Transforming Fairfax
Fairfax CEO Greg Hywood has today announced radical changes in how the company’s newspapers will be produced. This is his memo to staff.
During the past several months I have outlined our strategy to secure and grow our company.
There is no ambiguity about our vision and our mission. We will be a company that creates high-value, premium journalism and content for print, online, mobile and beyond.
We will do this by investing in quality, independent journalism that differentiates us from our competitors.
We will invest in our journalism to create markets for many different audiences. We will leverage those audiences for our customers and clients.
And we will do this better than anyone else.
Today we are announcing the operational changes that are necessary to deliver the strategy.
We must do things differently if we are to deliver on our commitment to the highest standard of quality independent journalism. Standing still is not an option.
While the changes I am announcing today carry some pain they represent a necessary step forward in creating a sustainable and successful Fairfax.
As media companies globally confront the challenge of fragmenting audiences and revenue, decisions have to be taken about how we operate in this new landscape.
Fairfax is at an inflection point and we must move now.
We have no intent or interest in managing this company for decline. We want Fairfax to grow, to be strong and to be respected.
The core of the changes I am announcing today are logic-driven – it’s about getting the right balance in our allocation of resources to deliver the necessary outcomes.
And it involves a substantial reallocation of our resources to writing and reporting.
The fact is this is only possible through gaining efficiencies from our production processes. There is no other way.
Yes, there will be cost reductions – but the strategic driver for those savings is reinvestment in the parts of Fairfax that will determine the future success of the company.
Metropolitan Publishing
We will increase our investment in quality journalism for The Sydney Morning Herald, The Sun-Herald, The Age and The Sunday Age – and The Canberra Times. This is fundamental to our strategy.
We will immediately look to recruit a number of high-quality reporters and writers. We will expand our trainee programs. We will invest in comprehensive multi-media training and equipment.
This investment of millions of dollars will dramatically enhance our ability to deliver journalism that attracts and grows audiences in our target markets.
To achieve this we are restructuring the way we produce our newspapers. New workflow and work practices will be introduced which will not only facilitate the investment in journalism, but will underpin quality.
Under this restructure it is planned that copy sub-editing of news, business and sport will be outsourced to AAP through its subsidiary Pagemasters. As you will be aware, Pagemasters has been successfully producing many of the sections for our metro mastheads for the past three years.
This is not an unprecedented decision. Pagemasters and other independent production houses now produce many high-quality newspapers around the world.
As we move to establish a sustainable model, work is also being finalised on a number of initiatives in other parts of the Metro publishing business. These will be communicated to staff as soon as practicable.
These decisions are critical to developing sustainable Metro publications. The Metros and the journalism they produce are critical to the future of Fairfax.
We must do everything required to ensure that future.
New Zealand Publishing
We will increase our investment in quality journalism while continuing to realise efficiency gains from pre-press and sub-editing hubs.
A decision taken has been to end our NZ Press Association news service subscription. Instead, we are investing in our unique content with the formation of the Fairfax NZ News Service.
This service will see a significant investment in journalism with new editors and reporters focusing on high quality, group-wide content that serves all mastheads.
A key decision is to invest in our essential capabilities, such as journalism and sales, while seeking efficiencies in other areas. Pre-press and sub-editing hubs are delivering greater flexibility across the group.
We understand the value in constantly reassessing our operations in a bid to improve efficiency and reduce costs where we are able to do so without compromising quality or delivery. It is this concept that led us to consolidate and centralise advertising production.
We believe there is an opportunity to drive further cost efficiencies by using technology and partnerships. This should allow us to deliver better results for the readers and ongoing cost reduction.
Australian Regional Media
Our Regional Media business will invest significantly in journalism through the creation of editorial hubs across Australia.
In parallel with this investment, Regional Media will reduce fixed costs through rationalisation of its pre-press operations.
Increased investment in localised online editorial content over the past year has underpinned the growth in online traffic across the 160 Fairfax Regional Media local news websites.
A significant growth in online traffic over the past 12 months has been the key driver in the growth of advertising revenue on these sites.
The nature of local newsgathering – particularly user-generated content – provides unique local content that strengthens our already strong local franchises.
