Is Fairfax preparing for another round of mass redundancies? Fears are swirling more cuts are on the cards, as the company prepares a proposal for consultation with staff and the journalists’ union.
The Media, Entertainment and Arts Alliance met with Fairfax management yesterday after staff “obtained” a document outlining a restructure, including reducing staff numbers, ending the subediting contract with PageMasters and revamping editorial management.
The union advised all staff of the meeting by email yesterday, saying that the company had “sought to downplay the significance of the document” but would come back to the union with a proposal for a consultation process. The house committees are expected to report back to staff today with any developments.
Neither Fairfax nor the union responded to Crikey‘s questions by deadline.
Talk of restructuring comes as the Fairfax takeover pot continues simmering.
In letters to be inserted in subscriber copies of The Sydney Morning Herald tomorrow, the paper’s new editor, Lisa Davies, repeated the commitment made earlier this year by CEO Greg Hywood:
“Earlier this year our chief executive, Greg Hywood reaffirmed the company’s commitment to the printed paper some years to come. At the same time we are continuing to explore new ways for audiences to consume our work, especially across digital platforms”.
Some sharp folk have pointed out that the letter will be inserted into the Herald on April Fools’ Day and wonder if there’s a bit of mordant humour at work.
The bigger question is whether Fairfax will be able to maintain that commitment to the printed paper for longer than a couple of years after the sale of Domain, its digital property website.
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You can ignore stories in Fairfax papers this morning that a putative suitor, TPG Capital, the US-owned private equity group, has gone “cool” on a deal because of the rise in the Fairfax share price. Over at rival The Australian they were still pushing the line that TPG was packed and ready to have a tilt at Fairfax.
All lightweight stuff, but enough to keep talk of a takeover going. The Oz reported that it “understands” Fairfax shareholder Alex Waislitz, who owns 2% of the media group, “has been in close contact” with TPG. Anyone reading Fairfax Media reports earlier in the week would have come away with that “news”. Waislitz wouldn’t tell Fairfax if he had been in touch with TPG (that might worry regulators about an acting in concert action, which could consider Waislitz’s Thorney group of investment companies considered an associate of TPG, thereby losing any leverage in a takeover). But he has been clear about the need for Fairfax to consider any offer.
After being sprung by Fairfax’s Financial Review and seeing the Fairfax Media share price run up to $1.15, a six-year high, TPG has now started to let it be known (through its market/media whisperers) that the price is too high for a deal for Domain.
Fairfax shares eased 3.6% yesterday to $1.055, despite reports (leaks) that TPG had arranged “a billion-dollar-plus debt package” (according to Fairfax Media). More than 25.3 million shares were traded yesterday, taking the total so far this week to more than 76 million. That was the highest one-day volume since last year when more than 58 million trades were traded on August 10. Fairfax also reported that “TPG’s banking syndicate, led by Credit Suisse’s Michael Stock, is believed to have funding in place at 4.5 times earnings before interest, tax, depreciation and amortisation (EBITDA). JPMorgan is also on board. Peter Cook, a partner at Gilbert + Tobin, is also on the deal.”
These details would not have been reported had TPG and its advisers not wanted them out in the market to give the impression to other big shareholders that it was still interested and that talk of “cooling” was just talk. Fairfax claimed TPG was looking to offer $1.15 a share for Fairfax, a price level so low to be absurd and just private equity chiseling..
Obviously TPG and its cast of market whisperers would argue $1.15 is too much, but Domain — the big attraction for TPG — is a one-off asset, and Fairfax directors know they have to maximise the price for the company’s best asset. And so do some level-headed investors.