The Proposed Acquisition of sole control of Independent Star Limited by Reach Publishing Group Limited Phase 1 Assessment
M_2020_2
Table of Contents
Table of Contents ...... i
1. Background ...... 3
The Purchaser: ...... 3
The Target: ...... 3
Media Sector ...... 4
The Purchaser: ...... 5
The Target: ...... 6
2. Application of the Relevant Criteria & s. 28D (2) of the Competition Act. 9
Significant Interests ...... 9
The Purchaser: ...... 10
The Target: ...... 11
Impact:...... 13
Relevant Media Assets ...... 14
The Purchaser: ...... 15
The Target: ...... 15
Impact:...... 17
Ownership and Control...... 18
Relevant Media Assets:...... 18
Regulatory Oversight: ...... 18
Proposed Changes: ...... 19
Impact:...... 19
Market Share ...... 19
Brand & News Reach: ...... 21
The Views of the Parties ...... 21
Impact:...... 22
Media Merger – Parties; Examination - i -
Governance and Editorial Management ...... 22
Compliance and Ethics ...... 24
Editorial Ethos ...... 24
Impact ...... 25
Content – Diversity ...... 25
The Purchaser ...... 25
The Target ...... 26
Impact ...... 28
Financial ...... 28
Proposed Transaction Structure: ...... 28
The Purchaser: ...... 28
The Target: ...... 28
The Views of the Parties ...... 28
Impact:...... 29
Impact on the Irish Language ...... 29
Impact:...... 29
The scale and reach of RTÉ and TG4 ...... 29
Impact:...... 30
The Views of the CCPC/European Commission ...... 30
The Overall Views of the Undertakings Involved ...... 31
3. Summary of the Application of the Relevant Criteria & s. 28D (2) of the Competition Act ...... 32
4. Conclusion ...... 36
Media Merger – Parties; Examination - ii -
1. Background
1.1 The Proposed Transaction involves the acquisition of 50% of the issued voting share capital of Independent Star Limited (ISL) and 100% of the issued non-voting share capital of ISL (the Target Group) by Reach Publishing Group Limited (the Purchaser) (together the Parties) (the
Proposed Transaction)1.
1.2 The Parties are making a joint notification2.
The Purchaser:
1.3 In the State, the Purchaser is active in the Publishing and Internet Media sectors through the publication of newspapers and the provision of online news offerings3.
1.4 The Purchaser currently owns 50% of the issued voting share capital of ISL.4
1.5 The Purchaser is a wholly owned subsidiary of Reach Plc. Reach Plc is a UK-based newspaper publishing group.5
The Target:
1.6 The Target Group refers to 50% of the issued voting share capital of ISL and 100% of the issued non-voting share capital of ISL.
1.7 In the State, the Target Group is active in the Publishing and Internet Media sectors through the publication of newspapers and the provision of online news offerings.6
1.8 The Target Group is currently owned by Independent Communications (Ireland) Limited (Independent Communications). Independent Communications is a wholly owned subsidiary of Independent News &
1 M_2020_2 Reach / ISL Notification form p. 2 2 M_2020_2 Reach / ISL Notification form p. 4 3 M_2020_2 Reach / ISL Notification form 4 M_2020_2 Reach / ISL Notification form p. 3 5 M_2020_2 Reach / ISL Notification form p. 2 6 M_2020_2 Reach / ISL Notification form
Media Merger – Parties; Examination - 3 -
Media Group (INM). INM is a wholly owned subsidiary of Mediahuis NV (Mediahuis)7. Taken together these are the Seller Group.
1.9 Mediahuis is a privately owned company registered in Belgium.8
Media Sector
1.10 Media Mergers, as defined in s. 28A of the Competition Act 2002 (as amended) (the Competition Act), refers to those undertakings which “carry on a media business” in the State. A “media business” is defined in the Competition Act as follows:
‘media business’ means the business (whether all or part of an undertaking’s business) of—
the publication of newspapers or periodicals consisting substantially of news and comment on current affairs, including the publication of such newspapers or periodicals on the internet,
transmitting, re-transmitting or relaying a broadcasting service,
providing any programme material consisting substantially of news and comment on current affairs to a broadcasting service, or
making available on an electronic communications network any written, audiovisual or photographic material, consisting substantially of news and comment on current affairs, that is under the editorial control of the undertaking making available such material;
1.11 Furthermore, the current Guidelines on Media Mergers (the Guidelines) provides the following supplementary definition of a “media sector”:
‘media sector’ means one of the following (and ‘media sectors’ means one or more of the following collectively):
Publishing – publication of newspapers or periodicals consisting substantially of news and comment on current affairs and the production of content for same.
7 M_2020_2 Reach / ISL Notification form p. 3 8 M_2020_2 Reach / ISL Notification form p. 2
Media Merger – Parties; Examination - 4 -
Broadcasting – transmitting, re-transmitting or relaying a broadcast service including radio or television and the production of content for same.
Internet Media – making available on an electronic communications network any written, audio-visual or photographic material consisting substantially of news and comment on current affairs.
1.12 Furthermore, the Guidelines also note a number of sectors, these being television, radio, print media, internet, [and] other media interests, on the basis of which cross-media interests can be considered.
1.13 The Guidelines provide a working method of grouping media business, as defined in the Competition Act, in order to facilitate the examination of notified media mergers. The guidance provided by the Guidelines in this area is not exhaustive and does not preclude the examination of sub- sectors of the media sectors identified or other relevant groupings of media businesses.
