Here’s an irony: Two media companies have complained about anonymous sources and what a public authority said to the media.
That forms part of Fairfax and NZME’s attempt to revive their StuffMe mega-merger proposal from its warm grave.
Their appeal filed with the High Court at Wellington against the Commerce Commission’s unanimous final determination turning down the merged media giant is mercifully brief but pained at the unfairness of it all.
In sum, it says the Commerce Commission was wrong in all three of the “affected markets” it said would be harmed by the merger of Fairfax’s national, regional and community newspapers and Stuff website with NZME’s New Zealand Herald, regional, communities and the nzherald.co.nz website plus half the commercial radio market.
It was wrong on how a merged company would affect a) online news b) the Sunday newspaper market and c) certain community newspaper markets in 10 areas. Wrong. Wrong. Wrong.
In the hand of the applicants’ lawyers, Russell McVeagh partners Sarah Keene and Andrew Butler, the appeal is no real surprise. Keene had an 11-month legal cage-fight with the Commerce Commission and, despite limbs broken and choker holds applied, has refused to tap out.
For the appeal, they’ve engaged Wellington Queen’s Counsel David Goddard, so there could yet be a return to Queensbury Rules.
Interestingly, Fairfax and NZME don’t just say the Commission was wrong, wrong, wrong on the specific markets.
They say it erred in overestimating the cost of the detriments of a merger and underestimated the benefits, and didn’t get the material benefit in prolonging the life of print products.
And they claim the Commission made a mistake by taking into account media plurality in its “legal test for authorisation of a business acquisition” under the Commerce Act. The Commission was an economic regulator, should focus on efficiences, needed to quantify benefits and detriments exhaustively to avoid speculation and “mere intuition” and it was inconsistent to the scheme of the Act for the Commission to “have regard to non-economic social and political considerations”.
So, stick to the commerce, pure and simple. The applicants’ commerce.
They also allege the Commission was unfair.
It allowed “extensive anonymity and confidentiality to a large number of third parties submitting in opposition to the application”. No mention of the extensive blacked-out redactions in the applicants’ own submissions – or of the dangers in a market already dominated by such large companies of submitters putting their heads up and speaking honestly.
The appeal says the Commission was also unfair in not giving Fairfax and NZME time to consider its “likely counterfactual” – its assessment of what might happen if the merger did not go ahead. It alerted them on March 5. They say that was less than three weeks before its final determination was due. However the Commission delayed that final deadline until May 3 in part to consider the StuffMe parties’ views.
Fairfax and NZME have a third reason why the Commission was unfair, but have, without irony, blacked it out.
Their fourth line of attack on fairness is, also without irony, taking the Commission to task for its “interaction with the media” after its draft decision last November and about extending its deadlines. These, the appeal says, meant the process was “affected by the appearnace of predetermination”.
The timing of the decision to appeal is interesting. With two big private equity players bidding for Fairfax New Zealand’s parent company Fairfax Media, it must be clear that the word from Australia is that neither wants the New Zealand operation. The first, TPG, had been explicit in its initial bid that it did not want Fairfax NZ. It now seeks to buy the whole entity only because the Fairfax board looked certain to reject the part offer.
Fairfax Australia is listed as one of three appellants in this latest StuffMe legal manoeuvre, having supported the local unit in its merger application to the Commerce Commission. As it awaits its own ownership fate, it continues to want its NZ arm merged into a separate listed company, NZME, and to take home the $60 million it stood to repatriate if the merger had been approved.
Undeterred by the news of the appeal, two separate investment entities using consultants from Hong Kong and Sydney have been approaching New Zealand media figures about prospects for the print/online media market here.
One is an “investment client around national and regional print media in New Zealand” and the other is “an investment firm who would like to understand better the newspaper and the media industry in New Zealand”. The interest followed Friday morning’s appeal. It is likely to focus not just on the Fairfax NZ assets, unwanted as they are by whichever buyer succeeds in Australia, but also NZME which is itself vulnerable to a determined investor raiding its share register.
A decision on the ultimate ownership of Fairfax in Australia is likely to precede any High Court ruling here on StuffMe. The victor would presumably let the case run and take the money if the merger is resurrected. If it fails, the market players in Australia and Asia will be well-briefed about their orphaned targets.