Fairfax Media boss Greg Hywood says there is interest from potential buyers for 28 New Zealand newspapers the media giant plans to sell or close as part of its push to grow its digital business.
The cutting of more than a third of the company’s NZ print titles was announced as Fairfax reported a 54 per cent fall in first-half profit, hit by impairments and restructuring costs relating to its spin-off of property portal Domain.
Fairfax’s first-half profit dropped to $38.5 million, from $83.7 million a year ago, while revenue for the six months to December 24 fell 3.9 per cent to $877.1 million, on the back of declines in advertising revenue across all divisions.
Fairfax, like other media outlets has continued to battle dwindling advertising revenues across its publishing arm.
While advertising revenue still contributes the bulk to total revenue, digital subscription revenue has continued to climb across the division.
Fairfax’s Australian Metro Media – which includes metro papers such as The Australian Financial Review and The Sydney Morning Herald – contributed $253.6 million in revenue, down from $279.1 a year go.
The company did however, reduce the division’s costs by 11 per cent thanks to savings on staff, technology and print production.
Fairfax chief executive Greg Hywood said the company was “strongly positioned” after a series of cost and staff reductions, and growth initiatives over the past five years.
Mr Hywood said Fairfax’s balance sheet was strong.
“We will take advantage of opportunities arising from media consolidation as and when it occurs,” he said.
Revenue from Fairfax’s rural and community papers and digital media fell 8.6 per cent to $187 million despite a seven per cent cost improvement.
New Zealand media business Stuff’s revenue slid eight per cent, despite digital revenue growth of 33 per cent.
Fairfax’s NZ papers sale comes after the New Zealand High Court backed a decision by the country’s competition watchdog to block an attempted merger between Fairfax’s Stuff and rival NZME.
Mr Hywood had previously warned there would be cuts in NZ if the merger did not go through.
Stuff chief executive Sinead Boucher on Wednesday said 28 titles and about 60 staff from rural print titles would be affected as the papers became digital only over the next six months.
Mr Hywood said the company has already had interest from buyers for its NZ publications and expects that to increase in the coming months.
“It is quite a diverse range of titles across the country so we’d expect to have some interest in a number of them,” he said.
The company said its investments in streaming service Stan and Macquarie Media Limited had both performed well, with Stan continuing to grow subscribers while Macquarie Media increased earnings by 23 per cent.
Shares in Fairfax were up 3.5 cents, or 4.6 per cent, to 69 cents by 1500 AEDT.
IMPAIRMENTS HIT FAIRFAX PROFIT:
* Net profit down 54pct to $38.5m
* Revenue down 3.9pct to $877.1m
* Interim dividend down 0.9 cents to 1.1 cents, fully franked