NZME, Fairfax NZ merger appeal to be heard in October
By Paul McBeth
June 22 (BusinessDesk) - Dominant New Zealand news publishers NZME and Fairfax New Zealand will have their 10 days in court in October as they seek to overturn the Commerce Commission's rejection of a planned merger they say is needed to create a sustainable domestic media group.
NZME director Peter Cullinane, filling in for chairman John Anderson, told shareholders at today's annual meeting in Auckland that a 10-day hearing has been set down for Oct. 16 in the High Court to appeal the regulator's decision last month.
Fairfax and NZME filed their appeal on May 26, claiming the regulator was wrong in fact and in law in rejecting their planned merger. The commission turned down the merger on the grounds that the estimated financial benefit from creating a larger, merged entity to combat global competitors for advertising revenue, such as Google and Facebook, wasn't enough to outweigh the detriments of reduced media 'plurality', meaning the range of voices and views in New Zealand news reporting.
Russell McVeagh has retained David Goddard QC to represent the media companies, having successfully argued against opposition to the Commerce Commission's authorisation of a national wool scouring monopoly. That decision became part of the backbone of the commission's decision to decline the NZME/Fairfax proposal.
NZME chief executive Michael Boggs told shareholders today the two companies are sharing the cost of the appeal, which he said was "in the best interests of NZME and its shareholders" when weighed up against the potential benefits from the merger, which are estimated to be between $36.8 million and $55.7 million a year.
"We believe the transaction would be positive for New Zealand, our employees and shareholders by enhancing the competitiveness of locally produced content for our news, sport and entertainment markets," Boggs said in speech notes published on the NZX.
Cullinane said if the merger goes ahead it will expand the number of directors on the group's board. However, NZME's board has started looking for directors to boost its skillset in "governance, digital and technology".
The company didn't provide a trading update at the meeting.
NZME shares rose 2.4 percent to 84 cents, having gained 39 percent so far this year.