'Remarkable transformation': Fairfax CEO confident in merged future
Fairfax Media chief executive Greg Hywood has called the company's metropolitan newspapers a "remarkable transformation success story" as he reported the publisher's potentially last full-year result as a stand-alone business.
The media group, which late last month agreed to be taken over by Nine Entertainment Co., on Wednesday posted a net loss of $63.8 million for the year to June 30, down from an $83.9 million profit in 2017. Excluding $188.7 million in one-time charges, largely related to impairment charges at its regional newspapers and New Zealand news site Stuff, it made a profit of $124.9 million, down 12 per cent from the prior year.
Mr Hywood said the publisher had taken "the big decisions" to defend its business amid the onslaught of online competition over the past six years, allowing it to be positioned for the merger with the free-to-air television network by the end of 2018. This will form a $4.2 billion media company, subject to a shareholder vote and approval from the competition regulator.
The lower net profit included the increase in minority interests as a result of the company's separation of its real estate platform Domain in November. Fairfax still owns 59.4 per cent of the now separately ASX-listed company.
The company will pay a 50 per cent franked dividend of 1.8¢ per share on 6 September. Its share price fell 2.8 per cent to 86¢ by 11:02am on Wednesday.
'Early signs' of stabilisation
Mr Hywood said Fairfax (owner of The Sydney Morning Herald and The Age) had "long believed that media consolidation provided enormous potential to leverage increased scale of audiences and marketing inventory to grow our assets", and consistently supported media deregulation due to the long-term benefits for shareholders.
Paid digital subscriptions across metropolitan Fairfax titles reached 313,000, while advertising revenue increased, helped by a partnership with Google to undertake ad sales programmatically. Print revenue declined, but Mr Hywood said there were "early signs" of stabilisation.
Australian metro media's earnings (before interest, tax, depreciation and amortisation) increased 8 per cent, despite a 6 per cent fall in total revenue. This was underpinned by a 9 per cent increase in digital subscription revenue.
Subscription video-on-demand platform Stan, a joint venture between Nine and Fairfax, reached 1.1 million subscribers.
'Legacy cost issues'
“Over the past seven years, we have taken the big decisions," said Mr Hywood. "We have built businesses such as Domain and Stan. We have maximised the growth drivers of our core assets. We have addressed legacy cost issues to give our business time to adjust to the structural change it
confronted."
Fairfax recently entered an agreement with its rival News Corp to use each others' printing networks in Queensland and NSW in a bid to reduce costs for both publishers. Fairfax reduced metro expenses 7.5 per cent over the year, with 9 per cent of publishing costs cut from staff, technology and printing.
In the first six weeks of fiscal 2019, Domain, Metro Media publishing and Macquarie Media saw year-on-year revenue growth.
The company will pay a 50 per cent franked dividend of 1.8¢ per share on 6 September. The share price fell 3.93 per cent by 10.15am on Wednesday.