The competition watchdog will allow Fairfax Media’s $4 billion merger with Nine Entertainment to go ahead after deciding the move would not diminish competition in Australian news and media.
The Australian Competition and Consumer Commission said Thursday it examined more than 1,000 submissions as well as documents demanded from Nine and Fairfax before giving the merger the green light.
The decision removes one of the final obstacles to the creation of a media giant owning Nine’s free-to-air TV network, newspapers including the Age, The Australian Financial Review and Sydney Morning Herald, a majority stake in real estate site Domain, streaming service Stan, and a 54.5 per cent stake in the Macquarie Media radio network.
“We concluded that the proposed merger was not likely to substantially lessen competition in any market in breach of the Competition and Consumer Act,” ACCC chair Rod Sims said.
The decision was met with criticism from the Media, Entertainment and Arts Alliance, who said the merger would reduce coverage of matters of public national interest.
Opposition leader Bill Shorten and former Prime Minister Paul Keating were also critical.
Fairfax directors have unanimously recommended that shareholders vote in favour of the deal on November 19, in the absence of a superior proposal.
The deal faces a final court approval on November 27.
Fairfax head Greg Hywood expects the merger to be officially completed by December 10, while Nine says December 7.
Shares in both companies rose more than two per cent in the first 10 minutes of trade on Thursday, before falling back.
Nine was up 0.3 per cent to $1.675 and Fairfax up 0.4 per cent to 62.75 cents at 1305 AEDT.
Mr Sims acknowledged the merger, which was announced in July, would reduce the number of companies intensely focusing on domestic news from five to four, but said international rivals such as The Guardian and Buzzfeed were providing additional competition.
“Only Nine-Fairfax, News/Sky, Seven West Media and the ABC/SBS will employ a large number of journalists focused on news creation and dissemination,” Mr Sims said.
“With the growth in online news, however, many other players, albeit smaller, now provide some degree of competitive constraint.”
The ACCC also found while Nine’s television operations and Fairfax’s main media assets generally do not compete closely with each other, their online news coverage could overlap after significant investment in this area from both companies.
It said the deal would likely elevate Nine it alongside News Corp and ahead of the ABC in terms of online coverage.
Nine Entertainment and Fairfax had varying fortunes during reporting season, with Nine posting a full-year profit jump of 26.8 per cent to $156.7 million.
Fairfax swung to a loss of $63.8 million, hit by write-offs at its regional and New Zealand operations as well as restructuring and redundancy costs.
Mr Sims said he understood the concerns outlined in many submissions that the impending merger would strip resources from Fairfax culture and journalism.
“The ACCC recognises there will 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,” he said.
“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.”