Stuff, NZME lose at Court of Appeal over merger

Tuesday, 25 September 2018

Merger would bring big efficiencies while the media industry adapted to huge changes, the companies have said.

The Court of Appeal has upheld a decision not to allow Stuff Ltd and NZME to merge.

The full judgment has not yet been publicly released, but the court said in a public 'minute' that the companies' appeal against a Commerce Commission block on their merger had been dismissed.

NZME and Stuff Ltd have been ordered to pay the costs of the appeal.

NZME and Stuff Ltd originally proposed in 2016 that Stuff Ltd (then known as Fairfax Media) would be folded into NZX-listed NZME, with Stuff's Australian owner Fairfax Media in return receiving a 41 per cent stake in the combined business plus $55 million cash.

Commerce Commission chairman Mark Berry announces the decision to block the Stuff-NZME merger in May 2017.

* NZME, Stuff merger appeal begins

* Stuff to push hard into digital markets after rebrand

* All you need to know about the Fairfax-NZME merger appeal**

The media companies argued that the merger was vital for the ongoing viability of their news businesses, with Fairfax managing director Greg Hywood warning that a rejection of the plan could lead to deep cuts in journalism and the closure of some newspaper titles.

After public hearings the Commerce Commission ruled against the merger in May, 2017, arguing in its decision that 'this merger would concentrate media ownership and influence to an unprecedented extent for a well-established modern liberal democracy'.

The companies appealed that to the High Court at a hearing in October, 2017, and when that was unsuccessful took their case to the Court of Appeal, which considered the arguments in June.

In an email to staff, Stuff chief executive Sinead Boucher said the two companies sought the merger because they believed a combined business would ensure the delivery of 'high quality independent journalism at scale for all New Zealanders.

'We believe the Commerce Commission's decision (which was upheld by the High Court) not to authorise the merger was wrong in fact and in law, which was why we appealed to the Court of Appeal.

'The decision is not the outcome we had hoped for, but, as everyone will be aware, we have not been sitting around idly waiting for it.

'The process has spanned more than two years, and in the meantime we have forged ahead with our own strategy of growing our Stuff and Neighbourly platforms, and new digital ventures, complemented by a strong portfolio of newspapers and magazines,' Boucher said.

Earlier this year, Stuff moved to close or sell 28 community and rural titles as part of its plan to reposition the business in the face of far-reaching changes to the media market.

Meanwhile, a separate proposal is under way in Australia for broadcaster Nine to effectively take over Fairfax Media's operations. The intentions for Stuff if that plan proceeds are unclear.

The Commerce Commission welcomed the ruling.