A warning of an “end-game” for New Zealand newspapers if a proposed merger between Fairfax NZ and NZME was blocked by the nation’s watchdog has been issued by the chief executive of Fairfax Media, Greg Hywood.Mr Hywood, on day two of a hearing into the proposed merger, told the NZ Competition Commission: “We don’t have the capacity of deep pockets of private money to subsidise journalism”.
He said there were “many proprietorial models where wealthy individuals and families, for social and political influence, own media companies”.
“We have shareholders,” Mr Hywood said, “and they demand that these publishing businesses stand on their own feet.”
He said that unprofitable newspaper businesses, prevented from making necessary commercial decisions, would spell an “end-game”.
The only way to avoid such an outcome was for NZME and Fairfax to join forces and end the duplication of back-end operational activities and run a consolidated business as efficiently as possible.
Concern that this would mean the end of editorial independence was ill-founded, Mr Hywood said.
The fact that a merged entity would be a publicly-listed company would preclude the possibility of a loss of editorial independence, he said.
The commission has expressed concern that media plurality in print and digital media would be lost if the two companies merged.
The hearing this week was held to focus on a myriad of issues following a draft determination last month that indicated the merger might be blocked. The commission said detriment to media plurality outweighed commercial benefit.
Previously, commission chairman Mark Berry said the proposed merger would result in one media outlet controlling almost 90 per cent of the country’s print market, the second highest level of print media ownership in the world after China.
Dr Berry said this combined with the merged entity’s digital presence and radio assets would result in an unprecedented level of media concentration.
“Our preliminary view is that competition would not be sufficiently robust to constrain a multi-media organisation, potentially with a single editorial voice, that would be the largest producer of national, regional and local news by some margin in New Zealand,” Dr Berry said.
“NZME and Fairfax each play a substantial role in influencing New Zealand’s news agenda. Competition between the parties drives content creation, increases the volume and variety of news available in New Zealand and assists with objectivity and accuracy in reporting.
“Our view is that the removal of this competitive tension would likely lead to a reduction in the quality and quantity of New Zealand news content both online and in print, with potential flow-on effects in television and radio.”
A final decision is due from the commission in March.
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