Digital dollars lure Fairfax from print

The media giant has announced plans to scale back its print business in favour of a greater digital distribution push following its 41% drop in profitability.

Fairfax used its half-yearly report, highlighting a first-half net profit slide to $96.7 million, to reveal yet another restructuring plan. Greg Hywood, CEO of Fairfax, conceded that the first-half results were disappointing and the difficult trading environment is likely to continue.

“We have had to contend with extremely poor advertising conditions in NSW and Victoria and no improvement in the subdued New Zealand market. Fairfax is particularly exposed to stresses in finance, retail and real estate sectors,” said Hywood (pictured).

Operating under the banner Fairfax of the Future, the company’s three-year plan will attempt to reshape Fairfax Media around content delivery and advertising sales. The group’s digital revenue rose 14% over the same period in 2011, while online ads increased 18%.

“Fairfax of the Future recognises that many parts of our business were built at a time when the newspaper was king and print classified advertising was the biggest driver of our business success. Large parts of our current operating model are still geared to supporting the old business model,” he said.

Hywood said that only 30% of Fairfax’s current expenditure is dedicated to producing editorial content and selling advertising. The restructuring plan will see the group cut costs again by reducing print, increasing digital distribution and sharing content across platforms.

By the time the project is completed the group expects to find $170 million in cost savings, this is double the $85 million target outlined in Fairfax’s full year result in August 2011.