The Purchaser:
1.14 The Purchaser is active in the following media sectors:
Publishing – publication of newspapers or periodicals consisting substantially of news and comment on current affairs and the production of content for same.
Internet Media – making available on an electronic communications network any written, audio-visual or photographic material consisting substantially of news and comment on current affairs.
1.15 The Purchaser is active in the Publishing sector through the publication of the following titles9:
Four national daily newspapers:
(i) The Irish Mirror
9 M_2020_2 Reach / ISL Notification form p. 2
Media Merger – Parties; Examination - 5 -
(ii) The Daily Record
(iii) The Daily Express
(iv) The Irish Daily Star
Five national Sunday newspapers:
(i) The Sunday Mail (the Sunday edition of the Daily Record)
(ii) The Sunday Express
(iii) The Daily Star Sunday
(iv) The Irish Sunday Mirror
1.16 The Purchaser is active in the Internet Media sector through the operation
of the following four online news offerings10:
(i) www.irishmirror.ie
(ii) www.dublinlive.ie
(iii) www.corkbeo.ie
(iv) www.buzz.ie
1.17 The Purchaser has a 50% interest in ISL11.
The Target:
1.18 The Target Group is active in the following media sectors:
Publishing – publication of newspapers or periodicals consisting substantially of news and comment on current affairs and the production of content for same.
Internet Media – making available on an electronic communications network any written, audio-visual or
10 M_2020_2 Reach / ISL Notification form p. 2 11 M_2020_2 Reach / ISL Notification form p. 2
Media Merger – Parties; Examination - 6 -
photographic material consisting substantially of news and comment on current affairs.
1.19 The Target Group is active in the Publishing sector through the
publication of the following national daily newspaper12:
(i) Irish Daily Star
1.20 The Target Group is active in the Internet Media sector through the
provision of the following online news offering13:
(i) www.buzz.ie
1.21 The Seller Group is active in the Publishing sector through the publication of the following titles14:
Three national daily newspapers:
(i) The Irish Independent
(ii) The Herald
(iii) Irish Daily Star
Two national Sunday newspapers:
(i) The Sunday Independent
(ii) The Sunday World
Twelve weekly regional newspapers:
(i) The Kerryman
(ii) The Corkman
(iii) The Drogheda Independent
(iv) The Argus
(v) The Bray People
12 M_2020_2 Reach / ISL Notification form p. 3 13 M_2020_2 Reach / ISL Notification form p. 3 14 Parties’ response to RFI p. 13
Media Merger – Parties; Examination - 7 -
(vi) The Wicklow People
(vii) The Wexford People
(viii) The Gorey Guardian
(ix) The Enniscorthy Guardian
(x) The New Ross Standard
(xi) The Fingal Independent
(xii) The Sligo Champion
1.22 The Seller Group is active in the Internet Media sector through the provision of the following three online news offering15:
(i) www.herald.ie
(ii) www.independent.ie
(iii) www.buzz.ie
15 Parties’ response to RFI
Media Merger – Parties; Examination - 8 -
2. Application of the Relevant Criteria & s. 28D (2) of the Competition Act
Significant Interests
2.1 In accordance with Section 28L of the Competition Act 2002, the Guidelines provide a characterisation of what constitutes a significant interest in a media business – which it states means “[h]as sufficient voting, financial or ownership strength within the relevant media business or media businesses to influence directly or indirectly, to an appreciable extent, the direction or policy of the media business or media businesses with regard in particular to news, current affairs or cultural content. This includes sourcing, production, supply or delivery of such content”. This characterisation further includes indicative thresholds as to what constitutes a significant interest in entities that carry on media businesses in the State, including that:
A holding or voting strength of between 10% and 19% (directly or indirectly) may constitute a significant interest.
A holding or voting strength of more than 20% (directly or indirectly) will generally constitute a significant interest.
2.2 The definition of “plurality of the media” is provided in the Competition Act and includes both diversity of ownership and diversity of content, both of which are also defined in the Act, as reproduced below:
Diversity of content – “means the extent to which the broad diversity of views (including diversity of views on news and current affairs) and diversity of cultural interests prevalent in Irish society is reflected through the activities of media businesses in the State including their editorial ethos, content and sources”.
Media Merger – Parties; Examination - 9 -
Diversity of ownership – “means the spread of ownership and control of media businesses in the State linked to the market share of those media businesses as measured by listenership, readership, reach or other appropriate measures”.
The Purchaser:
2.3 The Purchaser is a wholly owned subsidiary of Reach Plc. Reach Plc is a UK-based newspaper publishing group that has shares admitted to trading on the London Stock Exchange.16
2.4 There are three shareholders who have shareholdings in excess of 10% in Reach Plc, as follows17:
Aberforth Partners
M&G Investment Management
Schroder Investment Management
2.5 The Parties state that none of Reach Plc’s shareholders have any rights other than those arising by virtue of being an ordinary shareholder.18
2.6 The board of directors of the Purchaser is as follows19:
Nicholas Prettejohn, Chairman
Jim Mullen, Chief Executive Officer
Simon Fuller, Chief Financial Officer
Helen Stevenson, Senior Independent Director
David Kelly, Non-executive Director
Ann Bulford, Non-executive Director
Olivia Streatfeild, Non-executive Director and Colleague Ambassador
16 M_2020_2 Reach / ISL Notification form p. 5 17 M_2020_2 Reach / ISL Notification form p. 6 18 M_2020_2 Reach / ISL Notification form p. 7 19 M_2020_2 Reach / ISL Notification form p. 13
Media Merger – Parties; Examination - 10 -
Steve Hatch, Non-executive Director
2.7 There are other shareholders in Reach Plc but as none of them has an interest of 10% or more they will not be considered further in this
examination20.
