Fairfax Media joins News Corp with real estate as bigger profit source than news
Both of Australia’s major publishers now make more of their profits from real estate than they do from their news businesses, new numbers today confirmed.
Today’s numbers to the ASX from Fairfax Media split out real estate brand Domain’s performance from its metro division for the first time.
They show that overall the company made an underlying profit of $132.5m, down 7.6% per cent on the previous year.
Those figures show Domain earnings before interest and tax (EBIT) represented more than half of the profits for the whole company, with the online classified website recording EBIT of $107.3m up from $80.9m last year. The whole company’s EBIT number was $213.2m.
That figure dwarfed other divisions. Fairfax’s metro division – which publishes masteahds including the SMH and The Age, posted $13.8m in earnings, down from $30.5m last year. Community Media recorded $74.3m profits, down from $77.4m. New Zealand Media was $43.3m, down from $54.2m and Radio was up to $22.3m from $11m.
Fairfax posted a net loss after tax of $893.5m, following a $1.026m write down announced last week where it also revealed that for the first time it would be splitting out Domain’s numbers in today’s announcement.
Earlier this week, rival News Corp revealed that its $344m profits from its digital real estate operation around the world now outstripped its $214m profits from news and information services. However, News Corp’s $5.3bn overall global revenues from news operations still outstrip the $822m real estate turnover.
Revenues within Fairfax across the group were down 2% to $1.8bn with an overall earnings before interest, tax, depreciation and amortisation (EBITDA) of $283.3m down 1.4%.
Greg Hywood, CEO of Fairfax Media, said in a ststaement: “Today’s result is proof that the transformation of Fairfax Media over recent years has succeeded. The stable top-line revenue and EBITDA make it clear that we have reshaped this company into a high-value, broadly based, digital rich business.
“Digital and non-print earnings now constitute more than 40% of Fairfax’s EBITDA. On current trends, next year this will be closer to 60%, reflecting the continued growth in digital and non-print earnings.”
“We are delivering a higher quality of earnings from our more valuable segments – including Domain, digital publishing and events. This single fact underlines the extent of the transformation of the business in recent years.”
Hywood also continued to telegraph that the end of printing weekday newspapers is imminent, stating: “For our Australian Metro Media titles The Sydney Morning Herald and The Age it should surprise no one, and certainly not us, that the seven-day-a-week model will eventually give way to weekend only, or more targeted printing in the case of The Australian Financial Review.
“This trend is already occurring globally. Exactly when we move towards implementing this new model depends on the view we form about trends in consumer and advertiser behaviour.”
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Hi Arbie,
Thanks for that – we’ve fixed.
Cheers,
Miranda – Mumbrella
Hywood invites two questions. How come Domain masthead revenue can exist in isolation from the masthead operations? How are costs allocated between Domain and Publishing?
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3 years later and still no update on Hywoods big strategy;
“we are looking to substantially develop our business – events, content marketing, SME digital and marketing services and data.”
Fairfax AGM 2013.
https://mumbrella.com.au/fairfax-boss-greg-hywood-going-get-content-marketing-business-188456
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So when a property downturn hits they are in real trouble by putting their reliance upon a second in market website that is utterly dependent upon vendor paid advertising and volume of listings – which they state themselves are down year on year….plus will the spend another $175 million to massage the revenue figures by buying turnover and profit (Allhomes, PDS data and of course the elephant in the room, MMP)?
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Content Marketing? Right, so teference quality journalism ad nauseous, then get rid of journalists, pay said journalists at freelancers at twice the rate for “content marketing projects” run out of the advertising department, bundle in as much display ads as possible, buy all the bulk of your traffic from outside your network. Pitch for deals that will break even at best but can be spun as a “big win” and hey presto – Content Marketing ‘MADE’ by Fairfax.
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Very odd that Fairfax keeps declaring victory in strategy while reporting results that say the opposite. Also extremely strange to report segments of business that do not line up with the accounting. Domain clearly not an asset in the real sense but possibly a large blob of lipstick on a seriously sick piglet.
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After snoring through Mr Smith’s hopelessly unoriginal content marketing presentation at ADMA’s Global Forum this afternoon my guess is your cynicism is well placed – and your description probably pretty close to reality. It bordered on utterly embarrassing. Needless to say, there’s little hope of “content” making a dent in those numbers.
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Content had potential – 3 years ago. The usual goings-on at Fairfax – internal politics and horribly inept leadership – has ensured that boat has sailed.
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What’s in the “other” category? It’s making a huge loss.
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