The move of advertising pre-press to regional hubs and the efficiencies this creates allows the fast tracking of the Regional online editorial media hub initiatives. Reducing the fixed cost of local production has further application in gaining editorial efficiencies that will allow us to continue to invest in content in the future.
Future technologies will enhance the capability to run video content for both editorial and advertising. Our increased investment in online editorial resource will ensure the Fairfax Regional Media news websites are ideally positioned to capitalise on new technology to grow online traffic and multimedia advertising revenue.
Printing and Distribution
As you know, we are exploring opportunities to rationalise our printing and distribution operations. While it is early days, I am encouraged by our progress so far.
This is a large and complex undertaking and it will take some time.
While those discussions progress, we must continue to adapt our printing operations to changing market conditions. At Chullora in Sydney, more simplified book structures mean we require fewer staff.
In New Zealand, we also see opportunities around printing operations in a number of markets.
We believe there will be an opportunity to reconstruct our business utilising the capacity and capability of the broader industry to deliver both cost and productivity gains.
In summary
We have a clear vision for Fairfax Media. We have the right strategy. We now need to get on with it and start shaping our future. We have a lot to do.
Our focus will be on strengthening existing products and launching new ones. We will soon release the native iPad apps for The Sydney Morning Herald and The Age. There will be more of this.
At the heart of today’s announcement is a commitment to get the balance right for a sustainable and successful future.
I know there will be strong views about these changes – both positive and negative. We believe they are the right decisions – the only decisions that make sense – and the only decisions that will allow us to lead the way in quality independent journalism. We believe quality independent journalism is the key to the success of Fairfax.
The chief executives and senior managers of the businesses involved in today’s announcements will be providing more detail in the days ahead.
Greg
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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What is ‘mobile’?
A printed newspaper is mobile, portable, it doesn’t break when I drop it, I can also clean windows with it and start a fire with it.
I can go ‘online’ on a tablet, on a phone, on a desktop, on a laptop. I can also go online when I am at the top of a mountain. i can read a newspaper at the top of a mountain.
There is print and there is digital.
Mobile, online…???!!!!! Old school still at the helm, evidently…
It will be interesting if Fairfax fly. News rooms eat up funds, plus so many people focus on niche and personal online publishers. I wonder what the old school publishers will look like in 10 years time – anyone got any visions?
i am not in anyway wishing Fairfax harm – good luck I would love to engage with a quality digital news company in Oz… ABC and SBS do it very well I must admit and are leavinfg fairfax and news in their trail currently.
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The days of the “dead tree” medium is over. And editorial control by media groups has already been superseded by the evolution from printing press to online Curation
The notion of Content may have started with our Neanderthal predecessors as they made animal paintings on cave walls.
Then Gutenberg invented the printing press. Content got more enabled, and was now mobile.
Then came broadcasting over radio waves with TV and radio. Content became multi sensory and provided to the masses.
Then came the Internet, and the ubiquitous linked devices that enabled, Comment. Content creation was now anyone’s game, and no longer the privilege of the editors and media Barons.
Then came the many web applications both big (Facebook, Twitter, WordPress) and small (Apps, Blogs) that enabled any individual who was connected and possessing a device to become their own publisher and broadcaster. The public liked this new freedom of speech and spew forth masses of Content.
With so much Content accessible, Search gave us a means of finding anything discoverable easily and freely. The owners of Search & Social got rich and powerful, by re inventing advertising.
Then Content began being aggregated, and passed back to consumers by the aggregators rather than the content creators, publishers and broadcasters. This was called Curation.
Before they knew it the media brand owners realized they were in a pickle and needed to try and wind back the calendar, erect pay walls, etc… As their dollars and influence was being diminished.
The rise of real-time information sources such as Twitter, You Tube, Blogs, has produced such an unstoppable wave of content that we now makes Curation and filtering almost essential. And while that used to be something that only traditional media sources did, now it’s something anyone can do, regardless of whether they went to journalism school or work at a name-brand media outlet like the New York Times.
This is part of the reason why many publishers have reacted so strongly to what The Huffington Post, Zite and other digital media outlets are doing; it represents competition for them as the gatekeepers of information and the trusted oracles of what is important. And that poses a threat not just to their role in the media ecosystem, but to their financial status as well.
