The Commerce Commission is proposing to decline NZME and Fairfax's application to merge the two media outlets.

In a draft decision published today, the Commission's preliminary view is that it should decline to authorise the merger.

The proposed merger would bring together New Zealand's two largest newspaper networks and two largest news websites.

The Commission has assessed the impact of the merger on competition in both advertising and reader markets for a number of media platforms as well as the overall impact on quality and plurality (diversity of voices).

The Commission's preliminary view is that the merger would be likely to substantially lessen competition in a number of markets, including the markets for premium digital advertising, advertising in Sunday newspapers and advertising in community newspapers in 10 regions throughout New Zealand.

It also considers the merged entity would be likely to increase subscription and retail prices for Sunday newspapers and introduce a paywall for at least one of its websites.

Chairman Dr Mark Berry says the merger would result in one media outlet controlling nearly 90 per cent of New Zealand's print media market.

This would be the second highest level of print media ownership in the world, behind only China.

The merged entity would also control New Zealand's two largest news websites – nzherald.co.nz and stuff.co.nz – which together have a population reach more than four times larger than the next biggest domestic news website.

SunLive is generally ranked the third biggest in New Zealand.

Further, the merged entity would own one of New Zealand's two largest commercial radio companies. All this would result in an unprecedented level of media concentration for a well-established liberal democracy.

'Our preliminary view is that competition would not be sufficiently robust to constrain a multi-media organisation, potentially with a single editorial voice, that would be the largest producer of national, regional and local news by some margin in New Zealand," says Mark.

'NZME and Fairfax each play a substantial role in influencing New Zealand's news agenda. Competition between the parties drives content creation, increases the volume and variety of news available in New Zealand and assists with objectivity and accuracy in reporting.

"Our view is that the removal of this competitive tension would likely lead to a reduction in the quality and quantity of New Zealand news content both online and in print, with potential flow-on effects in television and radio.

'We recognise that the merger would achieve net financial benefits through organisational efficiencies. However, while we cannot quantify the detriments we see with respect to quality and plurality of the media, we consider that detriments resulting from increased concentration of media ownership in New Zealand would outweigh the quantified benefit we have calculated. In particular, the potential loss of plurality has weighed heavily in our draft decision. On this basis, we propose to decline the application.”

A public version of the draft determination is available on the Commission's website.

The Commission is seeking submissions on its draft determination by the close of business on Tuesday, November 22.