Fairfax staff were greeted this morning with an email in their inbox from CEO David Kirk and Deputy CEO Brian McCarthy.

The email (read the full email on Crikey) advised that Fairfax were embarking on a “major restructure”, effectively immediately — specifically, that Fairfax were slashing 5%, or 550 heads, from their full time staff:

We are announcing today a major restructure of corporate and group services and significant initiatives to improve the overall productivity and performance of many of our businesses.

Media markets continue to change rapidly but, notwithstanding our positive performance in adapting to these changes in our industry, to continue to succeed we need to continue to change.

These initiatives are a logical next step in the way we manage our business in response to the structural changes going on around us. This is a far-reaching program, designed to comprehensively restructure and reposition the business for years to come. We wanted to make a major change today across the company in order to accelerate our building of a strong and dynamic integrated media business. 

According to the Fairfax email to staff, the number of redundancies across Australia and New Zealand will be approximately 550, across “many areas of the business”.

Fairfax advised that “approximately 30% of the redundancies affect editorial staff in Australia and New Zealand (and for New Zealand this includes staff already affected by the previously announced editorial project in subediting).”

Another 180 employees will be reassigned in “restructuring” such as the introduction of “changes and efficiencies” in Sydney, including “most areas of the business, including editorial, publishing services, marketing and newspaper sales, the contact centres, and the editorial library.”

This includes a significant overhaul of the working process in Sydney:

In addition, there will be a restructure for The Sydney Morning Herald and The Sun-Herald, bringing both papers under a 7-day roster to remove duplication. Editorial production processes are to be streamlined, with the production of some sections and special reports outsourced. However, the content creation and selection will remain under the control of their editors. The changes are to be implemented over the next three months by the senior editorial team, led by the Chief Executive and Publisher.

For The Age in Melbourne, the strategy going forward will include “reviews of operating, production and support processes in all areas, including editorial, to ensure optimal employment of staff and technology, and including outsourcing of elements that will not impact our quality position. As a result of this program, a number of positions will likely be declared redundant.”

To the rest of the world, Fairfax announced that it was implementing a “business improvement program”. According to the ASX statement (read the full statement on Crikey):

A wide range of initiatives will result in a head count reduction of approximately 550 employees in Australia and New Zealand, or approximately 5% of the company’s full time workforce.

The program will deliver around $50 million in annualised cost savings. Approximately $25 million of the savings will flow into the 2009 financial result.

The Company will book a one-off charge of approximately $50 million for redundancy and associated costs.

“Media companies fit for the modern media world need to be lean and agile. This far-reaching program will position us well for the next stage of our growth and development,” said CEO Fairfax David Kirk.

And in an email to all Fairfax Victorian staff, Don Churchill, Chief Executive & Publisher of Vic Metropolitan & Community Publishing explained:

As media has changed, the job of putting out our newspaper has changed — and it will inexorably continue to change. What would produce a solid financial return yesterday will not do so tomorrow. In the release of our annual results, you would have noticed that the metropolitan mastheads’ financial position has declined.

In order to “ensure the continuing productivity and growth of The Age in both a financial sense and as a business model to truly support us becoming an integrated media company, we are now moving from a transition of our business into a transformation of our business,” said Churchill.

He outlined the “key elements” of The Age‘s “transformation of the business”: 

1. Continue with The Age’s strategy of high quality, independent news and information.
2. Secure a sustainable financial position for our print business, restructuring the cost base to meet the new media business model.
3. Speed up media integration.

Churchill also explained that management would “aggressively look at all areas of discretionary spending” including “a deferral of wage reviews for senior management, a reduction in our overall marketing spend, a refinement of our interstate newspaper sales program, a reduction in fringe benefits such as taxi use, parking and canteen subsidies.”

As for redundancies, staffing levels will be reduced “via redundancy programs following reviews of operating and support processes in all departments, on the corporate and business side as well as editorial”:

We will address productivity and efficiencies through greater sharing of resources within Fairfax Media. We will streamline our publishing and production practices and will outsource elements of our operations that will not impact our quality position. Specific details will be advised by your department manager. We will be meeting with the unions to discuss the program.

Finally, there will be a corporate or head office restructure of departments including: IT, Finance, HR, and Legal. The restructure will mean a reduction of roles in these areas as well as the management of many of these functions being returned to The Age.

“This is a difficult yet necessary step for The Age. It is a significant undertaking. It’s a transformation of our business. It won’t be easy,” acknowledged Churchill. “It’s in all our interests that we do this professionally over a short period of time. We will get through this, and we will focus on supporting the people affected by this announcement and we will also focus on keeping The Age strong through and beyond this transformation.”

Mike Dobby of the MEAA told Crikey, “We find the decision extremely disappointing and symbolic of Fairfax’s low cost discounted approach to journalism. Based on the company email it would seem 120 positions are under threat at The SMH and The Age, which is 8-10% of journalists on those papers.”

“Clearly as they are already under resourced the quality will be further discounted. It’s bad news for journalists and the company and especially bad news for the communities served by those papers,” said Dobby.

“It’s at odds with other news publications to invest in low cost discounted approach to journalism  — which is the wrong approach to take at this time. Ultimately it means that readers and other Fairfax publications are the losers.

Media Entertainment and Arts Alliance (MEAA) federal secretary Chris Warren said this morning that the union would meet Fairfax management at lunchtime on Tuesday and organise a meeting with staff later on Tuesday or Wednesday to decide what to do. The standard redundancy payout formula for editorial staff was four weeks pay for every year of service, Mr Warren said.

As for the ACT, this reassuring memo from General Manager Ken Nichols went out to all staff at The Canberra Times this morning:

Good Morning,

By now you would have read the note from David Kirk and Brian McCarthy. I would like to assure you that there are no redundancies planned within the ACT business unit. For us it is business as usual.

Regards,

Ken Nichols

Listen to Chris Warren of the MEAA speak to Ali Moore on 774 this morning about the cuts here

Peter Fray

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