Fairfax cuts glossy magazines
Twenty-five redundancies will be offered at Fairfax’s Business Media unit: The Australian Financial Review, BRW, Smart Investor, plus BusinessDay, the business section of The Age and The Sydney Morning Herald. The AFR’s Capital quarterly magazine will become a quarterly newspaper section.
A further 20 redundancies will be offered across Fairfax’s News Media and Life Media arms. News Media covers newspapers including The Age and the Herald, while Life Media comprises the sections Good Food, Epicure, Traveller, The Vine and Daily Life.
The 10 employees affected by the November closure of the(sydney)magazine and the(melbourne)magazine might be redeployed, the managing director of the Australian Publishing Media arm, Allen Williams, said.
‘‘The current revenue environment remains challenging. While we are satisfied with the actions we are taking to address these challenges, we must also find cost reductions across our business,’’ Mr Williams said in an email to staff.
‘‘It’s no secret to anyone in the media business that magazines have been an increasingly challenged platform ... it makes commercial sense to make these changes.
‘‘We remain committed to our other newspaper-inserted magazines and have already begun exploring new digital opportunities in the luxury category.’’
Final decisions are expected by October 14, 2013.
The news comes as media companies continue to struggle with challenging advertising markets and fragmented audiences. Both Fairfax, the publisher of BusinessDay, and rival News Corp have in recent years started charging for access to their websites, as revenue and circulation of print titles wane.
News Corp, in its latest results, revealed that its advertising and circulation revenue from its Australian titles fell by $US350 million ($371 million) – or 15 per cent – from the previous year. It was also hit by $US270 million worth of restructuring and redundancy costs due to cuts made at its Australian and US newspapers during the period.
Also, dozens of reporters left News Corp midyear as part of a forced redundancy program.
Fairfax in August reported a full-year loss of $16.4 million, compared with the $2.7 billion loss in the previous year. The 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 chief executive Greg Hywood said Fairfax achieved half its one-year subscription targets for The Age and the Herald 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.
No updates on digital subscription numbers were available on Tuesday.
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, and content marketing.
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Fairfax announced it will close its glossy weekend magazines the(sydney)magazine and the(melbourne)magazine and shed at least 45 jobs across publishing units. The cuts include 25 redundancies in its Business Media arm (titles such as The Australian Financial Review, BRW, Smart Investor and BusinessDay and business sections of The Age and The Sydney Morning Herald) and a further 20 roles across News Media and Life Media. The 10 staff directly affected by the November magazine closures may be redeployed.
Fairfax cited a ‘challenging’ advertising environment and the long-term commercial pressures on magazines as the reason for closures and redundancies. Management said magazines have become an increasingly challenged platform, so cost reductions and a shift toward digital opportunities and other revenue streams are needed to address declining print revenue and fragmented audiences.
As part of the restructure, the AFR’s Capital quarterly magazine will be converted into a quarterly newspaper section. In total 25 redundancies were offered in the Business Media unit, affecting The Australian Financial Review, BRW, Smart Investor, BusinessDay and the business sections of The Age and The Sydney Morning Herald.
The Fairfax cuts highlight broader industry headwinds — falling advertising revenue, weaker print circulation and audience fragmentation. Fairfax reported a full-year loss of $16.4 million, an 8.2% revenue fall to $2 billion and $445 million of write-downs. Investors should note Fairfax is targeting at least $311 million in annualised savings by June 2015 and pursuing new revenue streams, while rivals like News Corp have also reported steep ad and circulation declines.
Fairfax reported 68,000 paid digital subscriptions and 98,000 bundled print-and-digital subscriptions. Management said they achieved half of one-year subscription targets for The Age and The Herald in July and that this had a ‘minimal impact on overall traffic numbers,’ suggesting digital subscriptions are growing but updates on numbers were not available at the time.
Fairfax is targeting at least $311 million in annualised savings by June 2015. It is also pursuing new revenue streams including events, marketing services for small and medium-sized businesses, content marketing and exploring new digital opportunities in the luxury category, while remaining committed to some newspaper-inserted magazines.
Fairfax expected final decisions by October 14, 2013, and the closures of the(sydney)magazine and the(melbourne)magazine were scheduled to take effect in November (as stated in the announcement).
The article notes that challenging advertising markets and fragmented audiences are reducing print circulation and ad revenues. News Corp reported a fall of US$350 million (A$371 million) or 15% in Australian advertising and circulation revenue and incurred US$270 million in restructuring costs. These industry trends are forcing publishers to charge for digital access, cut costs and restructure operations.
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