Media experts say NZME-Fairfax merger would make commercial sense

This morning, Fairfax and NZME verified industry speculation when they confirmed that talks on a potential merger between the pair have commenced.

“The parties intend to work towards completion of the merger by the end of calendar 2016 subject to all approvals,” explained an APN market announcement this morning.

There are still a lot of approvals to be made between now and the end of the year, which means there isn’t a 100 percent guarantee of the deal coming to fruition.

“The discussions are subject to exclusivity provisions with standard fiduciary and other carve-outs,” the statement says.

Given the continuous decline in print revenue (and the fact that online earnings aren’t balancing the losses) for news publishers across the industry, several media executives told StopPress that a merger makes commercial sense.

OMD chief executive Kath Watson says the ad spend numbers in print keep falling.

She says that while the SMI ad spend data doesn’t take direct sales into account, the overall volume over the last few years has dropped consistently.

“It might not be great for journalists, but bringing together the two companies definitely makes commercial sense.”

The OMD boss says the move will also be good for advertisers, in that it will create a full national spread.

She says that at the moment, advertisers rely on Fairfax for the regions and the NZME-owned Herald in Auckland.

She says that bringing together the two media companies will give advertisers a single point of contact for the whole country.

ZenithOptimedia group business director Alex Lawson says that his approach will not change regardless of whether the two companies merge.  

“What we are looking to do remains the same: find the most efficient and engaging ways of reaching our audience for clients,” Lawson says.

“If a merger between NZME and Fairfax helps us to do this, then great. If this allows the new organisation to provide better journalism and news content for an audience hungry for it then this is only good for us as marketers looking for places to connect with them.”

Lawson says that the success of the initiative will also largely depend on whether the combined company produces better journalism.

“Could this be an opportunity to provide quality, long form, investigative print journalism worthy of paying for? I’m sure that many readers would welcome something in this field, as would many advertisers.”

NZME and Fairfax are already collaborating on initiatives like KPEX, and IAB chief executive Adrian Pickstock believes the proposal of a merger is further recognition that the real enemy lies abroad. 

“The proposed merger … is a positive step forward for local media in the battle for revenue share with the major international platforms operating in New Zealand,” Pickstock says.

“In the interactive game today, the player with the biggest audience wins first prize and the combined audience reach of the two entities would be compelling for any advertiser.”

However, he also warned that audience alone would not be enough to make the new company successful.  

“The question is will the merger result in a game changing move introducing industry-leading innovation for New Zealand media or will it conclude with a bigger and more cumbersome version of the two incumbents?”

If the merger does go ahead, we can rest assured that NZME and Fairfax will send out press releases promising the former. Readers and advertisers alike can only hope that it doesn’t materialise as the latter.   

Read more of our coverage on the proposed merger here

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