Australian media giants, Fairfax and APN are looking to merge the New Zealand arms of their businesses.

Two of New Zealand's largest media companies have confirmed they are in talks to merge.

The Australian parents Fairfax Media and APN said on Wednesday they are in "exclusive discussions to merge their NZ businesses" and list on stock exchanges on both sides of the Tasman.

The New Zealand businesses are Fairfax NZ and NZME respectively.

FAIRFAX NZ Fairfax NZ boss Simon Tong confirmed the merger talks.

Between them, they publish Stuff, The Sunday Star-Times, The Dominion Post, The Press (Fairfax NZ), and the NZ Herald, Hawke's Bay Today and Herald on Sunday (NZME), and other newspapers and magazines. NZME also operates radio stations including NewstalkZB and Radio Sport.

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No discussions have been had on details of the proposed merger – staff, brands and premises – as regulatory approvals are needed before the companies can talk to one another.

PHIL WALTER/GETTY IMAGES A merger wouldn't limit access to local news, Tong said.

But APN said a merger could be completed by December.

Between them the organisations have more than 3000 staff.

Etu national media organiser Paul Tolich said he had "grave concerns",.

FAIRFAX If successful, the merged company would be likely to make it into the NZX50.

There were serious implications for journalists' jobs and the quality of local journalism, he said.

"This means the content of diverse major news publications will be pared back to just one key generator of comment," he said.

"Another serious concern is the impact on the 'Fourth Estate' and its role to investigate in the interests of the public good without fear or favour of major institutions and power brokers," he said.

FAIRFAX NZ The Government would be unlikely to put up hurdles, comments by Broadcasting Minister Amy Adams suggest.

The Etu would make submissions to the Commerce Commission, stressing its concerns about potential job losses and the decline in the diversity of local media, he said.

The merger would need the commission's authorisation and may need approval from the Overseas Investment Office.

APN chief executive Ciaran Davis said the commission would look at a merger from "an advertiser and a revenue perspective" but did not expect either would be a show-stopper.

"In light of the global competition from new players we strongly believe the arguments we will put forward will be well-recieved by the commission," he said.

Fairfax NZ managing director Simon Tong said: "The depth and breadth of the combined business would be a win for audiences, and also enable us to create innovative solutions for advertisers based on the best of both of us".

The Government would be unlikely to put political hurdles in front of a merger, comments by Broadcasting Minister Amy Adams suggest.

"It's not for me to comment on the merits or otherwise of a merger and we don't want politicians meddling in commercial decisions," Adams said.

"Ultimately, it's for the Commerce Commission to decide on competition issues."

Adams said "convergence" was having a dramatic impact on the telecommunications, media and entertainment sectors.

"The distinctions between print, radio, television and online news are fading. Generally, digital convergence is giving New Zealanders greater access to content than ever before," she said.

"Through platform convergence, previously distinct media platforms compete with each other at a level much greater than ever before – with television companies publishing editorials, for example, or newspaper websites running video clips.

"Businesses across these sectors face a number of challenges as they adapt. None of these are new or unique to media companies," she said.

Labour broadcasting spokeswoman Clare Curran believed competition law might not be up to the job.

"Any proposed merger of media entities – given New Zealand has very few – would be very significant," she said.

"I would expect the Commerce Commission to be looking at it. But my concern is our commerce law is too weak and the competition watchdog really has no teeth."

"The bigger issue is what would happen to jobs in the industry."

"Given that our media industry is very stretched and there have been many cuts in recent years, we can ill-afford having our news and information sector being slashed further," Curran said.

Labour leader Andrew Little said a concentration in media ownership needed to be approached "incredibly cautiously".

No valuation has been put on the potential merged entity.

Neither party would say how long the talks had been going on for.

NZME chief executive Michael Boggs told staff in an email: "As with any merger proposal, I know there may be some uncertainly."

The first step would be for shareholders of NZME's Australian owner APN to agree to separate its New Zealand business and list it on the NZX. Davis said that could be achieved by June or July.

Merger talks with Fairfax would continue and, if successful, the merged listed company would be expected to make it into the NZX50 – an important consideration as it means some managed funds would need to take a shareholding.



TIMELINE

• May 11 – APN seeks shareholder approval at Australian AGM to demerge NZ arm NZME.

• By mid-June – Commerce Commission application lodged.

• December – merger complete.



WHAT YOU NEED TO KNOW

What's being proposed?

A merger between NZME and Fairfax New Zealand.

What does that mean?

It means that the two businesses would come together as equals to create a large New Zealand media company, listed on the New Zealand stock exchange.

Why is a merger being considered?

To a large extent, the New Zealand businesses of Fairfax and NZME are complementary.

When is the merger likely to happen?

The process to get approval for a merger could take six months or more.

The deal has to be approved by the respective boards and shareholders of APN and Fairfax and gain approval from the Commerce Commission.

An application is expected to be filed with the commission within four weeks.

How advanced are the merger discussions?

The discussions are at a preliminary stage.

If a merger goes ahead who will be the owner ?

The intention is to create a combined New Zealand media company, which is listed on the New Zealand stock exchange.

What does it mean for Fairfax/NZME staff in the meantime?

It's business as usual with Fairfax and NZME continuing to operate as independent companies.

Won't the merging of the two of New Zealand's biggest media companies be seen as anti-competitive?

Not necessarily. The media industry is going through massive global change which has changed the competitive landscape dramatically.

NZME and Fairfax operate in a highly competitive market for advertising revenue and audience attention.

What happens if the merger doesn't go ahead?

Fairfax and NZME will continue as two independent companies.

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