What are the possible futures for Fairfax Media, following the latest lurch in what the company points out is the biggest restructure in its history?

It’s hard to find much room for optimism in yesterday’s results. The metro newspapers have been written down, the outlook for the coming year is grim.

Meanwhile, the broadcasting assets of Fairfax have been mismanaged — put on the market then clumsily taken off the market again and told they are “family” after all, which, as the company admits, has damaged their performance. Even the resilient regional newspapers are doing slightly worse than holding steady.

The Australian Financial Review, potentially a tidy little business, is underperforming at a time when News Ltd is gearing up on business coverage. The company talks about “new management” poised to make a difference.

By that they mean CEO Brett Clegg, the man who defected from News Limited after less than a year to take up the Financial Review Group job. And Clegg’s trajectory should highlight the fact that the pain at Fairfax is merely the most visible trouble in newspaperland. Clegg spent a very short time as deputy chief executive of The Australian, before jumping ship, and one can surmise that he  liked the look of the figures in that job even less than he liked the Fairfax balance sheet.

So this is not just a story about Fairfax. It is about newspapers in Australia.

With Gina Rinehart selling her stake in Fairfax, further depressing the share price,  it becomes increasingly likely that either the board will begin to sell off assets, or a predator will move in and break up the company. A break-up is something that two major shareholders are already considering, according to a report earlier this year in The AFR.

Hard-nosed institutional investors can’t see why profitable divisions should cross subsidise unprofitable ones — why Trade Me, RSVP and other healthy parts of Fairfax should be weighted down by the  mastheads.

So, would a break-up be good or bad for the most important thing about Fairfax — its journalism? Optimistically, perhaps Pollyanna-like, we might observe that this would mean the mastheads fell into the hands of people who cared about the content, for whatever mix of motives, rather than the profit. That could be good, or bad.

In Melbourne, there are already two groups of potential investors who might be interested in buying The Age if it came on the market at a knockdown price. I believe there is one similarly minded group in Sydney, ready to run the calculator over The Sydney Morning Herald. And that’s not counting Rinehart, who may be playing a cat and mouse game with the board, rather than picking up her bat and ball and going home.

There is speculation that what Rinehart really wants is The Fin, with the profile, influence and credibility that would give her, and that she might be prepared to exit with this as her prize.

If the metropolitan mastheads did end up in other hands, separated from the rest of Fairfax, what might they look like? First, we can assume that the decisions to close the printing plants would stand. So, too, the redundancies. And there might be more.

The swish city offices would probably go as well. Cheap warehouse space in the inner suburbs might be the new base for a company that would see its future as primarily digital. There would have to be a question over whether the mastheads would continue to appear in print form, at least on weekdays — particularly since the Rural Press printing plants in regional centres would presumably stay with Fairfax Media.

Some guide to what standalone metro mastheads might look like can be gained from this speculative research by the CUNY Graduate School of Journalism in the US. Using real advertising spend data and readership figures, the researchers imagined that the city of Boston lost all its newspapers. With a population of 5 million, Boston is broadly comparable to Sydney or Melbourne. They also assumed that there would continue to be a market for quality journalism, and that the market would find a way to meet that demand.

But the news model they posited was that no single company or product would replace metropolitan daily newspapers. Instead, an “eco-system” of many different models, driven by many different proprietorial motives, would emerge.

There would be hyperlocal blogs, some operating at a professional level. There would be philanthropically supported news media websites, and there would be a metropolitan wide for-profit new news organisation, employing a few dozen journalists and fulfilling the traditional watchdog role of journalism, while also using material from the network of local bloggers and citizen journalists.

On this model, advertising remains the main source of revenue, but new revenue opportunities are opened up around business-to-business revenue services such as building websites, producing themed issues carrying advertorial and organising public events. The new news organisaton will also accept donations for watchdog journalism.

The spreadsheets and assumptions used by the researchers are available online allowing people to feed in their own assumptions and model different scenarios. The researchers comment:

“Although these genericised models are backed up by extensive, well-documented research, they are but one possible view of the future. They represent a stake in the ground. Clearly, our models cannot address the specifics of every individual local market. That’s why we invite you to download our spreadsheets and plug in your own assumptions.”

There is no future for today’s Australian newspaper companies that is not smaller and less profitable. The CUNY researchers have been accused of being far too optimistic and of course their picture of the future is highly speculative.

Nevertheless, if we assume that someone was going to either start a news service in the post-newspaper world, or try to find a way forward for a standalone city masthead, capitalising on the value left in the brand, this is a starting point to thinking through how it might look.

In yesterday’s tale of gloom, the assurance that there will be a future lies in page 11 of this investor briefing. As the business goes down, readership of the Fairfax titles (online and print versions combined) has increased by 30% since 2007. Admittedly they’ve been presented in their most favourable light. Internet readership is measured as people who have “visited any Fairfax site in the past four weeks” — hardly an encouraging figure for advertisers or journalists for that matter.

Nevertheless, there is no evidence of a declined appetite for news. On that fact, the future will be built.