FAIRFAX MEDIA has cut the number of its divisions but created a new one combining its legacy of metropolitan publishing with that of its high-growth digital operations as it attempts to deal with the challenges facing the sector.
The number of divisions has been reduced from 11 to nine and the standalone digital business run by Jack Matthews broken up and distributed across the business as part of a restructure announced yesterday.
The Fairfax chief executive, Brian McCarthy, said the search had begun for a chief executive to run the new Australian Metropolitan Media division, which will make up 22 per cent of the company's $639 million annual earnings. It combines the print, online and classifieds of metropolitan newspapers the Herald, The Age, The Canberra Times, Fairfax Community Newspapers, as well as news websites in Perth and Brisbane.
But the announcement, which has been 14 months in gestation, stopped short of the level of integration some were expecting, at least editorially. Websites will not fall under the control of newspaper executives although there will be greater co-ordination between advertising sales teams to be more flexible with advertisers.
Mr McCarthy said that while cost savings were not the "prime driver", the restructure could result in up to $10 million in savings in the new division. "Our strategic review has been driven by our desire to grow our mastheads; grow our online businesses; and adapt to become a multi-platform business," he told investors.
An editorial director to co-ordinate features across the mastheads and a commercial director to head sales teams will also be recruited for the new metro division, Mr McCarthy said. But the extent of the level of collaboration or integration between the different parts of the newly created division would most likely fall to its new chief executive, staff at Fairfax businesses, including the Herald, were told. It is unclear if Mr Matthews will remain with the company.
Along with the metro division, four other "multi-platform businesses" were created; Australian regional media, New Zealand media, Agricultural media, and the Australian Financial Review Group, as well two transactional businesses, the New Zealand business, Trade Me, and a digital transactions business for sites such as Stayz and RSVP. Radio and printing are unaffected.
Mr McCarthy said: "Monetising our content via [applications] for the iPhone, iPad, and other smartphone and tablet devices" would be a priority, and reported strong uptake of apps for those devices. A new iPad app for the Herald will be launched in February but it is likely to be cheaper than the $8 a month News Ltd is charging for apps for its tabloid papers.
A Citi media analyst, Justin Diddams, said he was "underwhelmed" by yesterday's announcement. "We were expecting a bit more of a splash, a big cost saving, the sale of radio or something transformational but what we got is more of the same."
The RBS senior equity analyst Fraser McLeish was more upbeat. "They have got some good online properties and some good products out there, so it is about finding the ways to monetise that and it's going to be different for different products," he said.
Frequently Asked Questions about this Article…
What did Fairfax Media’s recent restructure involve and why should investors care?
Fairfax cut its number of divisions from 11 to nine and created a new Australian Metropolitan Media division that combines metropolitan print, online and classifieds. The company also redistributed its standalone digital business across the business and created other multi‑platform and transactional units. For investors, this signals Fairfax is shifting toward a multi‑platform strategy to grow mastheads and online businesses and adapt to digital trends.
What is the Australian Metropolitan Media division and how large is it within Fairfax?
The new Australian Metropolitan Media division combines major metropolitan mastheads (the Herald, The Age, The Canberra Times), Fairfax Community Newspapers and news websites in Perth and Brisbane. Fairfax says this metro division will represent about 22% of the company’s reported $639 million annual earnings. A chief executive, editorial director and commercial director will be recruited to run and coordinate the division.
Will Fairfax fully merge print and online editorial operations under the restructure?
No. The restructure stops short of full editorial integration: websites will not be placed under newspaper executives. That said, Fairfax plans greater coordination—particularly across advertising sales teams—to be more flexible for advertisers while keeping editorial operations more separate.
How much cost savings is Fairfax expecting from the restructure?
Fairfax says cost savings were not the "prime driver," but the restructure could deliver up to about $10 million in savings within the new metro division. The broader strategic aim is to grow mastheads and online businesses and become a multi‑platform company.
How is Fairfax planning to monetise digital content and apps?
Fairfax has made monetising content via apps for iPhone, iPad and other smartphones and tablets a priority and reported strong uptake of apps. It plans to launch a new iPad app for the Herald (scheduled for February) and indicated pricing is likely to be cheaper than the $8 a month charged by a rival for tabloid apps.
What happened to Fairfax’s transactional and digital marketplace businesses like Trade Me, Stayz and RSVP?
Fairfax reorganised to create two transactional businesses: the New Zealand business Trade Me, and a digital transactions business that will include sites such as Stayz and RSVP. These were separated out from the media divisions as part of the restructure.
Were any parts of Fairfax left unchanged by the restructure?
Yes. Radio and printing operations were reported as unaffected by the restructure, so those parts of the business remain as before.
How did market analysts react to Fairfax’s restructure announcement?
Analyst reaction was mixed. A Citi media analyst, Justin Diddams, said he was "underwhelmed" and expected more transformational moves such as big cost cuts or sales. By contrast, RBS analyst Fraser McLeish was more positive, noting Fairfax has strong online properties and the challenge is finding ways to monetise them across different products.
Call 1300 880 160
Start a chat
Schedule a call
