For those expecting an announcement on the future of Fairfax’s print editions, this morning’s full-year profit result from the media group was somewhat anticlimactic.
In its annual report, the company continued to lay the groundwork for an announcement, but it didn’t provide a date. In the investor briefing, CEO Greg Hywood said the company was not yet ready to move away from daily print editions.
“We’ve been pretty clear that we’ll do it … when it’s beneficial to the business and when it meets consumer demand. We’re not at that stage yet. Inevitably we will be. Our view is to maximise the cash we can get out of current operation until we get to new one.
“Having said that, we are spending time, energy focus on building out this model. It’s not something you can flick a switch to. When the time’s right for the business, that’s what we’ll do.”
Fairfax staff wait with bated breath. So do at least some investors — Alex Waislitz told The Australian last week such a move should happen “sooner rather than later and with as short a transition period as possible”.
But this morning, it was largely business as usual, with the company spruiking the massive cost reductions it has achieved in its print division and its steady transformation into a digital company. Hywood said the result was proof the strategy was working. More than 40% of earnings before interest, tax, depreciation and amortisation came from things other than print. Next year, Hywood said, the company expected this figure to rise to nearly 60%. Revenue from digital subscribers rose 17% to $38 million.
On headline figures, the company swung to a loss — its tiny profit last year of $87.2 million became a $893.5 million loss. But that’s not unexpected, given the company’s $989 million write-down in assets last week. Revenue was only down 2% to $1.8 billion. Domain was a solid contributor to the result, with revenues growing 33%. Listings were down in the first few weeks of this financial year, but Hywood attributed that to impact of the federal election.
Fairfax has taken $400 million in costs out of its publishing business in the past four years. The division that houses The Sydney Morning Herald and The Age (metro media) had its publishing costs slashed by 4%, while the cost base at Fairfax’s regional division shrunk $60 million over the year, or 12%. In the release, Hywood hinted at further cost-cutting to come. “Difficult conditions continue in regional and agricultural markets. We are undertaking a review of ACM to develop initiatives and identify opportunities,” he said.
The past year was a good one financially for Hywood. While his cash earnings didn’t vary in the year to June from the base figure of $1.575 million, or just over $30,000 a week, an increase in the value of share rights granted to him, which he’ll be able to secure by hitting certain performance targets, caused his total salary to rise an inflation-busting 10% — to $2.731 million, from 2014-15’s $2.491 million. The value of those share rights jumped from $867,000 to a tasty $1.102 million. It puts Hywood among a tiny elite this year who enjoy a double-digit pay rise.