The Target:
2.8 As previously stated, the Target Group is owned by Independent Communications. Independent Communications is a wholly owned subsidiary of INM which in turn is wholly owned by Mediahuis. Mediahuis is a privately owned company registered in Belgium.21
2.9 There are shareholders who have a shareholding in excess of 20% in Mediahuis, as follows22:
20 M_2020_2 Reach / ISL Notification form p. 5,6 21 Parties response to RFI p. 4 22 Parties response to RFI p. 4 23 Parties response to RFI p. 4 24 A STAK (Stichting Administratiekantoor) is a form of Dutch foundation.
Media Merger – Parties; Examination - 11 -
2.10
2.11 The board of directors of the Target Group is as follows28:
Marc Vangeel
C. O’Brien
John Brewis
Gerry Lennon
2.12 The board of directors of Mediahuis is as follows29:
Thomas Leysen, Chairman
Robert Ceuppens, Vice-Chairman
Jan Baert, Director
Arian Buurman, Director
Bruno de Cartier, Director
Patrick Hermans, Director
Peter Hinssen, Director
Jan Suykens, Director
Guus van Puijenbroek, Director
25 Parties response to RFI p. 4 26 Parties response to RFI p. 3 27 Parties response to RFI p. 4 28 M_2020_2 Reach / ISL Notification form p. 14 29 Parties response to RFI p. 7
Media Merger – Parties; Examination - 12 -
Philippe Vandeurzen, Director
Philippe Vlerick, Director
2.13 As Independent Communications is wholly owned by INM and INM is wholly owned by Mediahuis, the interests held by Independent Communications and INM in the Target Group will not be considered separately to the interest held by Mediahuis.
Impact:
2.14 As can be seen above, there is one entity which can be said to hold a significant interest in the Purchaser as follows:
Reach Plc
2.15 As can be seen above, there are three entities which hold an interest in the Purchaser with may constitute a significant interest as follows:
Aberforth Partners
M&G Investment Management
Schroder Investment Management
2.16 Therefore should the Proposed Transaction proceed; Reach Plc will gain a significant interest in the Target Group, and Aberforth Partners, M&G Investment Management (M&G) and Schroder Investment Management (Schroder Investment) will gain interests in the Target Group which may constitute significant interest.
2.17 As can be seen above there are five entities which can be said to hold a significant interest in the Target Group as follows:
Mediahuis
Mediahuis Partners NV
Concentra NV
The Baert family
Mediacore NV
Media Merger – Parties; Examination - 13 -
2.18 As can be seen above there are five entities which hold an interest in the Target Group which may constitute a significant interest as follows:
The Van Puijenbroek family
Mr Thomas Leysen
Ackermans & Van Haaren
2.19 The information above does not, in itself, give rise to concerns regarding issues of significant interest in regard to the Proposed Transaction. It should be noted that significant interest within a media business or a range of media businesses does not necessarily constitute a significant interest in a media sector or across media sectors. While the Guidelines provide a definition of what constitutes a significant interest in a media business, the relevant criteria in the Competition Act specifies the consideration of significant interests in and across media sectors. Therefore, there are two separate concepts of significant interests considered in media merger examinations and in this examination, those in media businesses and those in media sectors.
2.20 Therefore, whether Reach Plc acquiring a significant interest in the Target Group and Aberforth Partners, M&G and Schroder Investment acquiring an interest in the Target Group, which may be considered a significant interest, will be contrary to the public interest in protecting plurality of media in the State will be assessed in accordance with the relevant provisions of the 2002 Act and the Guidelines, in terms of the remainder of the indicators in this examination, particularly Relevant Media Assets, Ownership and Control, Market Share, Governance and Editorial Management and the Views of the CCPC:
Relevant Media Assets
2.21 Relevant media asset is defined by the Guidelines as “holdings which constitute a significant interest in an undertaking (other than an undertaking party to the merger) that carries on a media business in a media sector(s) in the State, and which are held either by an undertaking party to the merger or by a natural or legal person with a significant interest in an undertaking party to the merger”.
Media Merger – Parties; Examination - 14 -
The Purchaser:
2.22 The Purchaser operates a number of relevant media assets in the State.
These are as follows30:
Four national daily newspapers:
(i) The Irish Mirror
(ii) The Daily Record
(iii) The Daily Express
(iv) The Irish Daily Star
Five national Sunday newspapers:
(i) The Sunday Mail (the Sunday edition of the Daily Record)
(ii) The Sunday Express
(iii) The Daily Star Sunday
(iv) The Irish Sunday Mirror
(v) The Sunday People
Four online news offerings:
(i) www.irishmirror.ie
(ii) www.dublinlive.ie
(iii) www.corkbeo.ie
(iv) www.buzz.ie
The Target:
