Age managing director Don Churchill seems to have been close enough to on the money when he briefed senior staff a month ago on the company’s declining classified advertising revenues.

That projection is born out — and for all Fairfax classified mastheads — in the latest private monthly analysis prepared by Goldman Sachs JBWere, a survey complied through the unusually rigorous process of actually measuring the volume of Fairfax classie columns.

The latest analysis shows that all Fairfax page volumes (a quantity normally determined by, and indicative of, advertising volumes) have declined over the past two months.

Our page count of Fairfax’s metro mastheads suggests FY09 has started in a slightly worse position than it ended in FY08. While the total average page count remained relatively resilient (July and August flat on pcp), it was increased editorial (Beijing Olympics, World Youth Day, August Reporting Season) and display advertising that masked the average c.16% decline in classified pages over the July-August period.

The fall in classified volume has been dramatic.

In classifieds, the average weekly count across all mastheads showed a drop of 13% (on pcp) in July, followed by a 19% decline in August. The average number of employment classified pages weakened further (SMH July -25%/ August -28%; The Age -11%/-19%; AFR -40%/- 32%), and despite holding relatively steady over recent months, real estate page volumes have also capitulated (SMH -7%/-11%; The Age -4%/-3%; AFR +30%/-10%). Automotive classifieds at both metros were down c.30% on average, though off a very low base.

The analyst’s report concludes that nothing in this latest data alters the basic position that Fairfax stock is something investors might be better off without:

In our view, notwithstanding its more diversified and defensive asset base, Fairfax remains clearly exposed to the economic headwinds facing all consumer-exposed companies in Australia and NZ … We maintain our Conviction SELL recommendation.

Fairfax was trading at $2.83 this morning up seven cents on yesterday’s close.

Peter Fray

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