Fairfax Media has warned of further revenue falls and promised deeper cost savings as it revealed it will launch metered paywalls on its major metropolitan news websites within a month.
Fairfax will introduce the paywalls for its Sydney Morning Herald and The Age websites on July 2.
The company also said its weekend broadsheet newspapers will shift to compact editions in early 2014.
Fairfax chief executive Greg Hywood told an investor briefing the company had suffered falls in half-year revenues of nine to 10 per cent up to the third week of May.
Mr Hywood said trading conditions remained “pretty tough”, with revenues for its core metropolitan media division and its regional division down 11 per cent.
He said earnings before interest, tax, depreciation and amortisation (EBITDA) for the second half 2012/13 was expected to be in the range of $129 million and $135 million.
That is down from EBITDA of $205 million in the first half of the current financial year, while underlying EBITDA for the prior second half was $210 million.
Fairfax shares dropped as low as 57.25 cents during the day before closing down one cent at 59 cents.
Mr Hywood also said Fairfax would achieve an additional $60 million in savings by September under its cost-cutting program, in addition to an updated $251 million forecast in February, taking total savings to $311 million by the end of 2014/15.
Morningstar senior equities analyst Tim Montague-Jones said the weakness in Fairfax’s regional division was a concern.
The regional media operations have been a strong earnings contributor for the company.
Mr Montague-Jones commended the cost reduction but said Fairfax’s challenge is the same one confronting all media organisations.
“The revenue line is the difficult one,” he said.
Managing director of Fairfax’s recently-created Australian Publishing Media division, Allen Williams, said the new paywall model would allow site users to read 30 articles a month before a paid subscription was required.
The meter will not apply to sections such as the Domain real estate or Drive motoring pages.
The model differs from News Limited’s offering for its Daily Telegraph and Herald Sun mastheads, with News allowing 20 free articles, then up to 80 without charge for users who register online without subscribing, and each company offering slightly different pricing structures.
Mr Williams also said Fairfax’s weekend broadsheets would move to compact or tabloid-size editions in early 2014, following the transformation of its weekday papers to the smaller format in March, 2013.
Fairfax’s iPad and Android tablet apps will have a “freemium” structure, with some sections available for free and others open only to subscribers.
Subscription pricing will start at $15 a month for web-only access.
Mr Hywood also said Fairfax would undertake a product review across its suite of media offerings as part of a continuing drive to reduce costs but stressed there were no plans to cut newspaper printing because the print editions were still profitable.
“We do not have any intention to reduce the frequency of print publication of any of our major mastheads in the foreseeable future,” Mr Hywood said.