2.23 The Target Group operates a number of relevant media assets in the State.
These are as follows31:
One national daily newspaper:
30 M_2020_2 Reach / ISL Notification form p. 2 31 M_2020_2 Reach / ISL Notification form p. 8
Media Merger – Parties; Examination - 15 -
(i) The Irish Daily Star
One online news offering:
(i) www.buzz.ie
2.24 In addition to its interest in the Target Group, the Seller Group operate a number of relevant media assets in the State. These are as follows32:
Two national daily newspapers:
(i) The Irish Independent
(ii) The Herald
Two national Sunday newspapers:
(i) The Sunday Independent
(ii) The Sunday World
Twelve weekly regional newspapers:
(i) The Kerryman
(ii) The Corkman
(iii) The Drogheda Independent
(iv) The Argus
(v) The Bray People
(vi) The Wicklow People
(vii) The Wexford People
(viii) The Gorey Guardian
(ix) The Enniscorthy Guardian
(x) The New Ross Standard
32 Parties’ Response to RFI
Media Merger – Parties; Examination - 16 -
(xi) The Fingal Independent
(xii) The Sligo Champion
Two online news offering:
(i) www.herald.ie
(ii) www.independent.ie
Impact:
2.25 The following entities relevant to this examination have significant interests in media businesses that operate a number of relevant media assets:
The relevant media assets of the Purchaser identified above:
(i) Reach Plc
The relevant media assets of the Target Group identified above:
(i) Mediahuis
(ii) Mediahuis Partners NV
(iii) Concentra NV
(iv) The Baert family
(v) Mediacore NV
2.26 The following entities relevant to this examination have interests, which may constitute significant interest, in media businesses that operate a number of relevant media assets:
The relevant media assets of the Purchaser identified above:
(i) Aberforth Partners
(ii) M&G
(iii) Schroder Investment
Media Merger – Parties; Examination - 17 -
The relevant media assets of the Target Group identified above:
(i) The Van Puijenbroek family
(ii) Mr Thomas Leysen
(iii) Ackermans & Van Haaren
2.27 The information above does not give rise to concerns in the issue of relevant media assets in regard to the Proposed Transaction. The interests held in a number of the relevant media assets identified above by the interest holders identified above must be assessed in terms of the market share that these relevant assets possess in their respective sectors and on a cross-sector basis.
Ownership and Control
Relevant Media Assets:
2.28 Reach Plc has an interest in the Purchaser that constitutes a significant interest and thus has significant interests in the relevant media assets, identified above (par. 2.22), of the Purchaser.
2.29 Aberforth Partners, M&G, and Schroder Investment have interests in the Purchaser which may constitute significant interest and thus have interests, which may constitute significant interest, in the relevant media assets identified above (par. 2.22), of the Purchaser.
2.30 Mediahuis, Mediahuis Partners NV, Concentra NV, The Baert family, and Mediacore NV have interests in the Target Group that constitutes significant interest and thus has significant interests in the relevant media assets, identified above (par. 2.23), of the Target Group.
2.31 The Van Puijenbroek family, Mr Thomas Leysen, and Ackermans & Van Haaren have interests in the Target Group which may constitute significant interest and thus have interests, which may constitute significant interest, in the relevant media assets identified above (par. 2.23), of the Target Group.
Regulatory Oversight:
Media Merger – Parties; Examination - 18 -
2.32 The Parties confirm that the Purchaser’s newspaper titles are publication members of the Press Council of Ireland and are signed up to its Code of
Practice.33
2.33 The relevant media assets of the Target Group are also publication members of the Press Council of Ireland and are signed up to its Code of Practice.34
Proposed Changes:
2.34 The Parties have not proposed any changes to the regulatory oversight of the relevant media assets.
Impact:
2.35 The information above does not in itself give rise to concerns regarding issues of ownership and control in regard to the Proposed Transaction. The ownership of a number of the relevant media assets identified above, by the interest holders identified above, must be assessed in terms of the market share that these relevant assets possess in their respective sectors and across sectors.
Market Share
2.36 The above identified relevant media assets of the Purchaser, the Target Group and the Seller Group are active in the Publishing and Internet Media sectors, in the State, through the publication of newspaper titles and online news offerings.
2.37 Comparison, through the use of various market share or similarly indicative data, will be used to determine whether the interests possessed in the Purchaser by the interest holders, as measured by their relevant market shares, when taken together with the market shares of the relevant media assets of the Target, would constitute a significant interest in the Publishing and / or Internet Media sectors such that it may give rise to a cause for concern in the context of plurality of the media.
33 M_2020_2 Reach / ISL Notification form p. 15 34 M_2020_2 Reach / ISL Notification form p. 16
Media Merger – Parties; Examination - 19 -
2.38 The Parties have provided the market share data for the national daily newspaper market, sourced from ABC, for the period July to December 2019.35
Publisher Title Market Share
INM Irish Independent (Seller Group) The Herald
Irish Daily Star (Target)
Irish Times Group The Irish Times
Irish Examiner
News UK Irish Sun
The Times (Ireland Edition)
Reach Irish Daily Mirror (Purchaser) Daily Express
Daily Record
Irish Daily Star (Target)
Daily Mail Group Irish Daily Mail
Guardian Media The Guardian Group Nikkei, Inc. Financial Times
Telegraph Media The Telegraph Group
2.39 The Purchaser and the Seller Group each hold 50% of the issued voting share capital of the ISL. Therefore, as seen in the table above, the Purchaser has an interest in of the national daily newspaper market and the Seller Group has an interest in of the same market.
