THE DISTILLERY: Fairfax papercut

Jotters say the media company's latest restructure won't be the last as it grapples for revenue.

The big takeaway from yesterday’s restructure announcement from Fairfax Media is that a lot had happened already and this isn’t the end of it. That makes it three restructures from chief executive Greg Hywood, which might look a lot more like a company that can operate online for the long haul, but it’s not there yet.

The Australian Financial Review’s Ben Holgate wrote a brief piece on the restructure where he said it’s quite transparently another shift away from the old printing business model to something more befitting of the digital age 

“Expect much more of this in the future,” writes Holgate.

Similarly Fairfax’s Malcolm Maiden alluded to more changes at the company in his piece that addressed management’s stated cost saving aims.

“Chief executive Greg Hywood said in February that the group was on track to deliver annual cost savings of $251 million a year by June 2015, but that more savings were being sought: this restructure delivers some of them.”

Some of them, which means there’s more to come.

Business Spectator’s Stephen Bartholomeusz argues that Hywood’s third restructuring will no doubt have an impact on morale at the company, but if there’s another choice at his disposal, it’s not apparent.

“With his traditional revenues dwindling as a result of both structural and cyclical factors and his audiences shifting into the low-yielding online environment, he has to at least try to create a cost base better aligned to those lower revenues while looking to paywall-driven subscription revenue and digital transactions revenue to supplement the much-diminished traditional advertising income and stabilise the group. The next big decision will come when the printing of the metros moves to the regional presses and the Chullora and Tullamarine plants are shut down and sold. At that point Hywood will have to confront the decision as to whether to continue printing the loss-making Monday to Friday papers or to shut them down and move to a digital-only presence outside the weekends. It appears a forgone, albeit very painful, conclusion.”

Meanwhile, The Australian Financial Review’s Chanticleer columnist John Kehoe says ANZ Banking Group boss Mike Smith’s announcement that the lender could divest its $US780 million stake in Indonesia’s Panin Bank certainly looks “paradoxical” at first glance when you consider Smith’s Asian superbank strategy.

“But the candid telegraphing to any interested buyers is underpinned by Mr Smith’s realisation that divestment may be the best option. Beyond the well-documented capital inefficiencies in banks owning minority equity stakes under the Basel III rules, ANZ’s inability to exert any management influence over Panin Bank has frustrated Mr Smith. Furthermore, the relationship with Panin’s other major shareholder is believed to be strained.”

The Australian’s economics correspondent Adam Creighton tackles the Gillard government’s rational for increasing superannuation taxation on higher income earners by pointing out that they’re already paying more than their fair share if you take a broader view of the budget’s revenue sources.

In other economics matters, The Australian Financial Review’s Jonathan Shapiro keeps his focus on the Australian dollar after the Reserve Bank of Australia’s decision to keep rates on hold earlier this week. The dollar’s trade-weighted index was already around its highest point in history when the rate decision came in.

Meanwhile, The Australian Financial Review’s Chanticleer columnist Tony Boyd asks where the protection is for Australian taxpayers from a cost blowout at NBN Co.

In company news, The Australian’s Richard Gluyas says mid-tier mining companies need to get used to the lower asset price valuations. His case in point is Arrium, which is still largely viewed for its iron ore business. The company’s share price is trading at a significant discount to the 88 cents a share Steelmakers Australia offered the company in October.

And finally, The Australian Financial Review’s Jamie Freed nominates Indonesian-focused Orpheus Energy as an ASX-listed company with assets outside Australia that investors who still believe coal to be a reliable energy source for emerging Asia could consider.