ACCC gives go-ahead for Nine-Fairfax merger

Australian competition watchdog allows proposed merger that will see the two media companies unite into a $4.2 billion integrated media firm even as it says media competition is likely to be affected

The Australian Competition and Consumer Commission (ACCC) will not oppose the merger between Nine Entertainment and Fairfax Media, even as it admits the deal is likely to reduce media competition.

The merger was first announced in July, and will bring together the two ASX-listed companies together into one $4.2 billion goliath integrated media firm operating under the Nine masthead.

News of the proposed merger quickly triggered significant concerns from across the media and supporting industries, with criticisms raised specifically by the MEAA. Despite this, the ACCC has blessed the union, paving the way for one of Australia’s largest-ever media mergers in this country’s history.

In a statement, the ACCC said it examined a number of markets affected by the proposed merger and the impact on media competition in this country, with Australian metro and regional news, online and in print, current affairs reporting and investigate journalism key issues in the spotlight.

The industry watchdog’s decision to allow the merger to go ahead comes after an extensive investigation involving contact with hundreds of stakeholders, wading through more than 1000 submissions and examining internal documents supplied by Nine and Fairfax.

“While the merger between these two big named media players raised a number of extremely complex issues, and will likely reduce competition, we concluded that the proposed merger was not likely to substantially lessen competition in any market in breach of the Competition and Consumer Act,” ACCC chair, Rod Sims, said.

“This merger can be seen to reduce the number of companies intensely focusing on Australian news from five to four. Post-merger, only Nine-Fairfax, News/Sky, Seven West Media and the ABC/SBS will employ a large number of journalists focused on news creation and dissemination.”

However, Sims said the growth in online news players locally, such as The Guardian, The New Daily, Buzzfeed, Crikey and The Daily Mail, “provides some degree of competitive constraint”.

“While there are important barriers to building trust and scale, significant new entry into the Australian news market has already occurred and made a noticeable difference,” Sims continued. “Due to the difficulties in monetising journalism online, however, it is hard to predict the future landscape with any certainty.”

In addition, the ACCC found Nine’s TV operations and Fairfax’s main media assets generally do not compete closely with each other. It noted Nine’s news and current affairs programs are targeted at mass market audiences, while Fairfax’s print and online publications are aimed at delivering more in-depth coverage and target an increasingly subscription-based audience.

“By most measures, a combined Nine-Fairfax will likely become one of the largest online providers of Australian news, alongside News Corp Australia and ahead of the ABC, so this was another area of great focus,” Sims said. “We found that while Nine and Fairfax online sites currently did not constrain each other much, other news websites would likely competitively constrain the combined Nine-Fairfax.”

The ACCC also played down potential concerns around the provision of regional news. And while many industry submissions warned of the proposed merger’s detrimental impact on Fairfax’s culture and result in less investment in journalism, and the ACCC said it also understood such concerns, these have ultimately been put aside in favour of allowing the merger to go ahead.

“Media markets are highly dynamic. The shift to online and the huge reduction in hard copy classified advertising revenue have changed the media landscape irrevocably,” Sims commented, adding this shift has halved Fairfax’s advertising revenue in the past five years.

“The ACCC recognises there will likely be changes to the way Fairfax and Nine operate in future, either due to the changing media landscape more generally, or due to the merger itself,” Sims said. “However, we reached the conclusion that if such changes do occur, they would not be, to a significant extent, caused by the merger lowering the level of competition.”

Nine CEO, Hugh Marks, not surprisingly welcomed the news and said the focus now is on securing the support of Fairfax shareholders on 19 November.

“It is clear to us the ACCC was thorough in its considerations of the many submissions received and we welcome this rigorous process, as this is first merger to take advantage of the government’s media law reforms,” he said. 

“It is a clear acknowledgement of the changing competitive landscape in our industry, where the ability to compete across a variety of platforms and to engage different audiences is key.”

Straight after the ACCC's news, Fairfax posted a statement on the ASX saying it's lodged a class ruling application with the Australian Tax Office to confirm the commissioner's views on the proposed merger. Fairfax's directors have all unanimously recommended shareholders vote in favour of the merger scheme.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu 

 

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

How to create profitable pricing

How do we price goods and services? As business leaders, we have asked ourselves this question since the history of trading.

Lee Naylor

Managing partner, The Leading Edge

Sport and sponsorship: The value of event sponsorship

Australia’s cricketers captured the nation’s attention during their recent run to the semi-final of the ICC Men’s World Cup. While the tournament ultimately ended in defeat, for over a month it provoked a sense of belonging, hope and empowerment for millions of people across Australia. Cricket, and sport in general, has a near-unique ability to empower individuals, irrelevant of their background, demographic or nationality.

Nikhil Arora

Vice-president and managing director, GoDaddy India

AI ethics: Designing for trust

As artificial intelligence (AI) becomes much more prevalent and increasingly a way of life, more questions are being asked than answered about the ethical implications of its adoption.

Katja Forbes

Founder and chief, sfyte

😂😂😂😂😂😂😂😂

Max Polding

What it takes to turnaround an iconic Australian brand

Read more

I spend a lot of time in my professional life as a provider of marketing solutions trying to persuade customers that CX, UX, UI and Custo...

sketharaman

Gartner VP: Why CMOs and CIOs must band together to make CX a discipline

Read more

I live the best deals at LA Police Gear.

Tyrus Rechs

6 Ways to ramp up Social Media to Your Web Design

Read more

Its absolute over priced acquisition. The CEO, must be fired for this all cash transaction. Absolutely no justification for prospective P...

about_face

Analysts question long-term play of SAP's acquisition of Qualtrics

Read more

Very well written Nikhil! Indeed this is a big ticket investment, but the impact on brand, sales and employee motivation should make it w...

Yugal Sachdeva

Sport and sponsorship: The value of event sponsorship

Read more

Latest Podcast

More podcasts

Sign in