News firms seek approval to create New Zealand's biggest media company

Two of New Zealand's major media organizations firms Friday took a step closer to merging into the country's biggest media company with an application to the commerce watchdog to approve the deal.

The proposal would see NZME and Fairfax, both owned by Australian parent companies, merging their media operations in New Zealand, said a statement from the Commerce Commission.

Fairfax operates the largest print media network in New Zealand, with nine daily and three weekly newspapers, 61 community publications, 10 magazine titles and six websites.

NZME owns eight daily and two weekly newspapers, 24 community publications, six magazine titles, 10 radio stations and 38 websites.

NZME and Fairfax are also joint venture owners, with state-owned commercial broadcaster TVNZ and private broadcaster MediaWorks, in KPEX Ltd., an advertising exchange to sell digital advertising inventory.

The ownership structure for the proposed merged entity had not yet been established, said the statement.

NZME's parent company, APN, was seeking approval from its shareholders to demerge NZME and have it listed as a separate company on the New Zealand and Australian stock exchanges.

It was proposed that NZME acquire Fairfax assets or shares from parent company Fairfax Media Ltd., for a mix of new shares in NZME and cash, with Fairfax expected to be the minor shareholder in the merged entity.

Both companies have suffered in recent years from competition with new media and the decline of traditional newspapers, which has seen advertising revenues steadily diminish.

The companies argue New Zealand's media industry is diverse enough to sustain competition for advertising, but media commentators have raised fears that the country's news-gathering operations could suffer.

The Commerce Commission has set a decision date for Aug. 22. Endit