Fairfax profits improve but revenues drop

Fairfax Media has signalled a return to profit with an improved set of figures across the board, although overall revenues have dropped.  

The media company – whose mastheads include the Sydney Morning Herald and The Age – announced this morning that it’s EBITDA profits (earnings before interest, taxation, depreciation and amortisation) had risen by 7% to $639m compared to the same time last year.

Overall revenue was down 2% to $2.48bn.

The most impressive number was the change in the company’s net profit after tax, which recovered for a loss of $380.1m last year (which came in part from writedowns of the value of its assetts)  to +$282.1m. However, that figure is still well behind the company’s $386.9m profit the year before that.

Fairfax chairman Roger Corbett, said: “The management team has made positive progress from our range of media assets on three fronts – building revenue, making the business more cost effective and reducing debt.”

The company’s biggest jump in revenue came in its online opertation, which was up 19% year on year.

The company was relatively vague in setting out its future strategy, although it did refer to a forthcoming new organisational structure, a further investment in video content and hinted at further cost cutting. It said:

For the next few years, we have identified three key priorities:

  1. Adapting Fairfax Media to being a true multi-platform company
  2. Evolving our news products and transforming our metro business model
  3. Expanding our positions in growth segments

In terms of the first priority, there are a number of initiatives we will pursue. These include a new organisational structure; greater sharing of editorial content and collaborating across print, online and mobile; more integrated selling; and monetising our content online and on emerging platforms.

In terms of our second key priority, our metro news businesses, taken as a whole, reach more readers than ever before. Nevertheless, we must continually evolve all of our metro news assets so they remain relevant and profitable. This will be achieved by undertaking a series of business efficiency initiatives focused on protecting revenues and reducing costs over time. We will continue to focus on editorial excellence, subscriptions and effective promotions to maintain paid circulation. Over time, the iPhone, iPad and other ereader platforms will enable us to distribute our content to new audiences, or migrate existing audiences from the papers.

In terms of the third priority, to keep pace with the changing media environment, we must continue to establish positions in new growth segments. This comprises investing in both internal and external opportunities.

We will continue to capitalise on the quality and size of our online news audiences to create new revenue streams. In particular, we will continue to invest in online transactional businesses and short-form video to benefit from the rapid growth in that segment.

An accompanying investors presentation offers little more about the future restructuring although it adds: “We have the strategy to take us forward. We will outline in more detail at an Investor Day later this year.”


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