MELBOURNE, Aug 23: Australian publisher Fairfax Media slashed the value of its newspaper titles by almost $3 billion on Thursday, as it posted a steep fall in profit and said it saw no early turnround in the worst advertising conditions in more than 30 years.
Shares in Fairfax fell 9 percent to approach their all-time low as the publisher of the Sydney Morning Herald,Australia’s oldest newspaper, as well as the Australian Financial Review and The Age, warned sales in the new year were running 10 percent below a year ago.
The group joined newspapers around the world in writing down the value of its mastheads to reflect a massive shift online by readers.
Fairfax is already shedding almost a fifth of its staff as classified ad revenues collapse in the face of online compeition for real estate, job and car advertisements.
‘I have been in this industry since the late 1970s and I have never seen an advertising environment of the type we are currently experiencing,’ Fairfax Chief Executive Greg Hywood told a conference call.
‘We are managing Fairfax Media with no expectation of an early recovery,’ he said. ‘Difficult trading conditions are likely to continue.’
The publisher said its outlook worsened considerably since January.
The number of people reading a newspaper once a week had dropped to 64 percent from 80 percent since 2007, Hywood said, while revenue at The Age, the Sydney Morning Herald and the classified ads business fell 17 percent in the year.
‘It’s no longer the traditional newspaper and media companies who have a monopoly,’ said University of Melbourne media analyst Andrea Carson.
‘Fairfax is doing what it can … But the long terms trends do not bode well for it,’ she said.
Fairfax wrote down the value of its newspaper titles and goodwill by A$2.8 billion ($2.9 billion), just weeks after local newspaper rival, Rupert Murdoch’s News Corp, took a $2.85 billion non-cash restructuring and impairment charge, related mainly to the value of its Australian newspapers.
OUTLOOK BLEAK
Shares in Fairfax, which have tumbled nearly 90 percent over the past five years, were last trading down 8 percent at A$0.52, nearing a record intraday low below A$0.50 hit earlier this month.
‘People had expected writedowns. It’s a little higher than anticipated though,’ said Angus Gluskie, portfolio manager direct, White Funds management.
‘The outlook comment … Doesn’t look strong,’ he said.
Fairfax publishes 400 metropolitan, regional and suburban newspapers and magazines, according to its web site, and also owns radio stations and the country’s top dating web site, RSVP.Com.Au.
Mining heiress Gina Rinehart, the Asia-Pacific region’s richest woman, has built up a stake of around 15 percent in the company and had sought two board seats in a row over editorial control that was played out in local media.
The group posted a 36 percent fall in underlying net profit to A$69.7 million in the six months to June 24, according to calculations by Reuters, in line with forecasts but down from A$108.4 million a year earlier. ($1 = 0.9576 Australian dollars)
(agencies)
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