The competition regulator will not stand in the way of Nine Entertainment Co and Fairfax Media's proposed merger to form a cross-platform media company, with the free-to-air television and newspaper businesses intending to combine by the end of the year.
Australian Competition and Consumer Commission (ACCC) chairman Rod Sims released a decision not to oppose the merger on Thursday, having conducted a review of the deal since August.
The ACCC sought industry and consumer views on whether Nine and Fairfax, publisher of the St George and Sutherland Shire Leader, competed in the supply of content to consumers and the supply of advertising space to brands, on the impact on choice and range of news for consumers due to lessened competition, the effect on prices, and whether specific platforms such as TV or radio or certain geographies would be affected.
Mergers that substantially lessen competition are typically not allowed, with the regulator looking at the effect on prices, quality or choice. Information released by the ACCC specifically said the competition test did not consider public interest, diversity or the number of voices, though these factors could be relevant to competition.
“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,” Mr Sims said in a statement.
“This merger can be seen to reduce the number of companies intensely focusing on Australian news from five to four,” he said.
“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,” he said, listing The Guardian, The New Daily, BuzzFeed, Crikey and The Daily Mail.
More than 1000 submissions
More than 1000 submissions were made, though it's understood some major rival media companies did not make submissions opposing the tie-up, which will leave Fairfax shareholders owning 48.9 per cent of the combined business and Nine investors with 51.1 per cent.
However, there were many submissions made through the journalists' union, with the Media Entertainment and Arts Alliance funnelling hundreds of responses from members and followers via its portal to the ACCC. The union has strongly opposed the merger as "bad for Australian democracy and diversity of voices", called on the regulator to block the tie-up and warned the move would threaten editorial independence.
Nine chief executive Hugh Marks has said he will support Fairfax Media's charter of editorial independence and has sent letters to the union restating this position.
Mr Sims said Nine’s television business and Fairfax’s core media assets were not close competitors, with Nine typically targeting the mass market and Fairfax targeting subscribers with in-depth news coverage.
“By most measures, a combined Nine-Fairfax will likely become one of the largest online providers of Australian news, alongside News Corp Australia and ahead of the ABC, so this was another area of great focus,” he said.
He recognised there would “likely be changes to the way Fairfax and Nine operate in future, either due to the changing media landscape more generally or due to the merger itself, However, we reached the conclusion that if such changes do occur, they would not be, to a significant extent, caused by the merger lowering the level of competition”.
Fairfax Media is the owner of The Sydney Morning Herald and The Age.
Fairfax shareholders still have to vote on the merger on November 19. Under the terms of the proposal, Fairfax shareholders are given 0.3627 Nine shares and $0.025 cash for each Fairfax share owned. Fairfax is then expected to stop trading on November 28, before the newly formed merged company begins trading again on December 10.
Fairfax chief executive Greg Hywood earlier said he was confident shareholders would see the value in the transaction.
The deal will bring joint venture subscription video platform Stan under one owner, and includes Fairfax's 60 per cent holding in real estate classifieds portal Domain Group and radio interests in Macquarie Media.