35 Parties’ response to RFI
Media Merger – Parties; Examination - 20 -
2.40 The Parties provided the data seen below for the online news offerings relevant to the Purchaser and Target Group.36
Online Portal Average Unique Monthly Page Views Monthly Users www.irishmirror.ie (Purchaser) www.dublinlive.ie (Purchaser) www.corkbeo.ie (Purchaser) www.buzz.ie (Target)
Brand & News Reach:
2.41 According to Reuters Digital News Report 2020 for Ireland (Reuters Report), when asked for a source of news online used on more than three days the previous week, 21% of respondents gave RTÉ news online, 19% gave Independent.ie and 18% gave Journal.ie as a source. Comparatively 1% of respondents gave the Target’s media asset, buzz.ie, as a source and 5% gave the Purchaser’s brand, the Irish Mirror online.37
2.42 According to the Reuters Report when asked for a source of news offline38 used on more than three days in the previous week, 36% of respondents gave RTÉ TV News, 20% gave RTÉ Radio News and 20% gave Sky News. Comparatively 4% of respondents gave the Purchaser’s newspaper, the Irish Mirror. The relevant traditional media asset of the Target Group, the Irish Daily Star, is not included in as a source of traditional news in the Reuters Report.
The Views of the Parties
2.43 The Parties state the following39
36 M_2020_2 Reach / ISL Notification form p. 13 37 Reuters Digital News Report 2020 for Ireland 38 Offline refers to traditional media encompassing television, print and radio 39 M_2020_2 Reach / ISL Notification form p. 5
Media Merger – Parties; Examination - 21 -
“Reach Publishing currently owns 50% of the issued voting share capital of ISL. Under the terms of the Proposed Transaction, Reach Publishing will acquire 50% of the issued voting share capital and the entire non- voting share capital of ISL currently held by INM. As such, the Proposed Transaction would result in Reach Publishing acquiring sole control of ISL.”
Impact:
2.44 Should the Proposed Transaction proceed the Purchaser will increase its interest in of the national daily newspaper market, and the Seller Group will lose an interest in of the same market, leaving the Seller with an interest in of the market.
2.45 The Purchaser currently holds a significant interest in ISL through its 50% ownership of the issued voting share capital, should the Proposed Transaction proceed the Purchaser will retain its significant interest by the ownership of 100% of the issued voting share capital and 100% of the non- voting share capital of ISL.
2.46 The information above does not raise concerns regarding market share in relation to the Proposed Transaction for the following reasons:
While the Proposed Transaction will result in an increase of the Purchaser’s interest in ISL, it will not result in an increase in the Purchaser’s interest in the national daily newspaper market.
Should the Proposed Transaction proceed, the interest held by the Seller Group in the national daily newspaper market will be decreased.
Governance and Editorial Management
2.47 The board of directors of the Purchaser is as follows40:
Nicholas Prettejohn, Chairman
Jim Mullen, Chief Executive Officer
Simon Fuller, Chief Financial Officer
40 M_2020_2 Reach / ISL Notification form p. 7
Media Merger – Parties; Examination - 22 -
Helen Stevenson, Senior Independent Director
David Kelly, Non-executive Director
Ann Bulford, Non-executive Director
Olivia Streatfeild, Non-executive Director and Colleague Ambassador
Steve Hatch, Non-executive Director
2.48 The board of directors of the Target Group is as follows41:
Marc Vangeel
C. O’Brien
John Brewis
Gerry Lennon
2.49 The board of directors of Mediahuis is as follows42:
Thomas Leysen, Chairman
Robert Ceuppens, Vice-Chairman
Jan Baert, Director
Arian Buurman, Director
Bruno de Cartier, Director
Patrick Hermans, Director
Peter Hinssen, Director
Jan Suykens, Director
Guus van Puijenbroek, Director
Philippe Vandeurzen, Director
41 M_2020_2 Reach / ISL Notification form p. 7 42 M_2020_2 Reach / ISL Notification form p. 7
Media Merger – Parties; Examination - 23 -
Philippe Vlerick, Director
2.50 The Parties state the following43:
“Reach has no plans to make any material changes to its arrangements or operations in the State.
Please note that Reach fully intends that ISL continue as a separate enterprise as it is prior to completion. The Proposed Transaction will not lead to a concentration of management/control in the State. The Proposed Transaction involves a change from joint to sole control of ISL and will not lead to any change on the structure of the market.
Following the Proposed Transaction, it is intended that the operations in the State will continue just as it had prior to the transaction. Reach intends substantially to maintain the existing editorial team for ISL. There are no material changes in content or format envisaged. It should be noted that the key content producing staff will remain the same. There are no other significant changes envisaged to existing staffing in Ireland in relation to ISL. It is intended that the Irish ISL will continue to run substantially in its current form. It is intended that there will be no changes to policies post-merger, including those relating to the staff remuneration system and the frequency and size of the publications.”
Compliance and Ethics
2.51 As previously stated (par. 2.32, 2.33), the Parties confirm that the relevant media assets of the Purchaser and of the Target Group are publication members of the Press Council of Ireland and are signed up to its Code of Practice.
