Monday, 13 March 2017 08:09

Commerce Commission Vodafone-Sky Veto Is No Clue to Imminent NZME-Fairfax Merger Verdict

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Story So Far---Newspaper Managers Ironical and Touching Failure to Cooperate

The extra month of unexpected additional breathing space allowed before the promulgating of the final verdict of the Commerce Commission in the matter of the proposed merger of the two newspaper chains, NZME and Fairfax, will allow all interested parties more time to study the implications of the word deceive.

Deceive features in the Commerce Commission’s own glossary of words, the ones that fall into heavy use in its own jurisdictional bailiwick.

Indeed, as a helpful compendium this technique might well be used by other such official authorities.

The Commerce Commission defines it thus:-

To cause to believe what is false, to mislead as to a matter of fact, to lead into error; to delude, take in:

We may use this crisp definition to parse it in the case of the two supplicant chains requiring the approval of the Commerce Commission to bring about their desired amalgamation.

Therefore does the desired merger cause New Zealanders:-

To believe what is false? Not at face value – the chains are overwhelmingly in the print business which is shrinking rapidly. A diminishing marketplace requires diminished fixed costs which requires economy of scale such as might be achieved by merging.

To mislead as a matter of fact? The chains have been candid. They want to merge. They are not, for example, seeking to establish a cartel, fix prices. Both of which are difficult anyway in a severely over-supplied market and one with no bar to entry.

To lead into error? The Commerce Commission in its earlier draft verdict seemed to indicate that it had in fact defined an error. Namely that the erring is in the elimination of editorial diversity represented by having one proprietorship instead of two, leading to a contraction in the diversity of opinion.

To delude? Here we must answer this one with another question. Would the “reasonable” person, so beloved of, for example, by libel lawyers, be “deluded” more or less by one single amalgamated chain, instead of two? The increasingly widespread distrust of journalists, not to say, contempt, might indicate that the reasonable person today already sceptically applies two pinches of salt, instead of just the one.

To take in? See “To delude.” See also bundling (below)

We may now refer in this context to the Commission’s own underpinning objective also clearly and prominently displayed on its web site. The Commission’s purpose, it proclaims is:-

Achieving the best possible outcomes in competitive and regulated markets for the long-term benefit of New Zealanders.

It is the three words “long term benefit,” that carry the freight in the merger context.

Without the merger, can the two chains sustain their score or so of subscription daily newspapers?

A curious element of the journalistic makeup, and one which cross-infects their management is an inability to explain their own case whatever it is with any degree of concision at all.

Another and a trait which has been notably on display in this matter is an inability to see something from the point of view of the other person.

Therefore one cannot take for granted that the two chains have explained to the Commission that should they have to close their provincial dailies then they will also have to close scores of rural free sheets that distribute agribusiness information gleaned by their subscription stable mates

Now to the matter of bundling.

This is an information technology term which refers to a provider rolling out a product which can only be connected with and used with parts and other add-ons from that same supplier which are said to be “bundled” with the original product.

The Commission’s veto of the Vodafone – Sky marriage turned on the notion that Vodafone’s subscriptions would become part of a bundled subscription package that contained Sky also.

For Sky, think sports broadcast rights.

If anyone is still in doubt about the significance of sport in relation to what the Commerce Commission might postulate as being “for the long-term benefit of New Zealanders” then they might contemplate its priority treatment by, for example, the free-to-air television broadcasters.

Any moral backsliding by anyone with any profile at all in a moving ball sport moves into the narrow early bulletin time band still allowed for authentic news, as opposed to the pre-orchestrated, or contrived version of which leisure/sport is the mainstay.

Any such similar behaviour by a member of a once revered calling, let us say by a lawyer or a cleric, is interpreted as being of little surprise value and is thus shunted, if it appears at all, into the tail end of the news hour.

The Commission in its veto of the Vodafone – Sky marriage took this singular benefit into account, the one of access to real time sporting rites of passage, and decided that it should not be bundled into mobile telecommunication subscriptions.

Bundling, customer capture, is another word for leverage. Is there any leverage bundled seen or unseen into the NZME- Fairfax nuptials?

One area of such coercion could be levering Fairfax subscribers into NZMEs radio stations.

But the NZME stations are free to listen to anyway.

In the heyday of the Newspaper Proprietors Association, the 42 daily newspapers of that era happily worked together shuffling news and advertising back and forth to mutual advantage.

This happy state of affairs reached its zenith when Reuters, in which the newspaper proprietors held 12 percent of the global value went public and generated a windfall which saw the retirement of the last of the benign old newspaper families.

Since this triumphal hour the ensuing professional managers displayed a touchingly innocent absence of cooperation.

This culminated in their failure to join forces in the purchase of TradeMe and thus allowing it to be sold at an international value instead of a local one.

If there are two less conniving, two less cunning mercantile institutions in Oceania, then they should be revealed. Ideally, prior to the Commerce Commission’s final verdict on the NZME-Fairfax merger.

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