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.