Fairfax splits Domain Group financials from publishing division and announces $1bn in write downs

Fairfax Media has moved to split its Domain Group away from its Australia Metro Media division ahead of the company’s financial results announcement next Wednesday.

The move fuels speculation that Fairfax will split the property classified site away altogether and float it as a separate entity in a bid to maximise its revenues and share price.


The publisher of The Sydney Morning Herald and The Age has also said it will make nearly $1bn of write-downs for the value of its metro, regional and New Zealand publishing divisions, citing the split out of Domain and challenging market conditions for the move.

Domain Group’s operating results will be shown as a separate reporting segment having previously been included in the Australian Metro Media segment, meaning investors will have a clear insight into the performance of the publisher’s newspaper assets and the property business.

The remaining Australian Metro Media segment comprises metropolitan and national newspapers and websites, digital ventures and events.

Fairfax’s half yearly financial results published in February saw the digital real estate division Domain drive growth for the company with posting revenue growth of 38%, while total revenue growth for the Australia Metro Media segment was up 62.8%.

Fairfax Media CEO Greg Hywood said in a statement: “Domain has established itself as a genuine force and aggressive competitor in real estate media and services. Domain makes a significant earnings contribution and remains an integral and growing part of Fairfax. We have no plans for that to change.


Hywood: The Australian Metro media adjustments reflect the market realities

“We continue to invest in Domain to make it stronger and extend its business model beyond listings to capture the immense opportunity in the broader real estate ecosystem.

“The new segment presentation for Metro provides a clearer picture of the operational performance of the business as it transitions to a new sustainable publishing model over time.”

The write-down of $989m pre-tax comprises of $484.9m in Australian Metro Media, $408.8m in Australian Community Media and $95.3m in New Zealand.

Hywood said: “The Australian Metro Media adjustments reflect the market realities that the Metro business is facing and the change to segment reporting. The considerable work done to transform the publishing business has created flexibility and optionality around the future, and we are confident in our plans to transition to our new sustainable publishing model.

“With regard to Australia Community Media, we have successfully delivered on our transformation program through FY16. The adjustments we are announcing today are appropriate as we recognise the challenges continued to face in rural and regional markets. We continue to develop initiatives and consider opportunities for this campaign.

“Our New Zealand publishing business faces similar issues to those in Australia. This impairment has been calculated on a standalone basis and does not take into account any potential benefit from the proposed merger with NZME. The impairment has no bearing on the proposed transaction or its structure.”

The company is currently in the process of attempting to merge its NZ assets with those of NZME to form a mega media company there.

The impairments do not affect Fairfax’s ability to pay future dividends.


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