News Corporation - proposed acquisition of APN News & Media Limited's Australian Regional Media division - ARM

Acquirer(s)

  • News Corporation

Target(s)

  • APN News & Media Limited's Australian Regional Media division - ARM

Summary

News Corporation proposed to acquire the Australian Regional Media business from Australian Provincial Newspapers Ltd, a subsidiary of APN News & Media Limited.

The ACCC engaged extensively with readers, advertisers and other market participants throughout its review. In particular, the ACCC contacted over 600 small businesses and advertising agencies which advertise in News and ARM publications in Queensland and Northern New South Wales. In reaching the conclusions set out below, the ACCC had regard to the fact that only a small proportion of market participants were concerned about the proposed acquisition.

Market definition

The ACCC's review focused on the likely effects of the proposed acquisition on:

  • the supply of local news and information to consumers/readers in Caboolture/Bribie Island, south west Brisbane, Brisbane northern bayside, Logan, and Tweed Heads/southern Gold Coast (together referred to as the local overlap areas). In these areas News and ARM supply competing local community newspapers (which were provided for free, with one exception) and the associated websites.

  • the supply of local advertising opportunities to advertisers in the local overlap areas

  • the supply of news and information to consumers/readers in Mackay, Rockhampton, Gladstone, Bundaberg, Hervey Bay, Gympie, the Sunshine Coast, Toowoomba, Ipswich, and Warwick (together referred to as the regional overlap areas)

  • the supply of advertising opportunities to advertisers in the regional overlap areas

  • the acquisition of news content from content providers.

  • The ACCC took into account the two-sided nature of media markets, noting that each of News and ARM supply content to readers and advertising opportunities to advertisers.

    The ACCC did not reach a concluded position on the delineation of the consumer-side market. In particular, the ACCC did not form a final view as to whether print newspapers and online news sites are in the same or separate product markets from a consumer perspective. Instead the ACCC focussed on the degree of constraint the print newspapers and online sites provide on each other for different types of readers.

    Competition analysis

    Supply of local news and information to readers/consumers in the local overlap areas

    In the local overlap areas News and ARM are the main suppliers of print local news and information to readers. The ACCC noted that despite the general decline in print newspaper readership, there are still readers who value the print newspaper format and the convenient package of news and information it provides. These consumers in particular would face reduced choice post-acquisition.

    However, the ACCC concluded that overall, a sufficient range of local news choices would remain available to readers in the local overlap areas, including some third party print newspapers, such as the independent Tweed Valley Weekly (circulated in the Tweed Heads area) and Fairfax's Jimboomba Times and Redland City Bulletin (circulated in the Logan area). The ACCC also identified online sources of local news sources, such as dedicated local ABC Online pages, and to varying degrees television and radio news.

    The ACCC considered that, in the face of growing competition from alternative local advertising opportunities, and the need for News to maintain readership levels in order to ensure advertising revenues, News would be unlikely to decrease the quality of the local content as a result of the proposed acquisition.

    Supply of local advertising opportunities in the local overlap areas

    The ACCC noted that the importance of print newspaper advertising has declined in recent years for many categories of advertisers, who have a range of other advertising choices available to them. However, there are still some categories of advertisers who value the ability to access readers of community print newspapers, for example because of its older readership profile, the ability to place time-sensitive ads or to target potential purchasers (particularly of higher value items) who are browsing a newspaper rather than actively searching for a product. Accordingly, the proposed acquisition would reduce the close competition that currently exists between News and ARM for the supply of local advertising opportunities in the local overlap areas.

    Nevertheless, based on market inquiries with local businesses, the ACCC concluded that most businesses or individuals seeking local advertising opportunities would be willing to substitute to alternate media or advertising methods for some or all of their advertising if News attempted to increase advertising rates after the acquisition. The ACCC considered that the various local advertising alternatives, including online, radio and television, would collectively impose sufficient constraint on News after the acquisition.

    Supply of news and information to readers/consumers in the regional overlap areas

    Market feedback and other information provided to the ACCC indicated that most readers did not consider the ARM paid regional papers to be close substitutes for The Courier Mail. ARM's regional publications and The Courier Mail are generally considered to target distinct categories of readers. The Courier Mail is generally not a suitable alternative source of news for ARM's regional publications, due to its lack of local content. ARM's publications are generally not a suitable alternative to The Courier Mail, as non-local news coverage in those publications is typically brief and sometimes delayed by a day.

    Supply of advertising opportunities to advertisers in regional areas of Queensland

    Market feedback suggested that the geographic overlap between The Courier Mail and ARM's paid regional newspapers would likely make these publications substitutes for some advertisers. For example, an advertiser seeking to run a state-wide advertising campaign might choose between advertising in The Courier Mail or in the ARM regional newspapers when attempting to capture the regional audience.

    However, ultimately the ACCC considered that:

  • the majority of advertisers in regional newspapers do not also advertise in metropolitan or national newspapers, due to the significantly higher advertising costs. This increased cost reflects the different geographic reach of these newspapers, which is not valued by most advertisers that advertise in the regional newspapers.

  • advertisers who do advertise in both metropolitan and regional newspapers tend to be large state or national organisations, or businesses represented by large advertising agencies. These advertisers generally have some degree of bargaining power and other options to reach their audience, such as radio and television.

  • Content markets

    In relation to the acquisition of news content from content providers, the ACCC considered that the removal of ARM as an alternative customer for content was unlikely to adversely affect competition, particularly given ARM is not a significant acquirer of content.

    Statement of issues

    Document title Date

    Timeline

    DateEvent
    01/08/2016ACCC commenced review under the Merger Process Guidelines.
    15/08/2016Closing date for submissions from interested parties.
    30/08/2016ACCC requested further information from News.
    09/09/2016ACCC received further information from News.
    15/09/2016Former proposed decision date of 22 September delayed to allow the ACCC further time to consider information provided by the parties.
    27/09/2016Former proposed decision date of 29 September delayed by ACCC to allow additional time to consider the proposed acquisition.
    06/10/2016ACCC published a Statement of Issues outlining preliminary competition concerns.
    20/10/2016ACCC requested further information from News.
    24/10/2016ACCC requested further information from APN.
    27/10/2016Closing date for submissions relating to Statement of Issues.
    14/11/2016ACCC received further information from APN.
    18/11/2016ACCC received further information from News.
    23/11/2016Former proposed decision date of 1 December 2016 delayed to allow the ACCC time to consider the parties' responses to ACCC information requests.
    08/12/2016ACCC announced it would not oppose the proposed acquisition.