Struggling Fairfax to slash jobs, shut plants

By Greg Ansley

The group will shed about 1900 jobs, shut two big printing plants, reduce its key Sydney and Melbourne newspapers. Photo / Thinkstock
The group will shed about 1900 jobs, shut two big printing plants, reduce its key Sydney and Melbourne newspapers. Photo / Thinkstock

Australia has been rocked by sweeping changes to the struggling Fairfax group, driving one of the nation's oldest and largest media empires into the digital age.

The group will shed about 1900 jobs, shut two big printing plants, reduce its key Sydney and Melbourne newspapers to "compact" editions, launch a "digital-first" editorial thrust and introduce pay-for-view online services.

The restructuring, which will produce annual savings of A$235 million ($300 million) from June 2015 after an initial one-off net cost of about A$248 million, has been welcomed by a market that has watched Fairfax shares slide steadily.

Last week the group lowered its profit forecast after earlier declines, predicting half-year results would fall 8 per cent with an 18 per cent dive in full-year, before-tax earnings to about A$500 million.

Yesterday's announcement came as mining magnate Gina Rinehart increased her stake in the group to 18.67 per cent, making her Fairfax's largest single shareholder and strengthening her claim for two board seats.

But while analysts believe Fairfax has made the right decision, the restructuring has dismayed journalists and brought warnings of shocks ahead, extending beyond the media to other sectors.

Fairfax controls some of the nation's most respected publications, including the Sydney Morning Herald, the Age in Melbourne and the Australian Financial Review, as well as regional newspapers, online services, radio stations and magazines.

Chief executive Greg Hywood said readers' behaviour had changed and would not change back.

"As a result, we are taking decisive actions to fundamentally change the way we do business."

About 65 per cent of Sydney Morning Herald and Age readers now accessed Fairfax journalism digitally, through online, tablet, smartphone or smart TV services.

"While Fairfax Media's print circulation remains meaningful ... the profitability of the Metro business will come under further pressure with its current legacy cost base," the group said.

This included printing facilities at Chullora in Sydney and Tullamarine in Melbourne, which would be closed by June 2014.

Print versions of the SMH and Age would be reduced to the size of the Financial Review, and the group would charge for access to its websites next year, although some free content would remain.

About 20 per cent of lost jobs would be editorial.

The Media, Entertainment & Arts Alliance, which represents journalists, was yesterday seeking urgent talks with Fairfax over the "savage" cuts.

Communications Minister Stephen Conroy said the job losses were terrible but reflected similar developments across the economy.

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a3 at 03 Oct 2014 06:41:17 Processing Time: 431ms