New Zealand regulators reject merger of newspaper publishers

By NICK PERRY Markets Associated Press

Regulators on Wednesday rejected a proposed merger between New Zealand's two main newspaper publishers, saying the benefits of saving money and extending the life of some newspapers did not outweigh the harm it would cause to democracy.

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The Commerce Commission announced its final decision a year after Fairfax Media and NZME proposed the move. The companies sent a flurry of late submissions arguing that they needed to pool resources to compete with online giants like Google and Facebook, but the commission stuck with a preliminary decision it made in November.

The commission said the combined company would have controlled nearly 90 percent of the daily newspaper market and a majority of traffic to online New Zealand news.

"This merger would concentrate media ownership and influence to an unprecedented extent for a well-established modern liberal democracy," Commission Chairman Mark Berry said in a statement. He said the merger would have reduced the quality of news and the diversity of voices. He said competition between news outlets resulted in better content.

Both Fairfax and NZME said they were disappointed by the decision. Fairfax said it would need to cut costs and consolidate some of its publications, while NZME said it was considering its options.

NZME shares were down 6 percent after the announcement.

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E tu, the union representing journalists, said it welcomed the decision. Senior Industrial Officer Paul Tolich said the union agrees with the commission that media monopolies are unacceptable. He said the union favors imposing a special tax on companies like Google and Facebook, which take a majority of the online advertising revenue without producing any news content.