Newspaper publisher Fairfax Media has launched a three-year $170 million savings program that will probably involve more job losses.
Fairfax chief executive Greg Hywood said the company’s first half results were disappointing, and while trading conditions were tough it had a bright digital-focussed future.
The owner of The Sydney Morning Herald and The Age newspapers was no longer a newspaper company, he said, and too much money was being wasted on printing costs which would be reduced.
The company would focus on three areas: content creation, sales and digital product development.
More functions would be centralised, which had already happened in human resources and could happen in IT or finance, Mr Hywood said.
However he did not reveal how many jobs could be at risk.
“Any reductions in the workforce will be a mix of attrition and redundancies,” Mr Hywood said in a teleconference on Thursday.
“We have a 15 per cent a year staff turnover so we will quite clearly keep it weighted as heavily as possible towards attrition.”
The company outsourced its sub-editing to Pagemasters in 2011, reducing about 90 jobs.
Fairfax’s media stable also includes The Australian Financial Review and a string of radio stations.
The company has endured a trend of earnings falls in recent years hit by the loss of classified ad revenue.
Net profit of $96.7 million for the six months to December 25, 2011, was down 44 per cent from $172.3 million in the previous corresponding period.
Excluding impairment and restructuring charges the after tax profit was $135.7 million.
Fairfax said January’s revenue was also down on top of a five per cent drop in first half revenue to $1.23 billion.
All of the company’s business segments experienced falls in revenue during the half.
However its digital operations increased sales revenue by 14 per cent to $189.8 million from the same period in the previous year.
“Fairfax is a technologically agnostic company, once upon a time we were a newspaper company but we are no longer a newspaper company,” Mr Hywood told reporters.
“We deliver our journalism and content in a variety of different ways.
“In print, there’s certainly a future in that, radio, iPad, which was a hugely successful initiative last year, smartphones potentially, IPTV (internet protocol TV) more than potentially as we are actually already doing deals with TV manufacturers.”
Mr Hywood said he wanted to devote more than the current 30 per cent of expenditure spent on journalism and sales.
Morningstar senior equity analyst Tim Montague-Jones said Mr Hywood had said nothing to change his negative view of the company.
Fairfax was still heavily reliant on the newspaper business, which he said was declining more rapidly than the digital side’s revenues were improving, despite strong online readership.
On top of that was a weak cyclical advertising environment, in which the real estate, finance and consumer discretionary sectors including retail were struggling.
“Their regional newspapers are the jam in the whole business with a credible 29 per cent margins … there is still value in regional newspapers,” he told AAP.
Fairfax declared a fully-franked interim dividend of two cents per share full franked, up from 1.5 cents.
The company’s shares closed half a cent lower at 82 cents.