Editorial Ethos
2.52 The Parties state the following44:
“The editors of all the relevant media assets/businesses in relation to the Proposed Transaction have editorial independence and control over the content of their respective titles, whilst being subject to the strict
43 M_2020_2 Reach / ISL Notification form p. 23 44 M_2020_2 Reach / ISL Notification form p. 26
Media Merger – Parties; Examination - 24 -
regulatory compliance landscape described above45. The editors are responsible for the integrity, tone and content of their titles alongside working with corporate management to ensure a strong circulation through consumer driven marketing principles whilst still remaining free from editorial interference.
Following the Proposed Transaction, it is intended that the operations in Reach and ISL in the State will continue in substantially the same way as it had prior to the transaction. Reach intends substantially to maintain the existing editorial team for ISL, including the Irish Daily Star. There are no material changes in content or format envisaged. It should be noted that the key content producing staff will remain the same. There are no other significant changes envisaged to existing staffing in Ireland in relation to ISL. It is intended that ISL will continue to run substantially in their current form. It is intended that there will be no changes to policies post-merger, including those relating to the staff remuneration system and the frequency and size of the publications.”
Impact
2.53 The information above does not give rise to concerns regarding governance or editorial management in relation to the Proposed Transaction due to the titles’ membership of the relevant regulatory bodies.
Content – Diversity
The Purchaser
2.54 The Parties have provided a high level breakdown of the content featured in the relevant media assets of the Purchaser as follows46:
(i) Irish Mirror (print) - centred on news, entertainment, sports, politics, current affairs and TV;
(ii) Irish Sunday Mirror (print) - centred on news, entertainment, sports, politics, current affairs and TV;
45 Here described above refers to the Parties statement that the Purchaser is signed up to the Code of Practice of the Press Council of Ireland and is subject to the UK Corporate Governance Code (2018) and the rules and regulations of the UK’s Independent Press Standards Organisation (IPSO) 46 M_2020_2 Reach / ISL Notification form p. 19, 20
Media Merger – Parties; Examination - 25 -
(iii) Daily Record – based in Scotland; centred on news, entertainment, sports, politics, current affairs and TV;
(iv) the Sunday People- centred on news, entertainment, sports, politics, current affairs and TV;
(v) the Sunday Mail- centred on news, entertainment, sports, politics, current affairs and TV;
(vi) the Daily Express- centred on news, entertainment, sports, politics, current affairs and TV;
(vii) Sunday Express- centred on news, entertainment, sports, politics, current affairs and TV;
(viii) Daily Star Sunday- centred on news, entertainment, sports, politics, current affairs and TV;
(ix) Irish Mirror.ie - core content is around breaking news, entertainment, sports and politics. It has established a reputation for live news blogging as well as live blogging for all the country’s big GAA and rugby matches;
(x) DublinLive.ie - focussed on breaking news and serves the Dublin and Greater Dublin area with hyperlocal news, Dublin GAA, What’s On in Dublin, and traffic and travel; and
(xi) Corkbeo.ie - serves the Cork area with news, entertainment, sports, politics, and current affairs.
2.55 The Sunday People, the Sunday Mail and the Daily Record are not edited for the Irish audience and do not have an Irish editor.47
2.56 Both the Purchaser and the Target Group have a social media presence which garners user generated content.48
The Target
47 M_2020_2 Reach / ISL Notification form p. 20 48 M_2020_2 Reach / ISL Notification form p. 20
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2.57 The Parties have provided a high level breakdown of the content featured in the relevant media assets of the Target Group as follows49:
(i) Irish Daily Star – Sport c. Irish news c. , Entertainment c. , Advertising c. , puzzles/ problems/ horoscopes c. and other content c .
(ii) Buzz.ie – provides a mix of news, entertainment, sports, videos, lifestyle, politics, and current affairs.
Alternative Content
2.58 The Parties refer to alternative content available in the State, particularly emphasising the impact of the growth of online media as a major competitor.50
The Views of the Parties
2.59 The Parties state the following51
“Following the completion of the Proposed Transaction, there will continue to be a large number of popular daily newspaper titles in the State, published by Irish and international media groups. In addition to the Irish Daily Star published by ISL, these national daily titles include the Irish Independent and The Herald (published by INM), the Irish Times and the Irish Examiner (published by the Irish Times Group), the Irish Daily Mail (published by the Daily Mail Group), the Irish Sun (published by News UK) and the Irish Daily Mirror and the Daily Express (published by Reach), among others.
Moreover, in addition to the large number of newspaper titles available, there are many other sources of news content in the State, ensuring a high degree of plurality. In addition to newspapers, consumers can source their news from a wide range of free online content including, for example, the websites of large broadcasters such as RTÉ, the BBC, The Guardian and social media platforms, such as Facebook, Instagram and Twitter. The relevance of websites as a source of free online news content
49 M_2020_2 Reach / ISL Notification form p. 20 50 M_2020_2 Reach / ISL Notification form p. 27 51 Parties’ Response to RFI
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is likely to continue to grow in the coming years, particularly as circulation of printed newspapers generally continues to decline.”
Impact
2.60 The information above does not appear to raise concerns regarding diversity of content, particularly news and current affairs, in relation to the Proposed Transaction. Therefore, it is unlikely that the Proposed Transaction will in this regard have an adverse impact on the plurality of the media in the State.
