move follows an exchange of statements earlier this week after NZME filed an urgent Commerce Commission application to purchase Nine’s New Zealand media assets for a nominal sum of $1.

Nine responded with a statement saying the parties had withdrawn from the bid last week and had terminated talks.

NZME hit back, saying it still had exclusivity and is now taking legal action to enforce it.
A hearing on the interim injunction is set down for tomorrow.

In a statement to the Herald, an NZME spokesman said the company did not accept that exclusivity had been validly terminated.

“NZME has filed an application for an interim injunction against Nine Entertainment Co Holdings Limited seeking orders to enforce this binding agreement entered into between NZME and Nine on 23 April 2020.”

NZME has spent the best part of five years attempting to buy Stuff but has previously been declined Commerce Commission clearance.

It says the media landscape has been so wildly impacted by Covid-19 and foreign digital giants such as Facebook and Google that it is the best owner in order to save newspapers and journalism jobs.

“NZME’s proposed acquisition of Stuff is important to the continued operation of a robust fourth estate and plurality of voice in this country,” NZME told the NZX on Monday.

NZME and Stuff own most of New Zealand’s daily metropolitan and regional mastheads. As well as the NZ Herald, NZME owns the Northern Advocate, Bay of Plenty Times, Hawke’s Bay Today, Rotorua Daily Post and Whanganui Chronicle.

Stuff’s stable includes the Sunday Star-Times, The Press in Christchurch and the Dominion Post in Wellington.

Stuff (14 May): Proposed media merger turns septic as NZME seeks injunction in bid to buy Stuff

Auckland media company NZME has gone to the High Court to seek an injunction forcing Stuff’s Australian owner Nine not to turn its back on negotiations to sell Stuff to NZME.

NZME said on Thursday it had filed an application for an interim injunction against Nine “seeking orders to enforce this binding agreement entered into between NZME and Nine on 23 April 2020”.

The injunction hearing is due to take place at Auckland High Court on Friday.

Sounds very messy, and expensive for companies that are struggling to survive.

A strong and diverse media is an essential in a healthy democracy, so this is not looking good.

Fairfax dumping 28 community and rural newspapers

Last year when the Commerce Commission denied a bid by Fairfax and NZME to merge it was suggested that regional newspapers may be dumped. Yesterday Fairfax announced that they would sell or close 28 regional and rural newspapers.

May 2017: Fairfax may cut newspapers after merger with NZME denied

Cuts to regional papers are likely in the wake of the Commerce Commission decision to turn down a merger between Fairfax Media and NZME.

After a year of lobbying and speculation, on Wednesday the market regulator unanimously declined permission for the media companies to join forces, saying it would concentrate media ownership to an unacceptable level.

Fairfax acting managing director Andrew Boyle said the decision was disappointing and brought into stark reality the need to address what publishing model was sustainable.

“Tough decisions will have to be made in terms on ensuring that ongoing viability,” he said.

“It’s too early to say exactly what that means but we’re really looking at the Marlborough example with a great deal of interest as a pilot of how we do things a little differently. And that will give us some good feedback in the coming weeks in terms of how a model like that could be applied.”

As of May 1, Fairfax’s Marlborough Express newspaper was reduced to publishing three days a week in favour of more online news daily. Four editorial jobs were lost.

The Commerce Commission considered the possibility that newspapers would only be published once a week if it rejected Fairfax and NZME’s merger, chairman Mark Berry said.

But he said it had decided that even if all weekday newspapers folded, that would be preferable to allowing the merger. That was taking into account the power the merged company would still have, particularly over online news.

The Commission’s decision can be read here.

Yesterday Stuff: to sell or close 28 community and rural newspapers

Stuff is planning to sell or close some of its smaller community and rural papers in a move that could affect 60 jobs.

Chief executive Sinead Boucher said on Wednesday that 28 mastheads would be affected, while reiterating Stuff’s plans to grow its digital business.

The company was still working through plans for each of the titles and consultation with staff would occur over coming weeks, she said.

Greg Hywood, chief executive of Australian parent company Fairfax Media, noted that the company had warned that its New Zealand business would go into “consolidation mode” if the Commerce Commission did not approve its proposed merger with rival publisher NZME.

“We predicted this outcome. We said that ultimately there would have to be rationalisation in the industry and the best way of sustaining journalism was to allow the merger to go ahead.”

But he stopped short of blaming the sales or closures on the commission, saying it was “hypothetical” whether they would have happened anyway, had the merger gone ahead.

ComCom and Dominion don’t get it

Today’s Dominion Post editorial complains The Commerce Commission doesn’t get it

Do they?

The ground is moving under journalism companies everywhere. Readers are migrating in their hordes to the web, with its endless flood of information.

Newspapers are fighting for survival, and news websites, even the most prominent, struggle to compete with the ravenous global attention-grabbers – the Facebooks and the Googles.

These are all banalities by now. It is a shame for New Zealand that the Commerce Commission has not properly grappled with them.

Fairfax needs to do a lot better grappling with the real problems facing media in New Zealand.

It ought to have seen how massive the media challenge ahead is – and allowed the companies to join, to give them a fighting chance of pushing on for years to come. Instead, it looked to the past

Bigger and bigger media companies is from the past to perhaps.

