Fairfax cuts herald an age of change
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The former editor-in-chief of The Age newspaper, Andrew Jaspan, voiced a commonly held view of embattled media company Fairfax's job-slashing, paper-shrinking and paywall-raising plan to save its digital life.
"It's too late," the now editor of online journal The Conversation said on Monday.
Fairfax announced on Monday that it will cut 1,900 jobs, reduce its flagship broadsheet newspapers in size to tabloid, and close its two major printing presses in Sydney and Melbourne in a bid to cut hundreds of millions from its ballooning costs.
The 170-year-old publisher will also introduce paid subscription paywalls to access online content from 2013, and promote a digital first strategy aimed at capturing the online market where three-quarters of its readers are now found.
Fairfax chief executive Greg Hywood launched the restructure, to the shock of his staff, on Monday under the banner of Fairfax of the Future.
"We are taking decisive actions to fundamentally change the way we do business," Mr Hywood said.
Fairfax's share price has traded at historic lows of around 60 cents in recent weeks and the company had warned of declining revenues and announced the shedding of nearly 60 jobs at its regional papers before Monday's surprise announcement.
Mr Jaspan said the company had suffered from a failure of management, with the shift in focus to online a welcome change but one that had been resisted for too long to avoid a damaging fall in the share price, which has left the company vulnerable to a takeover by mining magnate Gina Rinehart.
Mr Jaspan said Fairfax had progressively lost advertising revenue as its lucrative classified business was lost to online competitors.
While the company was cutting its costs, he questioned why it was delaying measures such as reducing the size of its broadsheets until March 2013.
"They just move too slowly," he said.
"It's too late but at least they now have a plan."
Media academic and journalist Margaret Simons said no print company had been immune to the rise of online media.
"The key mistakes were made a long time ago when Fairfax failed to anticipate the death of the classified advertising business," she said.
Ms Simons said the challenge for news organisations now was to find a sustainable model - but whatever model that was, they would be smaller, less profitable organisations.
Paywall readership, she says, is in the tens of thousands rather than the hundreds of thousands historically enjoyed by print.
The New York Times and The Times of London are two examples of papers that have gone behind paywalls, with questionable success.
"You definitely see a huge reduction in your reader numbers but the hope is that you meet (some level of) sustainability," she said.
With its share price now around 65 cents and Ms Rinehart holding nearly one-fifth of the stock, Fairfax is vulnerable to a takeover from either Ms Rinehart or a private equity firm.
If that were to happen, Ms Simons said, Fairfax may not be able to proceed with its outlined plans.
Whatever the outcome, she said, the internet brought about change in the nature of news and information "comparable to the invention of the printing press".
"Anybody who says `we have the answer, this is the new, sustainable model' is kidding," she said.
Peter Trute, AAP Senior Finance Writer