A big block for a formal mega media merger.
The Commerce Commission says it doesn't want NZME and Fairfax to join forces.
It has just declined the merger application.
It would've made the country's biggest media company, pulling together newspapers like The Dominion Post, The Press, and The New Zealand Herald.
The New Zealand Herald also has a website, while Fairfax is behind the website Stuff.
The merger also includes NZME's group radio stations like Coast, ZM and Newstalk ZB.
LISTEN: Nevil Gibson: NZME-Fairfax merger could go either way
Both companies argued for a merger, they said traditional revenues were falling - and they needed to stand up to the likes of Google and Facebook.
The Commerce Commission's final decision this morning comes almost a year after the two companies applied to join forces.
A disappointed NZME CEO Michael Boggs said the merger had been an exciting prospect for both businesses and their audiences.
"We will be carefully reviewing the NZCC's full written decision and over the next few weeks we will be considering our options."
He said NZME's strategic focus continued in six key areas: growing audience reach, retaining print revenue, returning radio revenue to growth, growing new revenue streams, ensuring effective cost management and developing people and talent.
"We have progressed a number of initiatives aligned with these priorities including implementation of the Washington Post Arc content management system, launch of the Salesforce singular CRM system, progressing the redesigned nzherald.co.nz site, and the nationwide launch of the new The Hits radio breakfast shows."
The parties have 20 working days to decided whether to lodge an appeal.
Commission chairman Mark Berry said the regulator recognised that NZME and Fairfax face a "challenging commercial environment".
But the regulator disagreed with some of the scenarios put forward by NZME and Fairfax about their respective futures without the merger.
"Following our draft determination the applicants significantly altered their submission on what the state of the market would look like without the merger. The details of those submissions are confidential; however, we do not consider the scenarios presented to be likely outcomes. In our view, without the merger NZME and Fairfax will be increasingly focused on their online businesses as their print products diminish in number and comprehensiveness over time," Berry said in a statement this morning
"We accept there is a real chance the merger could extend the lifespan of some newspapers and lead to significant cost savings anywhere between $40 million to around $200m over five years. However these benefits do not, in our view, outweigh the detriments we consider would occur if it was to proceed."
The commission said that the merged company would have control of the biggest network of journalists in the country, 90 per cent of the daily newspaper circulation in this country and a majority of traffic to online sources of New Zealand news.
The merged business would reach 3.7 million New Zealanders each month, the commission said.
"This merger would concentrate media ownership and influence to an unprecedented extent for a well-established modern liberal democracy. The news audience reach that the applicants have provide the merged entity with the scope to control a large share of the news consumed by a majority of New Zealanders. 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," Berry said.
"Having reviewed all the evidence, our primary concerns remain that this merger would be likely to reduce both the quality of news produced and the diversity of voices (plurality) available for New Zealanders to consume. Competition between NZME and Fairfax leads them to produce higher quality content than would otherwise exist with the merger. This competition incentivises investment in editorial resources, motivates journalists and editors in their day-to-day work and acts as a safeguard to plurality," Berry said.
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