Analysts say new moves in media boardrooms across the ditch make a merger of our two biggest news publishers more likely. How could that happen? And what would it mean for us?
==============
TOP NEWS LINES: APN may announce demerger with NZME at AGM 0930 Sydney time on weds morning
=============
How the story started
The rumour mill began to turn on Monday when The Australian newspaper first reported Sydney-based APN News and Media would announce a de-merger with its New Zealand arm NZME at its annual general meeting on Wednesday.
NZME owns the NZ Herald, Herald on Sunday, several North Island daily papers and several profitable radio networks including Radio Sport, ZM and Newstalk ZB.
The Australian also reported that the other big Australian-owned player in publishing here - Fairfax Media - also wants to spin off its New Zealand business. Here, Fairfax Media owns The Dominion Post, The Press, The Sunday Star Times, several magazines and the country’s most-visited news website Stuff.co.nz.
Fairfax New Zealand could then be bought by another company, offered to investors or listed on the NZX.
In Australia, Fairfax Media’s once-profitable papers are now losing money and, unlike other Australian media companies, it has few assets in broadcasting which bring in revenue.
The New Zealand business generated about 20 per cent of Fairfax’s A$1.8 billion revenue in the year to June. But first-half earnings were down 12 per cent and advertising revenue fell by 9 per cent. Online revenue was up, but that didn't offset the continuing decline in print advertising.
Fairfax said on Monday it was “exploring options” but no decisions had been taken which should be disclosed to the ASX.
The Fairfax spinoff may not happen soon - or at all - but The Australian does seem to know what goes on in Fairfax boardrooms in Australia.
Last month it reported Fairfax Media considering weekend-only publication of big city papers to cut costs. Fairfax denied it then, but confirmed last week it has weighed up the option.
One local publisher to rule them all?
The Australian also reported Fairfax and APN have held talks about merging the two New Zealand businesses in the future.
“If this option was undertaken it would be via a two-step process, in which each company initially spun off their NZ businesses,” The Australian said. “The two separately listed entities would then have the option of merging.”
Even though they are rivals for readers and ads, NZME and Fairfax already co-operate on printing in New Zealand. Both - along with Mediaworks and TVNZ - also run a joint agency called KPEX to attract more online advertising which is increasingly going to Facebook and Google.
In February, APN’s chief executive said he had abandoned the idea of floating NZME and spoke of “more partnerships” between New Zealand's two big newspaper publishers.
Last week, the TVNZ chief executive Kevin Kenrick told Mediawatch: "I don't lose any sleep worrying about competition from local media companies. The real competition is the big global players who have more cash in the bank than New Zealand's GDP. They could wipe us out in a heartbeat. That's what we've got to be focused on".
What would happen next?
A merger of New Zealand’s two dominant news publishers would mean both companies would no longer have to compete for shrinking ad income while cutting costs.
The nzherald.co.nz and stuff.co.nz website may be merged into one, which would either start charging readers for news or hike the price of advertising to an enlarged audience. Its also possible one website would be free and funded with ads while the other one puts premium content behind a paywall.
Some newspapers would almost certainly close, and hundreds of journalists and back-room people would lose their jobs as two sets of staff became one. A smaller staff of journalists reporting national news would be competing only with reporters from the broadcasters.
Would it be blocked?
A single company could dominate the nation’s newspaper and online news publishing - and corner the market for readers and advertisers. The Commerce Commission would have to approve it, and could deem such a move anti-competitive.
However, backers of a merged Fairfax and APN company could argue that in a converged, digital media environment they will be up against other media companies like TVNZ, Mediaworks and Sky TV.
In 2006, Sky TV was allowed to buy Prime TV.
Opponents argued a near-monopoly in pay TV would skew the market it it had a free-to-air channel too. The Commerce Commission found the acquisition “will not have, or would not be likely to have, the effect of substantially lessening competition in any of the affected markets”.
