Judge says risk to society ‘is a meaningful one’ that would have ramifications for quality of nation’s democracy

This article is more than 2 years old

This article is more than 2 years old

The high court of New Zealand has rejected a proposed merger between the country’s two largest print media companies, ruling it would have concentrated media ownership to such a degree that it threatened the country’s democracy.

In May the Commerce Commission rejected the plan to merge NZME, which owns the New Zealand Herald as well as a slew of local papers and radio stations, and Fairfax Media, which owns the country’s most popular news website, Stuff, as well as three metropolitan daily newspapers.

The commission said it would have concentrated media ownership in the nation of 4.7 million people to an “unprecedented level” and threatened media plurality.

The companies appealed but on Tuesday the high court upheld the ruling.

“We consider that it is appropriate to attribute material importance to maintaining media plurality,” Justice Robert Dobson said in a media release.

“It can claim status as a fundamental value in a modern democratic society … The risk is clearly a meaningful one and, if it occurred, it would have major ramifications for the quality of New Zealand democracy.”

Dobson said the court agreed that “a substantial loss of media plurality would be virtually irreplaceable”.

Including the radio stations, the merged entity of NZME and Fairfax Media would have had a readership of 3.7 million New Zealanders and controlled more than 90% of the print media market.

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NZME’s chief executive, Michael Boggs, said he was disappointed the court had rejected the appeal as he believed a merger would benefit shareholders and the New Zealand media industry.

“While the Fairfax merger offered us benefits, we have not been resting on our laurels in the last 18 months as we pursued the transaction,” said Boggs, who added that NZME would review the full judgment, including the option of appealing against the high court’s decision.

Fairfax NZ’s chief executive, Sinead Boucher, said the two companies had sought the merger because they believed it was in the best interests of the New Zealand media industry, which has faced years of declining revenue and competition from news aggregators such as Facebook and Google News.

“A combined business would have created efficiencies and benefits that would have made it easier to continue to deliver high quality independent journalism at scale for the benefit of Kiwis around the country,” Boucher said in an email to staff.

An open letter signed by 30 senior editors of NZME and Fairfax Media in November 2016 argued in favour of the merger, saying job losses were “inevitable” if the merger did not proceed. But a group of former editors said the deal risked the rise of a “glib, clickbait” news culture.