Fairfax is tanking, with New Zealand’s portion down 10% (15% in Australian dollars)

The Fairfax Media Limited(ASX: FXJ) share price is down 1.9% today to 79.5 cents, after the media group announced big falls in publishing revenues across both metro and community media and in New Zealand.

Revenues for the first 17 weeks of the second half of the 2016 financial year (FY16 2H) for the group as a whole is down 2 to 3% compared to last year.

  • In Metro Media, publishing revenues are down around 6%
  • Australian Community Media is down around 13%
  • New Zealand is down around 10% in local currency (15% in Australian dollars)

The general group performance is looking a lot less scary due to the performance of their radio broadcasting division.  But the harsh truth in the publishing division is that they are staring at a sunset industry.

Fairfax’s results again show that the slow death of newspaper publishing continues unabated. Fairfax itself has admitted that the seven-day-a-week publishing model is dead, and will give way to either weekend-only or more targeted printing for most publishers.

But the company is successfully transitioning away from that business. Stan, the subscription video on demand (SVOD) rival to Netflix and a joint venture between Fairfax and Nine Entertainment Holdings Co Ltd(ASX: NEC), will exceed 500,000 active subscribers this month. The service is currently expected to reach cash flow breakeven during the 2018 financial year.

While publishing remains a core component of Fairfax’s business, digital revenues are growing strongly, but until they become the dominant factor, Fairfax’s overall revenues are more likely to continue falling.

For investors, Domain is almost as valuable as the whole company, with the other business thrown in for free, which could make Fairfax a tempting investment.

Digital is a crowded space and it doesn’t have the same geographical loyalties that brick and mortar newspaper companies have been able to rely on.

As newspapers bring more of their subscribers online, this same audience becomes available to other competitors in a way that someone who buys one paper might never have purchased the other one as well.

There are a lot of people that are still going to have to lose their jobs while the industry itself searches for a way to deliver real value that is unique to their organisation.

Companies like Fairfax are unlikely to undergo the change to digital without substantial losses in people.


– Mike King, Motley Fool

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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

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