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Fairfax moves closer to printing deal with News

Wednesday, 21 February 2018
By Graham Osborne

Fairfax is stepping up talks with News Corp on sharing printing facilities and collaborating on distribution after posting a 54 percent fall in net profit in the first six months of the financial year.

Fairfax Media reported revenue of $877.1m in the first half of the 2018 financial year, with a net profit after tax of $38.5m – a 54 percent decline on the $83.7m net profit in the prior corresponding period.

The company has announced plans to sell or close more than a third of its New Zealand print publications and has appointed a team of advisers to pursue ‘deeper strategic opportunities’ with rival News Corp in its Australia newspaper publishing operation.

“We have progressed our recent positive discussions’: Fairfax CEO Greg Hywood.

“We expect greater industry cooperation will deliver significant benefits,” Fairfax chief executive Greg Hywood told the ASX in a results presentation.

“We have progressed our recent positive discussions with News Corp Australia to seek industry-wide efficiencies in printing and distribution. We have had successful collaborations around shared trucking and printing titles for News in Queensland. Building on this collaboration, we have appointed advisers to pursue deeper strategic opportunities.”

A insider says the sharing of printing facilities is being considered, especially at any press sites that are currently underutilized.

News Corp Australia and Fairfax Media have been talking for some time about sharing print facilities and collaborating on newspaper distribution in Australia. Hywood’s comments increased speculation that an agreement between the once bitter rivals is on the horizon.

He says Fairfax’s publishing businesses are profitable and generating valuable cash flows. “Each has benefited from an ongoing emphasis on digital publishing; a continuing focus on cost and efficiency; maximisation of print earnings; and development of new revenue opportunities.

The company’s Australia Metro Media division – including The Sydney Morning Herald, The Age and The Australian Financial Review – is in “good shape – the best they’ve been in recent history,” Hywood says.

“The publishing business now operates on an enhanced technology platform, having replaced complex legacy systems with new fit-for-purpose, agile, flexible and much lower cost solutions. Metro’s impressive 11% decline in costs – largely from savings in staff, technology and print production – more than offset the decline in revenue of 9%. Publishing advertising revenue declined 15%.

“Net paid digital subscriptions for The Sydney Morning Herald, The Age and The Australian Financial Review recorded their strongest reported uplift in four years, increasing from August 2017 to more than 283,000. We are encouraged by positive trends in consumers’ willingness to pay for trusted and quality content.”

Domain, the company’s property classifieds and services business, reported total revenue 12.5 percent higher to $183.3 million, with earnings before tax up 2.2 percent to $58.6 million. In November, Domain was spun off as a separately listed business, with Fairfax retaining 60 percent of the company.

Fairfax NZ, recently rebranded Stuff, saw total revenue decline by about five percent and the company – which includes Wellington’s Dominion Post, Christchurch’s Press, Hamilton’s Waikato Times, and the Sunday Star – will exit over a third of its smaller New Zealand publications.

“We have enormous confidence that Stuff is heading towards sustained growth as its digital business continues its strong momentum. We have acted decisively to bring this forward, and are announcing today a plan to exit around 35% of our NZ print publications through sale or closure. This will deliver additional EBITDA contribution over a full year and bring forward the time when increases in digital revenue will outweigh declines in print.”

Up to 60 staff across 28 titles could be affected. The NZ titles to be sold or closed are: Avenues, Waikato Farmer, Admire Marlborough, NZ Dairy Farmer, Discover Magazine, Selwyn and Ashburton Outlook, Admire Nelson, Hastings Mail, Christchurch Mail, Napier Mail, The Tribune, Kaikoura Star, Invercargill Eye, Auto Xtra, South Canterbury Herald, Clutha Leader, Waiheke Marketplace, NewsLink, Wairarapa News, Queenstown Mirror, NZ Farmer, Waitaki Herald, Canterbury Farmer, North Waikato News, Central District Farmer, Rotorua Review, Otago Southland Farmer and Ruapehu Press.

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