The Commission took a far too rosy view of the near future, banking on newspapers’ survival, lethargy from the broadcasters, and the continued success of the companies’ websites. But the market is in a state of near-constant upheaval.

So more innovative change is required than merging into a bigger company. That won’t address the problems – unless Fairfax and NZME thought it would enable them to just put up a pay wall. That could easily be a disaster.

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.

Fairfax-NZME merger ruling today

The Commerce Commission will be announcing it’s decision this morning on whether Fairfax and NZME will be allowed to merge.

If allowed this would combine most of the country’s newspapers into one company, as well as the Stuff and NZ herald websites.

Stuff: Regulator set to rule on Fairfax, NZME merger

Publishers Fairfax New Zealand and NZME will find out on Wednesday whether the Commerce Commission will let them join forces.

If the merger is allowed, what would the combined company own?

The Stuff and NZ Herald websites, almost all of the country’s major newspapers with the exception of The Otago Daily Times, a raft of community newspapers and magazines, and about half the country’s commercial radio stations, including Newstalk ZB, The Hits and ZM.

It would also own daily-deals site GrabOne, video entertainment site WatchMe and majority stakes in fast-growing community site Neighbourly and internet provider Stuff Fibre.

The traditional media business model has been under severe pressure for years due to the competition introduced by widespread Internet use and dramatically diminished advertising revenues. Online advertising is dominated by Google and Facebook.

And printed newspapers are struggling to survive.

It’s easier to do crosswords online now as well as get a wide variety of news.

Whatever the decision today NZME and Fairfax face challenging futures.

Regardless of the decision this may not be the end of it.

If the ruling is ‘yes’, could it be appealed?

All the interested parties that attended a Commerce Commission conference in December would have the right to appeal.

They include Television New Zealand, Three-owner MediaWorks, and Allied Press, which owns The Otago Daily Times.

However, the costs and risks involved mean an appeal might not be a given.

And if the ruling is ‘no?

Fairfax NZ and NZME could appeal and may already have identified possible grounds.

Those grounds centre on whether it can reject an application solely because of concerns that it can’t put a value on, like media diversity.

But the appeals process on a point of legal principle could go on for years. Both companies told the commission in March that when it came to the merger “later will be too late”.

Lawyers may fiddle while newspapers burn.

Sky and Vodaphone

The Commerce Commission has turned down an application for Sky and Vodaphone to merge. I think that is a good move – giving preferential treatment to one service provider in order to get sport on TV would not be a good thing.

Sky will now have to look at modernising their thinking. It is ridiculous to force subscribers to pay for a lot of crap just so they can watch a few games of rugby.

Their pay-per-day Fan Pass is too expensive, although you can watch the Chiefs versus the Highlanders today for a special price of $5.0o – I’d watch quite a bit at that price but their usual $14.95 is a deterrence.

Sky need to make major changes or they will drop the ball they are already fumbling.

Half price, 60% off, sale etc

The Commerce Commission is prosecuting Bike Barn for misleading advertising regarding bikes advertised at “half price” when they normally sold for that price, and for advertising a “clearance sale” when the bikes were also available before and after the so called sale at the same price.

Bike Barn has indicated it will plead guilty.


The only thing that surprises me is that this sort of prosecution doesn’t seem to happen more often.

There’s a number of things I wouldn’t consider buying unless they were ‘60%’ off or ‘half price’ – I think everyone knows this sort of pricing is commonly used as virtually an alternative week price and you pay through the nose if you are sily or desperate enough to but on the other week.

Sales used to be things that a shop would have once or twice a year. Now once or twice a week is common. It’s farcical.

The problem shops have now is they have oversold specials so much for so long their persistent pitches are meaningless.

Sales are so entrenched as normal marketing now it’s not uncommon for overlaps – like ‘Boxing Day Sale’ advertising on Christmas Eve.

‘Half price’ means half the price that would be a rip off. ‘Sale’ now means ‘the shop is open’.

Not all shops do this, but the most prominent advertisers do, like Briscoes, Harvey Norman and that vacuum cleaner place that I have honestly forgotten their name for the moment.

It’s dishonest advertising, and i hope the Commerce Commission takes a harder line on it.

Broadband prices rising

The Commerce Commision has decided to raise the price of wholesale copper charges. This will mean landline and broadband prices will go up. Spark have announced increases from February.

NZ Herald: Spark hikes prices after ComCom copper ruling

Spark will lift prices for some broadband and landline plans from February as a result of the Commerce Commission’s decision to increase wholesale copper line charges.

Home landline customers in Auckland, Wellington and Christchurch will pay $3.50 per month more, while ADSL/VDSL broadband customers are facing a $5 monthly increase.

On Tuesday, the commission announced that the wholesale price for access to Chorus’ copper network would be raised to $41.69 per month.

The regulator came to the final figure, $3 higher than expected, after it conducted a more rigorous process to find the price than the initial pricing principle review, which relied on international benchmarks.

Spark said the new Chorus charges, which took effect yesterday, were almost $8 per month higher for broadband services and $7 higher for landline voice services.

Bummer. Might be time to ditch the landline.