Fairfax Media reports its full 2015-16 results next week on August 10 when we should get some answers as to why the need for the near $1 billion in impairments announced yesterday. That write-down took the amount Fairfax has announced in “one-offs” to more than A$4.4 billion since 2012. Much of yesterday’s cuts were aimed at lowering the value of the print assets to allow a balance sheet value on the value of the Domain online property business to be established in the company’s balance sheet.

Fairfax will report a day after News Corp reveals its 2015-16 fourth-quarter and full-year results. Both won’t be pretty — Fairfax will be a big loss for yesterday’s impairments, News will reveal the “profitless prosperity” its newspapers are generating for the company as they confront big slides in revenue and earnings in Australia, the US and UK.

The size of the advertising and circulation falls in its Australian and UK papers in the past year, and the prospect of no improvement (especially in the UK where the Brexit vote is in danger of dragging the economy into recession), raises the question of whether News Corp’s board will announce its own impairment charges, or warn that such write-downs could be coming if revenues and earnings do not improve. News last cut the value of its Australian papers by A$1.8 billion (US$1.4 billion) in 2013, with another US$276 million in restructuring costs.

While Fairfax Media is heading for some structural separation of its media assets into those with no growth prospects — its metro and regional newspapers — and those with some growth outlook, its online property business, Domain, the Murdoch clan’s News Corp should be doing the same: separating its sluggards, the newspapers in Australia, the UK and the US, from its growth businesses, the online property assets in Australia (64% of REA Group) and Move in the US, Pay TV assets in Australia in Fox Sports and 50% of Foxtel, plus the recently acquired Talksport radio assets in the UK.

Peter Fray

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