Fairfax Media has its growing digital business to thank for helping prevent a nasty slump in interim profit on the eve of its merger with Rural Press, but underlying net profit (excluding one-off items) still fell 2.7% in the six months to December – here’s the announcement.

Without the Fairfax online business in Australia, with its growing revenues and earnings, and the recently acquired Trade Me website in NZ, the merger wouldn’t be happening. The online business is the only part of Fairfax growing and with any hope of continuing to grow.

Fairfax Digital lifted revenues 43.7% to $61.2 million (meaning annual revenues will exceed $110 million or more in the full year) and earnings before interest, tax, depreciation and amortization rose 41.7 per cent to $17 million.

But the Trade Me result was more impressive: $NZ23.3 million at the EBITDA level. That’s $A20.5 million and along with the Australian online business it’s now the growth centre for Fairfax.

Trade Me and Fairfax Digital could lift earnings past the $80 million mark in the full year.

Overall revenues rose 4.1% to $1.017.7 billion and group EBITDA (which is probably the most accurate measurement of the underlying profitability of a business) edged up 2.5% to $270.6 million.

Considering the contribution from Australian publishing was down 2.1% at the EBITDA level to $156.5 million, and the NZ result, was down a surprising 8.6% to $NZ90.3 million ($A79.4) at the EBITDA level, Fairfax shareholders can be thankful of the “rivers of gold” emerging from its online business.

There were no results for Fairfax Business Media (based on The AFR) or magazines or its regional and community papers (which are all included in the Australian publishing figures).

This will be run by Rural Press CEO and cost cutter, Brian McCarthy. Fairfax Business Media won’t be reporting to him, so hopefully its results will be broken out after the merger.

McCarthy will have charge of the “legacy” business, the digital and FBM businesses will report to David Kirk, the Fairfax CEO.

Watch for that to cause management tensions. No ambitious CEO in waiting like Brian McCarthy wants responsibility for a declining business – they all want a growth story to make themselves look good.

Peter Fray

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