Fairfax may shut 30 papers

More than 30 regional newspapers, including the ­Illawarra Mercury, are under review for possible closure.

More than 30 regional Fairfax Media newspapers, including the ­Illawarra Mercury, are under review for possible closure as the company continues a series of aggressive cost-cutting measures that could affect local communities and threaten the quality of the company’s journalism.

The Australian has obtained details from two consultancy reports commissioned by Fairfax, which reveal between 30 and 65 of the company’s local and regional newspapers are on a “watch list” for closure.

A 2013 report by global consultancy firm Bain & Co, commissioned by Fairfax, has identified 33 regional newspapers on a “watch list”, including the Illawarra Mercury south of Sydney, The Port Macquarie Express, The Leader in Wagga Wagga, The Warrnambool Extra andthe Tamworth Times.

A second review, conducted by US consultancy firm McKinsey and Company, titled Cimarron, recommended the closure of more than 65 titles. The review began in 2012 and was handed to Fairfax executives last year.

A Fairfax spokeswoman yesterday confirmed the regional newspapers were under review but said no decisions had been made at this stage. “We announced that we were reviewing the structures of the regional business last year. We have made no decisions. It’s business as usual,’’ she said.

A source said the Fairfax Board was implementing many of the options outlined in the Bain & Co report, and many have already been acted upon.

The list of newspapers under review, along with the direction Fairfax Media’s chief executive Greg Hywood is leading the company, will be likely to devastate local journalists employed by its regional arm, Australian Community Media, while affecting the regional communities who rely on their local paper for news.

“No one within the hierarchy of Fairfax has any regional experience and most of the board members have not been to the ­regional areas,’’ a source said.

It is understood Mr Hywood has made very few visits to Fairfax’s regional areas in his time as chief executive.

On Saturday, The Weekend Australian revealed internal Fairfax Media strategy documents, presented to the Fairfax board in mid-2013, state management would “explore all potential alternative print models” and would have a “watching brief dashboard on printed products”.

The Weekend Australian also revealed Bain & Co had advised the company to replace 75 per cent of senior journalists who left through attrition with third-year trainees. As a first step, Fairfax management was advised to set up a dedicated trainee hiring model. Fairfax appears to be following the report and has recently re-established its cadet program.

The report also suggested 20-50 per cent of content would be produced by lower-cost contributors rather than

full-time staff. The Bain & Co documents identify 10 “main lenses”, that is, the criteria by which it performed its high-level analysis on Fairfax products: Was the product first or second in the market? Did it make more than $5 million advertising revenue? Audience size. Is it a strong driver of circulation? Its EBITDA size and margin. The advertising revenue growth, audience growth and option value.

The document says that generally if a product scores low but is considered core content, has high reader value or drives purchasing intent, has a growing audience or has option value, “the aim would be to try fix/radically change the product before considering exiting”.

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