COMMENT: By Sri Krishnamurthi, contributing editor of Pacific Media Watch
Was New Zealand media giant NZME trying to pull a “fast one” when the company sought urgent approval to help to buy out rival media company Stuff for $1.
The New Zealand Herald owners filed an urgent Commerce Commission application on Monday for the purchase – for $1 – and wanted to have the transaction complete by May 31.
In a who-will-blink-first move, it was seeking the government’s help with urgent legislation to help clear the way for the application.
The company revealed in a market announcement to the New Zealand Stock Exchange (NZX) that it had entered an exclusive negotiation period with Stuff’s owner, Australian-based Nine Entertainment, on April 23.
However, Nine have said it “terminated” negotiations without a satisfactory conclusion.
As Andrew Holden, a journalist for more than 30 years, including five as editor of the Christchurch daily newspaper The Press, and four as editor-in-chief of The Age in Melbourne, told RNZ’s Nine-to-Noon programme yesterday:
“How strange it is, as Alice in Wonderland would say, it has become curiouser and curiouser.”
“At 9.34am, the New Zealand Herald website announcing precisely that, NZME has gone to the government and that it sought special legislation so it could circumvent the Commerce Commission and allow it to go ahead with the purchase,” the media commentator said.
“Pretty quickly Sinead Boucher, the CEO for Stuff comes back, and says the announcement was surprising to both to Nine and ourselves and not sure why NZME took this step given the clear message from our owners that there will be no transaction.
“That became more brutal when Nine entertainment issued its own statement to the Australian Stock Exchange saying not only that, but it had terminated further engagement with NZME,” he said.
That forced NZME to issue another statement to the NZX saying as far as it was concerned it had an exclusive negotiation period with Nine and that had not finished.
“Further to that, we’ve had the regulator for the NZX asking some questions of NZME as to why their initial statement at 9.31am hadn’t mentioned the fact that talks had broken down, so there may be some further consequences,” Holden said.
“So basically, they are in a fundamental standoff and some of the commentators saying it was an attempt to bully the government,” he said.
“It leaves us in a very murky situation.”
There were also suggestions that a private equity firm in Australia were interested in Stuff, as was National Business Review owner Todd Scott.
With a day until the budget, and the government having already announced a $50 million first tranche of support for media, the question is whether NZME were already aware of what is in the budget?
Not so, said Dr Gavin Ellis, a former editor of The New Zealand and media commentator. He had a different take on what had taken place.
“The budget process is such that it is not flexible enough to entertain 11th hour and 59th minute alterations,” Dr Ellis said.
“It is a bit puzzling I have to say,” he said of the whole process.
“The only development I’ve seen yesterday was a piece in The Australian about a medium sized private equity company having been in talks with Nine, apparently in conjunction with Todd Scott (NBR) but whether that was part of the ongoing discussion they had with a large number of people over a period of time with the possible sale of Stuff, I don’t know,” Dr Ellis told Pacific Media Watch.
His take was that there was a misunderstanding between the two parties.
“It seems to me that, both NZME and Nine, having made statements to their relative stock exchanges, that this appears to me not a matter of gamesmanship, so much as fundamental misunderstanding between the parties,” he said.
“They would not have made statements to the stock exchanges unless they believed it to be to current position because the consequences of misinforming the stock exchange are onerous.
“Particularly given that NZME share price rose yesterday,” Dr Ellis said.
‘Believed negotiations live’
“They must have believed the negotiations were live and that they were enlisting the aid of the Commerce Commission and potentially the government to ease the way for that sale to take place.
“The only unknown element is the role of Commerce Commission and the government, it is conceivable, and we’re privy to the financial details of Stuff or the liabilities that NZME would take on, but it is possible that if the government or the commerce commission were minded to facilitate a merger that they may put in place a number of binding conditions,” he said.
Meanwhile, Patrick Smellie of BusinessDesk in his column said: “Nine is ready to close Stuff down by May 31.
“It hasn’t said that publicly but BusinessDesk reliably understands that Nine has delivered that stark message to government ministers and officials,” he said.
“If Stuff were to close or were perhaps placed in receivership or liquidation next month, that could be the end not only for the country’s most-trafficked news website, but also a string of regional newspaper titles that are household names.”
That includes Wellington’s Dominion Post, Christchurch’s The Press, Hamilton’s Waikato Times, the Taranaki Daily News, the Timaru Herald, the Southland Times, and the Nelson Mail.