A merger of New Zealand's two largest media companies was rejected today as the country's competition watchdog warned it would create a dominant news giant and threaten democracy.
NZME and Fairfax Media NZ signed a merger agreement last September, hoping it would boost their ability to compete with global online giants such as Facebook and Google.
The combined entity would control almost 90 per cent of New Zealand's print media and reach an audience of 3.7 million -- more than 80 per cent of the population -- New Zealand's Commerce Commission (NZCC) said.
It stood by a preliminary decision issued in November to boycott the move, saying such concentrated media ownership was unprecedented in modern times.
"This level of influence over the news and political agenda by a single media organisation creates a risk of causing harm to New Zealand's democracy and to the New Zealand public," the anti-trust regulator said.
Australian-owned Fairfax NZ publishes titles such as Wellington's Dominion Post and the Christchurch Press, as well as running New Zealand's most popular news website stuff.Co.Nz.
NZME owns the New Zealand Herald, which has the second largest news website, and a string of radio stations.
Fairfax Media's Sydney-based chief executive Greg Hywood said the NZCC had "failed New Zealand" by stopping two local companies from aggressively competing on their home soil against the big internet companies.
"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," he said in a statement.
He also warned the company, which has already slashed jobs, would now have to look at more "cost efficiencies".
"Further publishing frequency changes (of newspapers) and consolidation of titles is an inevitability."
NZME shares were down 5.62 percent at NZ$0.84 in early trade in New Zealand. Fairfax's Australian parent had not commenced trading in Sydney when the announcement was made.
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