The merger of Fairfax’s New Zealand titles, including the newspaper the Dominion Post with the New Zealand Herald business, has been blocked by authorities.
The New Zealand Commerce Commission has declined authorisation to the proposed merger of APN’s NZME and Fairfax New Zealand Limited which would have created a media group reaching 90% of New Zealanders.
Combined revenues of the business would be almost $600 million.
Fairfax Media’s CEO Greg Hywood foreshadowed tough budget cuts following the decision.
“This decision does nothing to address the challenge of the global search and social giants, which produce no local journalism, employ very few New Zealanders, and pay minimal, if any, local taxes,” he says.
“We believe that the NZCC has failed New Zealand in blocking two local media companies from gaining the scale and resources necessary to aggressively compete now and into the future.”
Among the assets in the proposed merger is stuff.co.nz, New Zealand’s most visited local website.
“In light of the NZCC decision, an even greater focus on cost efficiency will be necessary,” says Hywood.
“Moving to the next stage of our New Zealand publishing model will involve reshaping how we deliver our journalism to local communities. Further publishing frequency changes and consolidation of titles is an inevitability.”
Fairfax is in the middle of restructuring its business and maintaining an intense focus on cost reduction, a stronger emphasis on digital publishing and in building new revenue opportunities.
The company also plans to list on the ASX its Domain classifieds as a separate ASX company to extract full value from that fast growing business.
The latest half year results show the company with an after tax net profit up 205.6% to $83.7 million on revenue of $913.0 million, down 4%. Underlying profit, without significant items, rose 6.1% to $84.7 million.
(Disclosure: Allure Media, the publisher of Business Insider, is 100% owned by Fairfax Media.)