Financial
Proposed Transaction Structure:
2.61 The Parties have provided the Share Purchaser Agreement, dated 23 July 2020, which sets out the terms of the Proposed Transaction.52
2.62 The consideration payable in respect of the shares is .53
2.63 The Parties state that 54
The Purchaser:
2.64 In the financial year ended 29 December 2019, the Purchaser had a turnover of , a profit before tax of , and cash and cash
equivalents of .55
The Target:
2.65 In the financial year ended 27 December 2019, ISL had a turnover of , a gross profit of and cash and cash equivalents of .56
The Views of the Parties
2.66 The Parties state the following57:
52 Annex 2.5 to the Notification Form – Share Purchase Agreement 53 Annex 2.5 to the Notification Form – Share Purchase Agreement 54 M_2020_2 Reach / ISL Notification form p. 22 55 Annex 6.2.1 to the Notification Form – Reach Annual Report 56 Annex 6.2.2 to the Notification Form – ISL Directors’ Report and Financial Statements 57 M_2020_2 Reach / ISL Notification form p. 22
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“Reach plc is a public limited company that has shares admitted to trading on the London Stock Exchange. It has a number of very large and well-resourced shareholders. Reach is a large media organisation with an annual turnover of for the year ended 29 December 2019. Reach’s operating profit for the year ended 29 December 2019 was . Reach plc’s net debt is very low at as at 29 December 2019 (down from in 2018). ”
Impact:
2.67 The information above does not raise concerns regarding finance in relation to the Proposed Transaction as the Proposed Transaction meets the requirements in respect of the financial sustainability of the post- merger business and that the Purchaser will fund the Transaction from its own cash reserves.
Impact on the Irish Language
2.68 The media assets relevant to the Target Group do not publish Irish language content.
The Views of the Parties
2.69 There Parties state that “At present, neither ISL nor Reach publishes Irish language content whatsoever. There are no plans for a change in relation to the Irish language following the acquisition. As neither ISL nor Reach publishes Irish language content, the Proposed Transaction will not have a deleterious impact on the Irish language in the State.”58
Impact:
2.70 The information above does not appear to raise concerns regarding the impact on the Irish language in relation to the Proposed Transaction because, as seen above (par. 2.79), the Parties have confirmed that there is no expected change to the level of Irish language content provided.
The scale and reach of RTÉ and TG4
58 M_2020_2 Reach / ISL Notification form p. 26,27
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2.71 As neither RTÉ nor TG4 are active in the publishing sector in the State, the Parties are not in competition with the Public service broadcasters in this regard.
2.72 RTÉ and TG4 are active in the Internet media sector through the operation of their online news offerings, www.tg4.ie and www.rte.ie.
2.73 According to RTÉ’s 2018 Annual Report “RTÉ.ie, Ireland’s number one media site, saw continued growth throughout 2018, up from 54.1 million monthly average page views to 61.8 million. Unique monthly average users also rose from 6 million to 6.3 million.”
2.74 According to TG4’s 2018 Annual Report “Unique visitors to the website (TG4.ie) increased 1.3% to over 2m. The number of page impressions increased almost 30% to 24.57m in 2018.”
Impact:
2.75 The information above does not appear to raise concerns regarding any detrimental impact to the pluralistic nature of RTÉ or TG4 in relation to the Proposed Transaction. Therefore, it is unlikely that the Proposed Transaction will, in this regard, have an adverse impact on the plurality of the media in the State in terms of the scale and reach of RTÉ and TG4 and therefore the adequacy of the public service broadcasters in not affected by the Proposed Transaction.
The Views of the CCPC/European Commission
2.76 The Proposed Transaction was notified to the CCPC on 24 July 202059.
2.77 On 28 August 2020 the CCPC determined that60:
“The Competition and Consumer Protection Commission, in accordance with section 21(2)(a) of the Competition Act 2002, as amended, has determined that, in its opinion, the result of the proposed acquisition whereby Reach Publishing Group Limited, a wholly-owned subsidiary of Reach Plc, would acquire sole control of Independent Star Limited will not be to substantially lessen competition in any market for goods or
59 CCPC Determination of merger notification M/20/021 – Reach / ISL 60 CCPC Determination of merger notification M/20/021 – Reach / ISL
Media Merger – Parties; Examination - 30 -
services in the State, and, accordingly, that the acquisition may be put into effect, subject to section 28C(1) of the Competition Act 2002, as amended.”
The Views of the Parties
2.78 The Parties note that “on 28 August 2020, the CCPC determined that the Proposed Transaction “will not substantially lessen competition in any market for goods or services in the State”. The Proposed Transaction was approved unconditionally by the CCPC under Part 3 of the 2002 Act.”61
The Overall Views of the Undertakings Involved
2.79 The Parties state the following62:
“Following the Proposed Transaction, it is intended that the operations in Reach and ISL in the State will continue in substantially the same way as it had prior to the transaction. Reach intends substantially to maintain the existing editorial team for ISL, including the Irish Daily Star. There are no material changes in content or format envisaged. It should be noted that the key content producing staff will remain the same. There are no other significant changes envisaged to existing staffing in Ireland in relation to ISL. It is intended that ISL will continue to run substantially in their current form. It is intended that there will be no changes to policies post-merger, including those relating to the staff remuneration system and the frequency and size of the publications.”
And
“The parties cannot overstate the significance of the growth of Internet and online platforms as competitive threats to the traditional newspaper markets, both on the circulation and advertising fronts. It is abundantly clear that the rise of online media platforms has had, and will continue to have, at an exponential rate, a massive impact on these newspaper markets. This indicates the rapid growth in the number of sources of information available to the public.”
