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May 12, 2009

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Here’s a story you won’t read in The Age or The Sydney Morning Herald tomorrow:

This newspaper is publishing 50 fewer classified advertising pages each week than it was a year ago, according to the latest research by Goldman Sachs JB Were. This reduction in advertising translates into at least $1 million off this newspaper’s profits every week compared to a year ago.

That is the picture that emerges from the latest Goldman Sachs JB Were page-count statistics of Fairfax’s major newspapers, released today. They present difficult reading for anyone who cares about the future of newspapers, and raise further doubts about the competence of the Fairfax management and board as trustworthy custodians of Australia’s two greatest newspaper mastheads.

According to Fairfax CEO Brian McCarthy, speaking three months ago, the problems afflicting newspapers are purely cyclical.

“I have been around long enough to know this is only a short-term thing,” he said.

“The law of economics will take place … It’s just a matter of working through the cycle.”

He also argued that Australian newspapers are not affected by the same structural problems afflicting US and UK newspapers because Australian newspapers are better managed.

Today’s page-count numbers — continuing a trend that has been unfolding throughout this year — show that average classified advertising pages in The Age, SMH and Financial Review were down 55% year-on-year in April, following declines of 47% in March, 41% in February and 40% in January. At the SMH, employment ads fell 60%, real estate 50% and autos 80%. At The Age, employment and auto ad pages declined by around 65% in April, while the decline in real estate pages fell 65% compared to last year. At the AFR, display classified property ads fell 62% and employment fell 49% on a year ago.

Another alarming trend to emerge from today’s Goldman Sachs research is a large reduction in the total pages being published by the three Fairfax flagship newspapers. Each paper is running around 100 fewer pages each week than it did a year ago — supporting the anecdotal evidence that as well as lopping off pages they no longer fill with ads, The SMH, Age and AFR are cutting hard into editorial pages to save costs (and deprive readers).

Every stakeholder in Fairfax — readers, staff, shareholders and Australians who value their newspaper institutions — should be praying that the company’s CEO is correct in his thoughtfully historic analysis that the collapse in profits at his flagships “is only a short-term thing”. And that he is also right about his contention that great management will save Australian newspapers from the maelstrom that is decimating the American press.

They should also be praying that Rupert Murdoch was wrong in his prognosis of newspapers last week:

There is no doubt the traditional newspaper business model has to change, even though the present situation I think has been greatly exaggerated by the current recession … classified revenues are undoubtedly migrating to the web, probably not to return.

If Murdoch is right about classifieds never returning to newspapers, the $100 million+ that has evaporated from the annualised profits of The Age and SMH will also never return — and that would raise a troubling question about the viability of the two newspapers that used to be the best in Australia.

Eric Beecher is Publisher of Crikey.

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3 comments

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3 thoughts on “Fairfax classifieds nearly halved year-on-year

  1. John Kilner

    Eric Beecher should compare the decline in newspaper advertising to past recessions rather than a year ago. What’s the point of comparing today’s rate to one year ago? How does the decline compare to past declines during times of recessions? And the answer?

    Well I have insider trading. I just rang my friend who spent over twenty years working at The Age counting pages of advertising from across the media. Her view on Eric’s figures? Oh, not too different a decline than other recessions she counted. “The advertising declines fast and comes back fast fast. Watch the rate of growth when the recession is receding; that will be the real telling point.”

    To those who see the death of newspapers [and boy, I wish those who argue their faults have a look at newspapers from the past in the newspaper reading rooms of state libraries to see how adaptive and resilient they have been] should measure overall newsprint consumption, Australia wide and globally. Why? Because it is growing dramatically. The issue is not just about quality [I have just come home on a train full of people reading a free, low quality one] but about how they have been marketed and how they will be marketed in the future. Their engagement with an audience. The Age is read by 15 grand final crowds for over 40 minutes each Saturday. Some decline…

  2. Cavitation

    The newspapers just don’t get the internet. Their internet site is now, or shortly will be, their primary product, while the printed paper is just a secondary version. Yet, there does not seem to be much evidence that the people in charge recognize this.

    I used to buy the SMH on Saturday, but seldom do so now. I don’t like buying a newspaper, and coming home, and shoving half of it straight into the bin unread. Sometimes I like seeing the advertisements when there are sales on, but these only appear in the print version, and I cant understand why these don’t appear on the web site, since you should be able to change more to the advertiser to get access to people like me. Even when I buy the paper version, I discover that many of the stories I have already seen; they are reprinted from the New York Times, or the British newspapers, that I have read on the internet earlier…

    They are trying to ignore the Internet, wishing it will go away. It wont tho…

  3. James O'Neill

    It is probably correct that the downturn in newspaper advertising is cyclical and when the economy recovers at least some if not all of that advertising will return. But there is a more serious problem facing the SMH, Age and other newspapers. Readership has been bleeding away for some time now and that is highly unlikely to return unless newspapers recognise the reasons why their readership is deserting them and address that problem by transforming their news and editorial pages.
    Readers who have access to the internet now realise just how selective the Australian media’s coverage is of a huge range of topics. I think it was Orwell who said that the greatest lie is not what we are told but what we are not told. That was never more true than in today’s SMH, Age, Australian etc.
    Newspapers also appear to assume that their readers have no capacity to remember anything beyond yesterday’s headlines. Thus they rewrite history at will, for example, the reasons for invading Iraq and the reasons now advanced for maintaining a “presence” there. Ditto Afghanistan. The opinion pages are full of conservative commentators and even allegedly “liberal” writers are well to the right by the standards of European newspapers.
    A further factor is the stranglehold on the media by three companies and three families in particular.
    It is impossible to even begin to feel sorry for the plight of these newspapers when they are so singularly unable to recognise their deficiencies and take serious steps to correct them.

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