Kiwishare model mooted to protect journalism in new NZME-Stuff takeover bid

Tuesday, 19 November 2019

Sources say the Government is being lobbied to help progress the sale of Stuff to NZME.

High-level talks are underway over Government backing for a new bid from NZME to buy Stuff, it is understood.

The Government has been lobbied by NZME over whether it can find a way to further its chances, Government sources have confirmed.

One of the country's biggest media organisations, NZME owns the New Zealand Herald and Newstalk ZB.

The talks are understood to include proposals for a 'Kiwishare' arrangement, similar to that last used by the Crown to protect free local calls and fixed phone line rentals when Telecom was privatised in 1990.

Commerce Commission chairman Mark Berry announces the decision to block the Fairfax and NZME media merger in 2017.

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* Stuff, NZME lose at Court of Appeal over merger

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Effectively, the arrangement could ringfence Stuff's editorial operations and protect local journalism.

That would answer concerns raised by the Commerce Commission in 2017 when it rejected a merger proposal on the grounds of a loss of a plurality of voices in New Zealand journalism.

The Kiwishare arrangement would potentially overcome that hurdle but it is one of several options being considered, including bypassing the commission or doing nothing.

During the commission hearings, Stuff's then-owners at the time, Australian company Fairfax Media, warned that there would be significant job losses and further media disruption if the merger proposal failed.

It cited shrinking revenues in the face of massive competition from the likes of Facebook and Google, which suck up most of the digital advertising dollar but don't fund any local journalism themselves.

The latest bid would require some form of regulatory approval.

The media landscape has become increasingly fractured and distressed. Mediaworks, which owns Newshub, is the latest outlet to raise the alarm, putting its TV business Three up for sale. Its outgoing head of news, Hal Crawford, warned the current New Zealand media model is broken.

Stuff's new owners, Nine, declined to comment about the latest proposal. They unsuccessfully tried to sell Stuff earlier this year.

In a statement to the NZX stock exchange, NZME confirmed it was in discussions with Nine and had put a proposal to the Government about a possible transaction.

'However, NZME notes that these discussions are preliminary and stresses that no decision has been made in relation to any potential transaction. There can be no certainty at this stage that these discussions will result in any transaction,' the statement said.

Another option being considered is that the Government could issue some sort of directive to the Commerce Commission that could make it view another bid more favourably. Or it could override the commission's decision through legislation.

Stuff understands that the Government isn't keen on the precedent either of these options would create.

A third option is to do nothing. Given the significant issues involved that could be the Government's preferred option.

Broadcasting Minister Kris Faafoi could neither confirm or deny whether the Government was considering a 'Kiwishare' model to allow NZME to buy Stuff.

He said the Commerce Commission decision blocking the move was still in place and 'anyone who has had a good look at the Commerce Commission's ruling would find it pretty hard to change their minds.'

Faafoi confirmed he had spoken to various media companies about their concerns and briefed Cabinet about the situation, but refused to get into specifics as he said these were commercially sensitive.

'I have spoken to nearly every media company in the last 12 months because they are all worried about survival in the future.'

He would not discuss commercially sensitive details, and neither would he rule out the Government somehow overruling the Commission's decision.

The E tū union said it opposed the proposal for a merger on the first occasion, which was rejected by the High Court and Court of Appeal.

'We don't see that anything has changed in the circumstances. We opposed it then and we oppose it now,' it said.

'In the end it would lead to one company dominates the news media in the print and digital space.'

The union said it would discuss the matter with members.

The takeover - should it go ahead - would bring radio stations such as Newstalk ZB, Radio Hauraki and newspaper titles the NZ Herald, The Dominion Post and The Press into one big media conglomerate. Both companies have a wide array of local print titles.

Stuff has New Zealand's biggest online news audience and is also one of the biggest digital sites, comparable with YouTube, Google and Facebook.