UPDATED 12.16pm: It's unlikely the proposed merger between New Zealand's two largest newspaper networks and news websites will go ahead.

WATCH ABOVE: Tristram Clayton finds out more from media commentator Bill Ralston

The Commerce Commission has published a draft determination on the application from NZME and Fairfax to merge their media operations.

NZME is the parent company of Newstalk ZB. 

Its preliminary view is that it should decline to authorise the merger.

Commerce Commission chairman Dr Mark Berry said competition between NZME and Fairfax drives content creation, increases the volume and variety of news and assists with objectivity and accuracy in reporting.

Mr Berry said the removal of that would likely lead to a reduction in the quality and quantity of New Zealand news, both online and in print, with potential flow-on effects in television and radio.

"This would be the second highest level of print media ownership in the world, behind only China," he said.

The two companies also had a significant role in influencing the country's news agenda and a lack of competition would likely lead to a reduction in quality and quantity of reporting, the commission said.

The commission says the merger would be likely to substantially lessen competition in a number of markets, including those for digital advertising, advertising in Sunday newspapers and advertising in community newspapers in 10 regions throughout New Zealand.

It also thinks subscription and retail prices for Sunday newspapers would increase and there would be a paywall for at least one of its websites.

NZME chief executive officer Michael Boggs said the commission has failed to properly take into account the diversity of opinions that will continue after the merger.

He said the company will be reviewing the draft in detail to make a submission on it in the next few weeks.

John Key said given it's a draft determination it would probably be unwise for him to wade in, because there will be a lot of discussion back and forth.

He knows there was some dispute as to whether there was too much elimination of competition around Sunday newspapers, and what the response from APN and Fairfax might be.

Mr Key said they have to let it go through the process.

Act Party leader David Seymour said the Commerce Commission appeared to be stuck in the 1990s.

“It’s as if newspapers are a distinctive product from the media in general. They’ve written their decision as if this is going from two [newspapers] to one nationwide.

“The reality is there are five major newsrooms - it would have been a reduction from five to four.

“Convergence is a reality. The Herald is doing video, TVNZ are running written editorial content, and apparently Radio NZ have cartoons.

“So I think generally the commission is out of date. It’s just this conflict between old government and new technology.”

New Zealand First leader Winston Peters, on the other hand, said the commission had “made a sound decision at last”.

Peters said a merger would have led to “an even faster race to the bottom”.

He said the commission’s preliminary decision was “ a glimpse of good news”.

“But it’s not much in the way of being a beacon of hope for a changed media environment. This is a retention of the status quo.

“This country has suffered immensely from the foreign ownership of our media – something that many countries will not allow.”

Labour broadcasting spokesperson Clare Curran called the draft a win for media diversity.

"We acknowledge the challenges facing the print media but again agree that the downside of concentration of media ownership ... outweighs other matters," she said.

Journalists' union E tu welcomed the draft, saying it felt its members' concerns about diversity and quality had been heard by the commission.

NZME listed on the NZX as a standalone media company in June after being spun off from APN News & Media.

Rupert Murdoch's News Corp is a 14.99 per cent shareholder in NZME.

NZME shares last traded at 66 cents valuing the company at $129.4 million.

 

WHAT FAIRFAX NZ CONTROLS
The Dominion Post

The Sunday Star-Times

The Press

stuff.co.nz

Regional newspapers including the Manawatu Standard, Waikato Times, Taranaki Daily News, Timaru Herald

A number of magazines including Cuisine, NZ House and Garden

WHAT NZME CONTROLS
The New Zealand Herald

Herald on Sunday

nzherald.co.nz

Regional newspapers including the Bay of Plenty Times, Rotorua Daily Post, Hawke's Bay Today, Wanganui Chronicle

Newstalk ZB

Radio Sport

Music radio stations including ZM, Hauraki, The Hits, Flava

GrabOne deals website

 

Additional reporting by NZ Newswire