Fairfax eyes $60m cost savings in digital overhaul
Fairfax Media will reap another $60 million in annual cost savings by September in the face of unprecedented change in the global media landscape.
A wide-ranging review across its Australasian news platforms, including print, online, mobile and radio - as well as the removal of duplication within its administration and corporate arm - will help propel the publisher of The Age and Sydney Morning Herald to total savings of $311 million by 2015.
It comes as Fairfax informed the market that revenues were down between 9 per cent and 10 per cent in the second half, although radio and the online real estate site Domain had bucked the trend to post double-digit growth. Chief executive Greg Hywood unveiled the fresh cost savings target at an investor briefing on Thursday, with the extra $60 million coming on top of the $251 million in reduced costs already nominated last year as part of its "Fairfax of the Future" restructure.
The fresh attack on its cost base comes as Mr Hywood also hosed down speculation Fairfax would soon end its print publications of its flagship mastheads The Age and Sydney Morning Herald, saying the business remains committed to the print editions, while a new metered paywall for the newspapers would help forge new digital revenue streams.
"We are confronting reality," Mr Hywood told analysts at the briefing, "and we are taking the actions we need to take to get through a period of transition from a legacy print business to a media company that prospers in a competitive market.
"Ongoing cost management is now in our DNA."
The extra savings outlined on Thursday formed an integral part of the next stage of Fairfax's transition, Mr Hywood said, in the face of continued choppy trading conditions which would see earnings fall through the second half.
The shake-up will include plans to reduce duplication across the company's 431 publications, 337 websites and almost 100 apps and seven radio stations.
Mr Hywood told investors overall group revenue had slipped 9 per cent to 10 per cent in the current half with the company's Metro Media and Regional divisions both down 11 per cent, with the latter business segment dragged lower by difficult conditions in mining-related areas and Queensland. Radio remained a strong performer, up 10 per cent, while its booming digital real estate platform Domain had lifted revenues by 16 per cent.
Fairfax earnings before interest and tax, depreciation and amortisation (EBITDA) for the second half of 2012-13 would be between $129 million and $135 million, Mr Hywood said, against first-half EBITDA of $205.3 million.
Rival News Corporation held its own local roadshow for investors this week on the eve of its historic corporate split, with executive chairman Rupert Murdoch seeking to uncouple the media company's entertainment assets from its publishing business.
Fairfax also had a suite of high growth businesses, which Mr Hywood said would be further exploited to drive revenue, as revenue from its traditional print businesses, such as its newspapers, waned.
Its online real estate site Domain would not be spun out. Fairfax would maintain ownership of the platform which analysts were told posted revenue of $140.7 million for 2011-12 and EBITDA of $44.6 million. Holiday accommodation site Stayz had grown revenue above market in a challenging environment.
Boosting digital revenue would be the introduction of a metered paywall for its key metro papers, The Age and The Sydney Morning Herald, from July 2 ranging from $15 to $44 per month.
Fairfax shares closed 1¢ weaker at 59¢.