Fairfax excoriates ComCom, promises more 'cost efficiencies'

Fairfax Media has issued a statement excoriating the Commerce Commission for its refusal of the company’s proposed merger with NZME and promises “an even greater focus on cost efficiency.”

That focus will apparently include “reshaping how we deliver our journalism to local communities.”

Fairfax Media chief executive Greg Hywood says, in a written statement, the Australian-owned media company was "disappointed by this decision and will now take the time to carefully review the NZCC's reasons."

NZME shares dropped 5.6 percent to 84 cents immediately after trading opened on the NZX this morning.

An appeal for judicial review can be lodged to the High Court within 20 days, but Mr Hywood appeared to indicate that Fairfax would begin immediately to shrink its New Zealand operations, which the struggling ASX-listed publisher has made clear it wants to quit.

The memo sent to staff this morning notes that “further publishing frequency changes and consolidation of titles is an inevitability.”

The memo in full from Mr Hywood, who has previously warned a formal rejection by the commission would spell an "end-game" for its Kiwi assets:

“Hi Everyone,

“This morning the New Zealand Commerce Commission (NZCC) advised us of its decision to block the proposed merger of our Fairfax New Zealand business with NZME.

“The regulator’s failure to grasp the commercial and competitive realities of modern media is disappointing.

“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.

“We believe that the NZCC has failed New Zealand in blocking two local media companies from gaining the scale and resources necessary to aggressively compete now and into the future.

“Our impression from the outset is the NZCC seemed to be fixed in its assumption that the relevant competitive marketplace was restricted to only traditional media. No amount of market data, comparable decision or studies from similar markets overseas could move them from that.

“During the whole of the year-long NZCC process we continued developing our own standalone strategy.

“Our strategy involves leveraging our trusted brands and independent journalism and content reach 90% of New Zealanders.  This is reflected in high levels of engagement and rich data and insights.

“Stuff.co.nz is New Zealand’s most visited local website and benefits from market-leading product innovation.

“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.

“In light of the NZCC 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. Further publishing frequency changes and consolidation of titles is an inevitability.

We are carefully reviewing the NZCC’s reasons for the decision.

“Regards, Greg.”

NBR VIEW BACKSTORY: The StuffMe Merger from NBR Radio on Vimeo.