If you had to focus on just one factor that helps explain the current industrial action by Fairfax Media journalists over the company’s cutting of 125 jobs and $30 million in costs, it is the worsening finances of the print side of the business – especially an accelerating slide in revenue so far in calendar 2017 compared to the same period in 2016
While CEO Greg Hywood went on at length about what a bright shining jewell Fairfax’s Domain property website business is and will be once floated off later this year, the reality was in the now usual trading update given in his presentation to a Sydney finance conference on Thursday morning.
Investors noted his comments and pushed the shares up 1.4% to $1.085 because of the relatively bullish outlook for Domain (and its suggested low debt of just $150 million, according to Hywood).
But in short, outside of Domain it is not good and from what Hywood said this morning in his presentation, Fairfax’s group revenue position has worsened appreciably compared to this time last year.
"Overall Group revenues are 6% below last year for the first 17 weeks of FY17 H2 (26 December 2016 to 23 April 2017). Revenue across our current reporting segments:
• Domain overall revenue is up 10% with its total digital business up 18%;
• Metro Media is down around 11%;
• Australian Community Media is down around 11%;
• New Zealand Media is down around 3% including currency impact;
• Macquarie Media is down around 7%.
While that is about what the company said was the position in the first six weeks of the year back in its interim profit statement in February, it is much worse than for the start of the 2016 calendar year when Hywood told the same conference:
"Overall group revenues for continuing businesses are up just under 1% for the 1 January 2015 to 26 April 2015 period compared to the prior corresponding period.
"Revenues across our current reporting segments:Metro Media, which includes Domain, is up around 7%. Publishing revenues are down 7%.
"Domain’s overall revenue is up 54% including the benefit of acquisitions (MMP from February 2015 and Allhomes from October 2014), with its total digital business up around 32% and domain.com.au up around 27%.”
As you can see growth has slowed sharply in Domain because of the change in the comparative base, but the situation in Metro Media is worsening – a 11% fall in revenue against 7%. That is why the cost cutting has happened, the jobs lost and now the one week strike.
Mr Hywood in his presentation said the company’s news operations were in the midst of a transition to a more sustainable and digitally focused model. "Make no mistake, we believe this is the sustainable publishing model of the future," he said in a speech in Sydney.
"We are developing a suite of new digital products to create deeper and more engaging experiences for our audiences, while sustaining a commercially successful print proposition."
“A flatter, more efficient editorial structure is in place with more targeted commissioning of stories and a focus on areas of competitive advantage." But a lot of pain for the journalists involved.
