NZME effort to deal with Stuff fails

Photo: ODT files
Photo: ODT files
NZME, publisher of The New Zealand Herald, has dropped its takeover bid for major rival Stuff after failing to get High Court backing to force Stuff’s owner, Nine Entertainment, to continue negotiations on a deal that Nine had deemed were ‘‘futile.’’

In a decision yesterday morning, Justice Sarah Katz threw out NZME’s application for an injunction requiring Sydney-based Nine to honour the terms of an exclusivity agreement that it accused Nine of ‘‘unilaterally’’ abandoning.

In a statement to the NZX, NZME also announced it was withdrawing its urgent application for clearance of the merger proposal by the Commerce Commission.

The competition regulator had already ruled against it in 2017 on the grounds that allowing the country’s two largest news companies to merge would too greatly reduce ‘‘media plurality’’, which it argued was more important for news consumers and the role of media in a well functioning democracy than the two firms’ desire to increase their scale in order to compete for advertising against social media and search platforms Facebook and Google.

Both the High Court and Court of Appeal upheld the original Commerce Commission decision.

While NZME continued to argue it was the best owner for Stuff, it surprised both Nine and the New Zealand Government on Monday last week by making a $1 offer for Stuff, and seeking urgent legislation allowing the deal.

That action prompted inquiries from NZX Regulation and flushed out a statement from Nine saying that talks in recent weeks had concluded, leading NZME first to claim both parties were bound by an exclusivity arrangement and then to seek that agreement to be enforced by a court injunction.

At last Friday’s injunction hearings, counsel for Nine accused NZME of wanting exclusive access to data on the Stuff business as part of a fishing expedition that would help it to damage Stuff’s commercial prospects if the NZME bid failed.

The $1 bid was part of an attempt to undermine Stuff’s commercial reputation, Nine lawyers said.

In the statement, NZME said it was disappointed, but ‘‘respects a High Court judge’s decision not to preserve its exclusive talks with Stuff owner Nine Entertainment’’.

‘‘Should there be a credible buyer for Stuff who will protect jobs, newsrooms and mastheads, then NZME believes this should be positive for New Zealand media.

‘‘However, if this is not the case then NZME continues to believe that it would be best placed to sustain and support Stuff’s mastheads, newsrooms and jobs in the interests of maintaining a robust fourth estate and plurality of voice in New Zealand,’’ NZME’s statement said.

While the parties have seen Justice Katz’s reasoning, that is not expected to become public until later this week. Even then, redactions are expected.

As it was a pre-trial hearing, the judge was not required to determine which party was right about the status of the exclusive talks, but the overall justice of whether the interim orders were needed. 

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