Over recent months, we have continued to review the performance of our
metropolitan newspapers. As you know, we have attempted to keep a tight
rein on all our costs. We need to make sure our costs align with our
revenue performance. This allows us to make the kind of
investments we need in priority areas, to produce quality journalism
for our readers.

After careful consideration, we have decided to propose a redundancy
program to reduce costs at The Age. There is a similar proposal for The
Sydney Morning Herald
and The Sun-Herald as part of a broader program
of cost reduction across Fairfax. A consultation process will
begin this week with staff and the MEAA.

In Melbourne, the proposal is to reduce salary costs through a staff
reduction of between 20-30 positions across The Age. It would be
open to all eligible editorial staff.

Editorial is not the only area of the Company affected by this
process. Virtually all other areas of the business are affected,
with reductions in staff along with other cost controls. We are
continuing to look at all costs outside staffing to ensure we are
managing our business appropriately.

Reasons for the proposal

The reasons behind this proposal include the following:

Since January 2005, the revenue performance for the Company’s metropolitan newspapers has been lacklustre.

Our metropolitan newspapers are facing significant structural pressures
and we expect revenue growth may be modest at best for the near future.

The Company needs greater alignment between revenues and the cost base
of the metropolitan newspapers. Over the past year, the Company
has reduced its discretionary costs and tightened its pagination and
book sizes. However, costs and book size cannot contract
indefinitely if we want to protect the quality and readership of the

Lack of staff turnover has meant the Company can not fully address
its costs challenge without the need for redundancies. The challenges
we face are not unique to Fairfax. Major
international newspapers like The New York Times, the Philadelphia
and the Boston Globe have had to significantly reduce
editorial staff in recent weeks.

Even if the redundancy program is implemented, we will continue to
carefully manage page volumes in line with advertising conditions. This
will help reduce the impact of any staff reductions on the
papers. We will also be looking at efficiencies through better
copy flow.

In addition, the Seachange program, introduced three years ago in
Sydney to give staff more flexible work arrangements, may also be
available to eligible staff at The Age. This program would allow
our best writers, photographers and artists to develop their work in
other areas such as books or other non-media activities while
continuing to contribute to the paper.

If the proposal were to go ahead, our total editorial staff at the
mastheads we expect would be reduced by a maximum of 7.5%. By managing
our costs now we are aiming to give ourselves the
opportunity to reinvest in the papers and importantly, be able to
recruit new staff in the future.

In accordance with the Certified Agreement, expressions of interest
redundancy will be sought and the Company has the right to determine
who is suitable for redundancy. If insufficient suitable expressions of
interest are received, compulsory redundancies may need to occur. More
details about the proposed redundancy program are available in the
attached memo. Representatives of the Company will be available to
discuss the proposal and answer questions about the process.

A number of senior members of the editorial leadership team will be
happy to talk with staff individually as this process gets underway.


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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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