The ACCC has given the green light to Nine’s takeover of Fairfax, with the consumer watchdog noting it will not “substantially lessen competition” in the Australian news industry.
The ACCC investigation involved contact with hundreds of stakeholders, consideration of more than 1000 submissions and examination of internal documents from both Nine and Fairfax.
- Leadership Webinar: Which-50’s 2019 Outlook and Business Transformation Drivers webinar is set for November 27. Register today!
Rod Sims, ACCC Chairman, said “While the merger between these two big name media players raised a number of extremely complex issues, and will likely reduce competition, we concluded that the proposed merger was not likely to substantially lessen competition in any market in breach of the Competition and Consumer Act.
“This merger can be seen to reduce the number of companies intensely focusing on Australian news from five to four. Post the merger, only Nine-Fairfax, News/Sky, Seven West Media and the ABC/SBS will employ a large number of journalists focussed on news creation and dissemination.”
“With the growth in online news, however, many other players, albeit smaller, now provide some degree of competitive constraint. These include, for example, The Guardian, The New Daily, Buzzfeed, Crikey and The Daily Mail,” he added.
The ACCC approval means the deal, which was first announced in July, is one step closer to being finalised. Nine shareholders will own 51.1 per cent of the combined entity, with Fairfax shareholders owning the remaining 48.9 per cent.
The ACCC found that Nine’s television operations and Fairfax’s main media assets generally do not compete closely with each other. The consumer watchdog also investigated potential competition issues in the provision of regional news. In particular, concerns were raised about combining the two key newsrooms in the Hunter/Newcastle region.
It determined, however, that in the Hunter region, Fairfax and Nine do not compete sufficiently closely with each other.
Hugh Marks, CEO at Nine, said “We welcome the ACCC’s decision not to oppose the merger of Nine and Fairfax.
“It is clear to us the ACCC were thorough in their considerations of the many submissions they received and we welcome this rigorous process, as this is first merger to take advantage of the government’s media law reforms.
“It is a clear acknowledgement of the changing competitive landscape in our industry, where the ability to compete across a variety of platforms and to engage different audiences is key.
“Our focus is now on securing the support of Fairfax shareholders on November 19.”
Many submissions argued that this proposed merger will change Fairfax’s culture and result in less investment in journalism. In particular, market participants raised concerns about losing a brand that is known for independent investigative journalism.
Sims said “Media markets are highly dynamic. The shift to online and the huge reduction in hard-copy classified advertising revenue have changed the media landscape irrevocably.
“The impact of some of these changes is demonstrated in the approximate halving of advertising revenue from Fairfax’s digital and print mastheads in the last five years.”
The impact on advertising markets
The ACCC also considered the potential impact of the proposed merger on competition in advertising markets, content acquisition markets and markets for the provision of non-news content to the public, as well as the potential impact of cross-promotional activity and bundling.
In relation to advertising markets, content acquisition markets and non-news content markets, Nine and Fairfax do not currently compete strongly against each other, and would continue to face a range of competitive constraints after the merger. Cross-promotions and bundling of advertising were considered likely to occur within a combined Nine-Fairfax, but the ACCC did not consider such behaviour would be likely to substantially lessen competition.
The ACCC has noted the speculation about future media mergers.
“Each merger or acquisition is assessed by the ACCC individually taking into account its particular circumstances. Today’s decision not to oppose the Nine-Fairfax merger is not indicative of what the ACCC may conclude in respect of any future proposed media merger or acquisition.”