61 M_2020_2 Reach / ISL Notification form p. 29 62 M_2020_2 Reach / ISL Notification form p. 26, 27
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3. Summary of the Application of the Relevant Criteria & s. 28D (2) of the Competition Act
3.1 This examination, in accordance with s. 28D(2) of Part 3A of the Competition Act, was conducted with regard to the following:
The “relevant criteria” as set out in s. 28A of the Competition Act.
The Guidelines on Media Mergers issued in accordance with s. 28L of the Competition Act.
The Notification Form and other information provided by the Parties to the proposed media merger.
The Views of the Competition & Consumer Protection Commission in relation to the proposed media merger.
Relevant research conducted by the BAI under s. 28M of the Competition Act.
3.2 Furthermore, this examination considered the following indicators in the application of the “relevant criteria” and with regard to s. 28D(2):
Significant Interest – Reach Plc has a significant interest in the Purchaser. Reach Plc also has a significant interest in the media assets relevant to the Target Group via its 50% ownership of the voting share capital in ISL. There are five entities which hold a significant interest in the Target Group, the interests held in the Target Group by these interest holders will be extinguished should the Proposed Transaction be put into effect.
Whether these interests are of concern, post-transaction, is assessed in terms of the remainder of the indicators in this examination, particularly Relevant Media Assets, Ownership and
Media Merger – Parties; Examination - 32 -
Control, Market Share, Governance and Editorial Management and the Views of the CCPC.
Relevant Media Assets – The relevant media assets of the Purchaser to be considered in this examination are identified as follows:
. Four national daily newspapers:
o The Irish Mirror
o The Daily Record
o The Daily Express
o The Irish Daily Star
. Five national Sunday newspapers:
o The Sunday Mail (the Sunday edition of the Daily Record)
o The Sunday Express
o The Daily Star Sunday
o The Irish Sunday Mirror
o The Sunday People
. Four online news offerings:
o www.irishmirror.ie
o www.dublinlive.ie
o www.corkbeo.ie
o www.buzz.ie
The relevant media assets of the Target to be considered in this examination are identified as follows:
. One national daily newspaper:
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o The Irish Daily Star
. One online news offering:
o www.buzz.ie
Ownership and Control – The ownership and control arrangements of the various relevant media assets identified are examined in this section, as are the regulatory regimes in place regarding the relevant media assets and any proposed changes on the part of the Purchaser to the operation of the relevant media assets of the Target post-transaction.
Market Share – The market shares of the various relevant media assets identified earlier in this examination are analysed.
The views of the Parties in relation to this section are also examined.
It is determined that:
. While the Proposed Transaction will result in an increase of the Purchaser’s interest in ISL, it will not result in an increase in the Purchaser’s interest in the national daily newspaper market.
. Should the Proposed Transaction proceed, the interest held by the Seller Group in the national daily newspaper market will be decreased.
Furthermore, while this is unlikely to give rise to a concern, the Market Share must be examined in the context of a number of the remaining sections of this examination, including Governance and Editorial Management.
Governance & Editorial Management – The current governance and editorial regimes of the Purchaser and the Target are analysed in this section.
The information does not raise concerns regarding governance and editorial management in relation to the proposed transaction due
Media Merger – Parties; Examination - 34 -
to the relevant media assets’ membership of the Press Council of Ireland.
Content – A high level breakdown of content type for the Parties is provided. Alternative news content is examined in the News and Brand Reach section.
The information does not raise concerns regarding the availability or diversity of content available in the State.
Financial – The Financial standings of the Parties are examined.
The information does not raise concerns regarding finance in the Proposed Transaction.
Impact on the Irish Language – There is currently no Irish language content provided by the Parties and no change envisaged post-merger. Therefore, the information does not appear to raise concerns regarding the impact on the Irish language in relation to the Proposed Transaction.
The Scale and Reach of RTÉ and TG4 – The potential impact of this acquisition should it proceed on the Public Service Broadcasters, RTÉ and TG4, is analysed.
The information does not appear raise concerns regarding the impact on adequacy of the public service broadcasters in ensuring the plurality of the media in the State. Therefore, it is unlikely that the proposed transaction will, in this regard, have an adverse impact on the plurality of the media in the State.
Views of the CCPC/European Commission – The views of the CCPC regarding the competition element of the Proposed Transaction are noted.
Views of the Parties – The views of the Parties are noted and considered throughout this assessment, generally, and specifically in the relevant sections, and where appropriate, responses are provided.
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4. Conclusion
4.1 In light of the notification, and other materials supplied by the Parties to the proposed acquisition as considered with regard to the matters the Minister shall have regard to under s. 28D of the Competition Act, including the ‘relevant criteria’ as set out in Part 3A of the Competition Act, the Guidelines published by the Minister under s. 28L of the same Act, as considered by the Department in this assessment, it is recommended that the Proposed Transaction should be permitted to be put into effect.
4.2 The following are the major factors informing the recommendation:
That while the Proposed Transaction will result in an increase of the Purchaser’s interest in ISL, it will not result in an increase in the Purchaser’s interest in the national daily newspaper market and that the interest held by the Seller Group in the national daily newspaper market will be decreased.
That the Proposed Transaction meets the requirements in respect of the financial sustainability of the post-merger business and that the Purchaser will fund the Transaction from its own cash reserves.
4.3 In light of the above, it is considered that the proposed transaction is not contrary to the public interest in protecting media plurality in the State and may be permitted to be put into effect.
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