Amid reports of NZME and Fairfax NZ being carved off from their Australian owners, former Herald editor-in-chief Tim Murphy considers the prospects for a merger between NZ’s two big newspaper groups

DitchMe. AbandonMe. MarryMe off to Fairfax.

The Australian owner of the New Zealand Herald and NewstalkZB and a clutch of lesser radio stations, websites and newspapers is about to cast these storied news organisations adrift.

APN (originally it stood for Australian Provincial Newspapers) is expected to announce tomorrow to the stock market that it plans to give its shareholders new shares, not in the main company but in the New Zealand arm, NZME. NZME will be a separate company; separate board, separate fate.

At the same time, APN is expected to announce it is asking investors for around $A200m – money it will use to take debt off its books (APN’s debt is too big, at $A450m plus) and help make NZME seem more viable.

APN, which is selling off its Australian regional newspapers simultaneously, will then be an Australian radio and outdoor advertising company.

NZME will be a bit of a rump, the venerable but declining print products, a second-placed general news website and a radio entity struggling to meet its financial targets and overall market ratings in the face of the success of the MediaWorks radio empire.

The APN shareholders who are given NZME scrip are widely expected to sell it; many of the shareholders are funds which need to invest in certain indexed stocks, businesses of a mix of sectors and scales. NZME is unlikely to be one of them. So there’ll be shares rushing onto the NZX and the price will be under real pressure.

When APN tried another approach to offload NZME in 2014 – by touting it for an Initial Public Offering, or a sharemarket listing in which it might have kept a shareholding itself, the market told it there was no real interest. The money men and women saw no obvious path to making profit out of digital.

And the radio assets were doing better then, as was the Herald. And digital advertising had not been quite so devalued by the ubiquity of the great social and search networks, Facebook and Google, and automated cheap ad sales.

This is why the financiers, who are always thinking through issues several steps ahead of the industry itself, have pushed the idea that Fairfax – the other half of New Zealand’s “print” media, and also Australian owned – should do the same thing: divorce its Kiwi assets.

This step will not necessarily happen straight away. Divorce and courting a new partner take some time.

Fairfax has turned itself steadfastly away from newspapers in Australia to the extent that it this week talked openly about the cost and inevitability of producing the Sydney Morning Herald and the Age papers only at weekends.

Those pushing media assets around on a model battleground with long sticks are thinking the two New Zealand media rumps could be given an arranged marriage.

There will be difficulties between the families, particular over the dowry. Getting Fairfax and NZME to agree on their relative valuations could be very tough indeed. But the theory is that by adding the two together there would be a) a more economic scale in this market and b) a chance for eliminating duplication and thus cost.

First, that could come in creating one printing and distribution business. The companies already work together on the former. Second all “back-office” functions such as finance, human resources, IT, purchasing and property could be “synergised”. Third, the sales and even journalism functions could be skinned and thinned.

Any deal would need to avoid Commerce Commission scrutiny of creating “dominance” in any media market. So parts of both empires might need to be sacrificed, closed, sold to some other player.

For example, the Herald on Sunday and the two Fairfax Sunday papers are 100% of the Sunday newspaper market. The Herald and the Waikato Times and Fairfax and NZME community papers similarly dominate Hamilton and the Chiefs’ territory.

A combined company would have the main paper in four of our five biggest cities; the Otago Daily Times would be the standout independent.

Most acutely, stuff.co.nz (with 2 million monthly unique browsers) and nzherald.co.nz (1.6 million) would be a very big voice in online news in this country. Stuff is already bigger than anything here other than Facebook and Google; bigger than TradeMe, bigger than the NZ Government.

It is likely the backers of the Fairfax-NZME shotgun marriage will argue that even with that combined audience, it is now impossible to dominate the market for news and entertainment. They can cite everything from Facebook, Google and Apple’s news feeds to tvnz.co.nz, newshub.co.nz, global news sites, Sky TV, thespinoff.co.nz and every other brand in the fragmented “news” universe.

People can get their news anywhere, anytime. They’re not restricted by geography or infrastructure.

On the commercial side, the dealmakers would be able to say that advertising is also increasingly competitive. Fairfax and NZME hardly have a digital lock even on the old rivers of gold of houses, cars and jobs.

Advertisers are moving out of print – and online the two companies are in fierce competition with realestate.co.nz, TradeMe, car sites, retailers’ own direct sites, TV, and for radio – remember there’s always the revenue juggernaut at MediaWorks.

In the past, all-things-being-equal, merging two big news organisations would have been unquestionably bad for diversity of opinion and public interest journalism.

However, the death-by-a-thousand-cuts culling of the two newsrooms (Fairfax had about 700 plus and NZME about 350 when I stepped down less than a year ago; both are lower now) and the homogeneity of content online as nzherald.co.nz mimics stuff.co.nz’s high appeal tabloidism, mean that is possibly now moot.

In Florida last week, the Tampa Bay Times newspaper bought its St Petersburg city competitor, the Tampa Bay Tribune, and promptly closed it. Its justification was that there was no longer room for two big players in such a market.

“The continued competition between the newspapers was threatening to both,” the Times chief, Paul C Tash, said.

There would be jobs lost here if the same thinking prevails. But there will be jobs lost, progressively, in any case. It is possible that a whole company, or big parts of it, might be lost if things continue as they are.

Some mastheads could disappear – or be sold on by a combined entity to another player – even with a deal.

Could a Fairfax-NZME combo survive Facebook and Google, Snapchat and Instagram’s continued pushes into content? Media analysts in the US say consumers tend to use just five of the apps they have on their cellphones. The new battle is, one way or the other, to have your content, your advertisers, on an app that will make the cut.

In this market, what will be the one app New Zealanders include in their five?