Fairfax boss Hywood says it is ‘inevitable’ SMH and The Age will close weekday print editions
Fairfax Media CEO Greg Hywood has said it is "inevitable" the company will close its weekday Metro masthead print editions in favour of "weekend only or more targeted printing".
Fairfax Media CEO Greg Hywood has said it is “inevitable” the company will close its weekday Metro masthead print editions in favour of “weekend only or more targeted printing”.
In a speech to the Macquarie Australia Conference yesterday Hywood the costs cut from the business mean a decision to close its Metro Publishing unit – including The Age and Sydney Morning Herald and Australian Financial Review – would only cost the business $150m today, compared to $450m four years ago.
“But moving out of Metro publishing is not a decision we need to make, nor should we,” he added.
Speaking to the room full of investors he noted: “Quite frankly we are watching what is happening internationally rather than observing any local media. What we are doing in our business is as advanced as anything that is happening offshore.”
He also denied the company had been “pessimistic” about print, instead saying: “Perhaps it’s more a case of being too honest for their liking. We prefer telling it like it is and planning for it.”
In the talk he looked to the future revenue models for the company, predicting the SMH and The Age would have 65% of their print and digital revenues focused on the weekend, while the AFR would “likely focus on its weekday revenue strength”.
“Exactly when we move towards implementing a new model for our Metro titles depends on the view we form about trends in consumer and advertiser behaviour, but all the signs indicate it is inevitable – although some time away,” he added.
“The model will take shape over the coming years as our transformational journey continues.”
He also hinted the company could do a deal to co-locate printing operations with rival News Corp, saying they expected to save money from “increased industry cooperation on printing and distribution”.
Hywood also reiterated the company’s plans to focus more on using audience data to decide which stories to cover, saying 80% of web traffic for the SMH and The Age came from 20% of their stories.
However, he also again denied a move to a click bait strategy pointing to a slide showing the top 10 most read stories in March which included investigations, politics, breaking news and sports yarns.
“Digital-only publishing may be the next logical progression of the model, but we believe that the model we have discussed is sustainable for many years,” he added.
“Still, we have the confidence that, if necessary, we could make a more intensive digital-only model work because we are already doing it successfully and we have the proven capability.”
Hywood also gave an update on the company’s revenues so far this financial year, with overall group revenues down 2-3% on last year, with digital revenues up 2% but print revenues again down by 6%.
Looking at other areas of the business he flagged more growth in real-estate business Domain, and said that market was not a “winner takes all” environment.
The acqiuisiton and merger of Fairfax Radio Network into Macquarie Radio Network was also paying off, he said, with the company expecting to have made $15m in savings by June.
He also said streaming joint venture with Nine Entertainment Co Stan would exceed 1m gross signups this month, and have 500,000 active subscribers.
Hailing it as the “largest domestic player in the Australian SVOD market” Hywood said it has “shown clear value” and is “on a clear path to profitability”.
“Recently weekly sign-up rates have doubled compared to the same time last year and we continue to see both an improvement in conversion and an exponential reduction in churn after conversion from trial to paying subscriber,” he added.
“Stan is expected to reach cash flow breakeven during FY18.”
Alex Hayes
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Hywood is clearly of the Goebbels school of spin. It is simply astonishing for him to assert that Faurfax has demonstrated a digital business transition. It has not.
Hywood implies in his spiel that this is somehow his choice. It ain’t.
What the facts so far show is that he is simply reactive to revenue loss to the point where his primary brands are shrunk to subscale, low grade eye candy that will not deliver the strong demographics that are the primary asset of any sustainable business.
What he’s said now is that closing the business down won’t cost too much. Which I imagine is another way of saying that his big salary is cheaper than a liquidator.
Depressing.
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Hywood says his job is to wind down the big brands at least cost. So, when the big brands are dead, what will be left? The evidence is that the digital news media business is a dud (see The Guardian for evidence, and The Guardian has maintained its news media focus – unlike Fairfax).
Hywood seems to rely on Domain, but what is Domain when the big brands die? A second tier real estate site with no leverage?
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Am I the only one who finds it remarkable that the headlines and copy in the info deck are in all caps? For a publisher with a fine tradition of high quality typography and art direction this is quite shocking.
The 80% / 20% stat is one of the most dangerous in the business.
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The 80/20% stat has been around for the last 5 – 10 years or more. Fairfax has only just figured this out?
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Wow liam … it’s been around 5-10 years.
Yeah, couldn’t be any longer than that because anything of that importance has only just been discovered.
But if you bother to look at Vilfredo Pareto’s 1896 paper “Cours d’économie politique” that he published while he was at the University of Lausanne, I think you will find he just MAY have mentioned it once or twice.
Pity he didn’t post it on his Facebook page way back then.
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The 80:20 is a bullshit stat. It would be relevant if traffic was a revenue driver but it is not. Unless Fairfsx can get its prices up on both ad inventory and content revenue the whole Hywood strategy is fiction.
The fact that he cites the 80:20 is plain evidence that there’s no plan other than slow (well paid) death.
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Tres drole
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@ spinster. There is “some” correlation between traffic and revenue, at least as long as advertisers are charged on a cpm basis, where page impressions are a driver of ad impressions. Having said that, ad yields in digital are miniscule compared to what publishers got used to raking in over many years in print, and they continue to shrink. so yes, unless he — and all publishers — can figure out a way to dramatically increase digital yield, and print continues to decline, then the revenue pie continues to shrink.
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If you are running any business and things just keep getting worse, it should be obvious to everyone you are making the wrong decisions. Fairfax have not got anything right for about 4 decades, so it is well past the time those making the decisions decided to get out of the kitchen and let a totally new team run the show.
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@minnie: my point exactly. Chasing traffic yields peanuts.
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News and Fairfax launched websites and regarded any dollars made as extra and secondary to their ‘traditional’ business models. $’s are always put first, which is another reason why they can’t seem to make this digital thingy work.
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