My belief is that Curation is an unstoppable trend that is likely to become an even bigger part of the future of media.
Storify, Flipboard, Instapaper, Zite, Pulse, the list grows daily. Many eyes are now eyeing the prizes to be had in this area.
And if you have learnt to love swiping your finger over an iPad, innovations like http://pushpoppress.com
shows you what media consumption is going to look like very soon.
Publishers need to understand that everything they know is wrong (an old Wired mag headline).
Paul G Roberts
Author of the Trilogy including (plug) “NEXT An Armchair Guide to Your Future”
https://www.youtube.com/watch?v=WLY50LNU3Qo
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Fairfax, News Ltd and even The New York Times could have come up with something similar to Flipboard or Zite, but they didn’t. Instead, they’ve spent their money on Apps like “The Daily” or those that amount to flat and boring copies of their websites, hoping Steve Jobs might help them out of the hole they’ve dug themselves.
With Flipboard and Zite and similar tools, their creators have done something fresh and given a free alternate way to reach readers — and possibly monetise that relationship in some way other than just an old-fashioned paywall, if these Apps dont get shut down, and i cant see that happening. The aggregation, personalisation and customisation that such Apps allow is the future of Content consumption, and traditional media outlets better figure out how to ride that wave or be crushed by it.
This is an area i know a bit about, as my group has new several projects in this area about to launch.
Greg, Rupert etc…give me a call.
Paul G Roberts
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Excellent points you have made guys. Whilst you have to take your hat off to Steve Jobs, who’s Apple share price is as high as a kite. I do actually think it is high as a kite though… There has been an air of arrogance with the operating platforms of apple (no flash etc) Plus the usability compared to some new tablets out there doesn’t cut it. Android is ever popular and soon I can truly see the Nokia’s and Samsung’s gaining far more ground on Apple. I will have a punt that the Apple share price will fall quite heavily over the next 3 years.
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Hey Trigger,
Apple’s share price may seem high as a kite, but it actually should be flying much much higher. It is undervalued. And I can assure you it will keep growing at these and even higher rates. And I can explain why.
Apple’s share price has been trading at a P/E of 16.3. Excluding cash that ratio was at 13. On a conservative forward basis (my estimates) the stock is priced at less than 10 times next twelve months’ earnings. Many other in favour share prices are traded at up to 30 times earnings.
These figures show a remarkable pessimism that has persisted around Apple for years. It persisted when Apple was growing at 30% of, as now, 95% annually.
Why is Apple so undervalued when we know the ever more connected universe is just starting to become Apple devotees (note the growth path in China alone).
Android you quote is “ever popular”, and there is some fact in that. Some say Android has been the key factor in the Apple stock being undervalued.
Lately it’s become fashionable to credit Android with overtaking Apple’s IOS. But Apple has not “lost sales” to Android as it has been selling all it can produce.
Since Apple is trading at a fraction of it’s historic multiple, it’s multiple based on growth, and comparable companies’ multiples then we can assume that a “normal” valuation should be twice the current (i.e. a multiple of about 32).
But a multiple of 32 would imply a doubling of its Market Cap, so Apple should be valued at $600 Billion US.
And if the Android factor is indeed the factor that is stopping Apple being valued fairly the solution could be simple. Since Google (Android’s owner) itself is only worth about $169 billion. Apple could buy Google (it already has a third of its value in cash) and it shut down Android, and it would create $300 billion in extra value.
It could even throw away all of Google and still walk out with a profit.
Just an idea.
Paul G Roberts
Author of the Book (and part of his Trilogy)
NOW A Business Survival Guide (on sale everywhere)
https://www.youtube.com/watch?v=GhkqjyCNgoE
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Thanks Paul. I am not sure if that was all spontaneous clever knowledge, or just a plug for your book, or both 😉 Just kidding. You make a lot of sense.
We shall see I guess. Apple buying Google – now there is a thought.
Goople…
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Sorry, but this represents the end of quality journalism, not the beginning. You cannot put subs in one city and journos in another and still call it a newspaper. How will Fairfax source great editors from their pool of journos if all the production people are sitting at AAP?
More stories about celebrity plastic surgery and wires beat-ups is what we are in for.
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