Fairfax confident digital changeover is on track
Fairfax Media chief executive Greg Hywood has a growing belief in the media company's ability to transform from a primarily print-based business to a digital-focused one, and expects conditions to improve after the federal election.
"Fairfax will not blink," Mr Hywood told BusinessDay. "People have looked at the internet in terms of traditional media and thought, 'Look, these are all the structural challenges that it poses ... but the fact about new technologies is they also provide opportunities that weren't there in the past."
Fairfax, owner of The Sydney Morning Herald and The Age, reported a full-year loss of $16.4 million, compared with the $2.7 billion loss reported in the previous year. This year's result was marred by an 8.2 per cent fall in revenue to $2 billion and write-downs worth $445 million on its regional, printing and agricultural business.
But Fairfax signalled a moderation in revenue decline for the start of this financial year, and reported a better than expected take-up of subscriptions for the Herald and The Age sites since paywalls were introduced last month.
Mr Hywood said Fairfax achieved half its one-year subscription target for the sites in July alone. There were 68,000 paid digital subscriptions and 98,000 bundled print and digital subscriptions, with "minimal impact on overall traffic numbers", he said.
In addition to at least $311 million in annualised savings by June 2015, Mr Hywood said Fairfax was targeting new revenue streams in events, marketing services to small and medium-sized businesses, as well as content marketing.
He said the federal election had caused many advertisers to sit on their hands. "A lot of businesses, including ours, in a business sense ... we're looking to improved circumstances after the campaign."
For the year to June 30, underlying earnings - before interest, tax, depreciation and amortisation, and excluding significant items - came in at $366 million, slightly above analyst consensus. The underlying profit of $128 million was bang on the analyst average. Simon Marais, of funds group Allan Gray, said the result was as expected in an "incredibly hard" market. He said low debt levels, at $154 million in June, were a good thing but at some point Fairfax had to "stabilise the revenue".
Citi analyst Justin Diddams said the results were broadly in line with expectations, but the outlook statement of revenue falling 8 per cent in the first six weeks of this financial year "highlights ongoing challenging revenue condition".
Shares in Fairfax edged 0.86 per cent higher to close at 58.5¢ on Thursday. After dropping to a low of 35¢ last year, the shares have risen 15 per cent in the year to date.