Are the two most important custodians of editorial quality in Australia, The Sydney Morning Herald and The Age, financially robust enough to continue to fund the “public trust” journalism that is so pivotal to the democratic process?

The signs are disturbing. Last week, Fairfax CEO David Kirk revealed that The SMH and The Age contribute barely 20% of his company’s profits; the bulk now comes from country and suburban newspapers, agricultural publishing, internet trader ads, online dating and small contributions from The Financial Review, radio, internet news sites and printing.

This sounds like good news for Fairfax shareholders, whose exposure to systemically declining newspaper classified advertising revenues has been dramatically recalibrated in recent years. Fairfax is no longer a quality journalism company, it is a local newspaper/printing/online dating/internet trading ads company (although it still makes an estimated 84% of profits from print newspaper products).

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But how will this corporate transformation affect the inherent subsidy from classified advertising profits that funds quality journalism? Are we just watching, as Kirk says, the broadsheets becoming a smaller part of a larger whole, or are we also watching two iconic Australian mastheads in sectoral decline?

According to the media analyst who has followed Fairfax as closely as any other in Australia — CCZ’s idiosyncratic Roger Colman — The SMH‘s annual profit has collapsed from $93 million to $61 million over the past three years, and The Age‘s profit has fallen from $69 million to $52 million in the same period. What’s worse, according to Colman, the Monday-to-Friday editions of the SMH and Age are increasingly moving into loss, with the classified-ad-funded Saturday editions contributing almost all the (declining) profits.

If they are accurate — and Fairfax never publicly reveals individual masthead profit figures — these are alarming figures for the future of Australian journalism.

And they raise the most poignant question of all: is the Fairfax board prepared to subsidise quality journalism from its other profitable activities as the classifieds migrate from newspapers — as the Washington Post, New York Times and London Guardian do — or will they attack editorial costs to prop up the evaporating SMH and Age profits?

The answer to that question is more relevant to the Future of Australian Journalism than a hundred thoughtful conferences or seminars.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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