Mike Hosking: End game - Fairfax is a company in trouble

I wondered, when I heard the news that Fairfax is selling or closing 28 of their mastheads in this country, whether the wise old heads at the Commerce Commission were hearing the same thing I was.

Fairfax produces the Stuff website and a bunch of papers like the Christchurch Mail, the Napier Mail, the Invercargill Eye, the South Canterbury Herald, the Clutha Leader. And it is the company that was looking to merge with the company that owns Newstalk ZB: NZME. That merger was blocked by the commission, appealed and lost, and is now being appealed again.

The grounds for the appeal, as I have said a number of times, seem sound to me. The Commerce Commission is dangerous in its outlook. The out-workings of that view we may well be seeing in the Fairfax news yesterday.

That is not to say that if the merger went ahead that rationalisation wouldn't happen, because it would. But what we know for sure is what Fairfax told the commission originally: if the merger doesn't go ahead, it's the end game.

The end game being, well, what we're seeing at 28 mastheads. Fairfax is a company in trouble.

Should the merger go ahead, NZME would be the bigger part of the equation.

NZME, which also owns the Herald, is in much better health than Fairfax because it has a radio arm, and a very successful one at that.

Fairfax has no radio and its print revenue dropped last year by 15 per cent. Subscriptions dropped by more than 4 per cent.

Now here's the point that the Commerce Commission never seemed to get. One of the great arguments against the merger was the grandiosely termed "plurality of voices in the market place".

In other words, it's good to have lots of papers and TV stations and radio stations, so we don't end up like China where the state produces the only news you'll ever hear.

All of that is fine. Until it was pointed out - a point they chose to ignore - that the cold hard reality is Google and Facebook are killing the competition by sucking the advertising dollar out of the market. They grab news, stick it on their feed, and poor old Fairfax puts out another paper no one reads.

Hence we are where we are. And where we are, is the plurality of voices that the commission so vehemently leaped on, is being killed off anyway. As, indeed, Fairfax said they would be.

So what's better? A combined company with potentially the resource and size to survive and thrive in an extraordinarily competitive market place that's increasingly global not local? Or two companies, one of which is going down the gurgler, with increasing numbers of people being without work.

If the end game, as Fairfax called it, is that Fairfax falls over, and there is no Fairfax, what have you got? No merger, and no company. Who on earth is the winner in that?

Perhaps the commission could take their rationales and wisdom down to the offices of the Star or the Mail or Tribune or Eye, and explain why they're right - and the poor old Fairfax worker who is out of a job, just doesn't get it.