Job losses are sure to follow the Commerce Commission decision yesterday to turn down the proposed merger between media companies NZME and Fairfax New Zealand.
Across the Tasman, Fairfax Media is cutting 25% of its metropolitan journalist staff - equal to 125 full-time jobs - in an effort to help save $A30million ($NZ32.4million) across its Australian newspaper operations.
The cuts were announced on Press Freedom day.
The Media, Entertainment and Arts Alliance slammed the Australian move, saying it was ''appalled'' and the decision would weaken Fairfax's business.
Fairfax journalists on Twitter said Australia's oldest publisher was offering voluntary redundancies at its metro publishing business, which includes masthead titles The Sydney Morning Herald and The Age.
Craigs Investment Partners broker Peter McIntyre told the Otago Daily Times the New Zealand media companies had previously said they would make staff cuts.
''Look across the Tasman today. There is your answer.''
Private equity funds could be interested in parts of both Fairfax and NZME, he said.
The radio assets of NZME would be attractive, despite the fragmented nature of the industry. But both companies were vulnerable to private equity funds with cash.
There had been a reversal in trend for print media but that might not be enough to save some of the papers published by NZME and Fairfax, Mr McIntyre said.
Fairfax Media is already moving to cut back its investment in New Zealand news production.
Australian-based chief executive Greg Hywood said the ''disappointing'' decision by the New Zealand Commerce Commission not to allow a merger with its largest rival news producer, NZME, made ''further publishing frequency changes and consolidation of titles ... an inevitability''.
The competition regulator said NZME and Fairfax had failed ''by a considerable margin'' to convince it the clear commercial benefits of the merger would outweigh the potential detriment to the quality and variety of news available to New Zealand news consumers.
''While we cannot weigh in dollar terms the net benefits against the detrimental societal impacts we expect to see, in our assessment this is not a finely balanced decision,'' commission chairman Mark Berry said, confirming a draft decision to decline the merger last November.
The application had taken nearly a year to turn down.
BusinessDesk reported an appeal for judicial review could be lodged with the High Court within 20 days, but Mr Hywood appeared to indicate Fairfax would begin immediately to shrink its New Zealand operations, which the struggling ASX-listed publisher had made clear it wanted to quit.
''The regulator's failure to grasp the commercial and competitive realities of modern media is disappointing,'' Mr Hywood said in a statement.
''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.
''In light of the decision, an even greater focus on cost efficiency will be necessary. Moving to the next stage of our New Zealand publishing model will involve reshaping how we deliver our journalism to local communities.
''Ensuring the ongoing sustainability of the New Zealand business will require continued diversification of our digital revenue base, building on recent progress of monetising our audiences through new advertising products, and businesses such as Stuff Fibre and Events.''
The company would be ''carefully reviewing'' the commission's reasoning, contained in a 357-page decision.
At its media conference, the commission was at pains to reject the proposition from legal counsel for Fairfax and NZME it was operating outside the bounds of the Commerce Act by basing its decision on concerns about media ''plurality'' - the range and quantity of views published in a single media market.
''We reject the submissions that there is a category of consequences that we are required to ignore,'' Mr Berry said.
Australian and New Zealand case law made the commission confident non-commercial factors could be weighed against commercial considerations to reject a merger application.
NZME and Fairfax argued commercial benefits of between $40million and $200million over five years if the merger went ahead, and that it was vital if the growing impact of global social media and search giants Facebook and Google was to be combated effectively. Those two alone were soaking up around 80% of online advertising revenues at a time when revenue from the traditional newspaper publishing business is in steep and apparently irrevocable decline.
The commission said that it recognised the ''very real
commercial pressures'' on both print and online news producers, but concluded that the potential loss of competing views and voices in the media represented a greater threat to New Zealand democracy and news consumers than the threat of reduced advertising revenue to the would-be merged publishers.
Media commentator Bill Ralston said the commission's decision to decline the proposed merger between NZME and Fairfax NZ was ''a bit of a disaster''.
''Those two news organisations will have to strip their budgets. And when I say strip, they'll have to slash and burn.
''It will reduce the number of journalists out there, it will reduce the number of stories. It'll impact everything from travel budgets to accommodation to getting out and talking to contacts. It will have a very detrimental effect on the New Zealand media.''
Act New Zealand leader David Seymour deplored the decision, saying the rejection of the merger was a denial of modern media realities.
The Commerce Commission was a heavy-handed and out-of-touch regulator.
''It blocked two major media companies from adapting for the 21st century. Now we're set to witness the slow, painful withering of our major newspapers.''
Allowing the merger would not have created a monopoly. Fairfax and NZME already competed with Radio New Zealand, 1 News, Newshub, the NBR, the Spinoff, Facebook, Twitter, and more, he said.
''In the internet age, people consume media from countless sources and don't need nannying from grey-haired Commerce Commission bureaucrats.''
Journalists at Fairfax Media in Australia have voted to go on strike following the company's decision to cut a quarter of the remaining journalists at its major Australian newspapers, AAP reported.
Fairfax journalists announced via Twitter that they would strike for seven days from Wednesday, a stoppage that will include the Federal Budget on May 9.
