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Fairfax Media reports loss of $63m ahead of takeover by Nine

Fairfax Media
Fairfax Media has announced its last full-year results under its own name, recording a net loss of $63.8m. Photograph: Scott Barbour/Getty Images

Fairfax Media has announced a full-year net loss of $63.8m ahead of its takeover by Nine Entertainment.

The company revealed its last full-year results under its own name on Wednesday, recording a fall in revenue of about 3.1% to $1.69bn. The loss compares with a net profit of $83.9m in the prior corresponding period.

Fairfax is the publisher of The Sydney Morning Herald, The Age and The Australian Financial Review. In July, the company announced a merger with Nine Entertainment in a surprise deal worth an estimated $4bn.

The merger, which will give Nine a controlling stake in the company and lead to the disappearance of the Fairfax name, is being reviewed by the Australian Competition and Consumer Commission. It is due to be completed by December.

Revenues at the company’s real estate spinoff Domain increased 11.5%, while streaming service Stan – jointly owned with Nine – now has more than 1.1m subscribers.

The company recorded a $36m charge for restructuring and redundancy costs. Revenues at the metro publications fell 6.1%, while pre-tax profit was up 8%.

But the metro publications now boast 313,000 digital subscribers, driving digital growth of 9%.

The Fairfax chief executive, Greg Hywood, said the metro part of the business was now a “remarkable transformation success story” and the results showed “the strong position of the Fairfax Media portfolio”.

“Each of our businesses has maintained a growth focus and delivered good cost outcomes which will underpin future performance,” he said.

“Over the past seven years, we have taken the big decisions. We have built businesses such as Domain and Stan. We have maximised the growth drivers of our core assets. We have addressed legacy cost issues to give our business time to adjust to the structural change it confronted. We have hit our stride going for growth.”

However, the story is not as positive for the company’s regional publications, which have come under increased focus since Nine chief executive Hugh Marks indicated the new company may look to offload them.

Fairfax recorded a 9% decline in revenue and a 22% drop in profits in its community media section, which Hywood blamed in part on drought conditions affecting the performance of its regional titles.

In a call to investors, the outgoing chief executive said the regionals were “bearing the brunt” of the drought. However, the company’s statement on the results also pointed to “weakness in regional advertising and circulation” and “declines in local and real-estate print revenue”. The company said the circulation declines reflected lower retail volumes.

The mooted takeover of Fairfax by Nine has raised concerns about the concentration of Australia’s media landscape and fears about the editorial independence of the company’s flagship print mastheads.

The CEOs of both companies have said they will not look to merge newsrooms, but when asked about finding “synergies” between journalistic operations during the investors’ call on Wednesday, Hywood said there would probably be “cooperation” across platforms.

“TV journalism and the process of putting a TV bulletin together [is] a lot different to putting out 24-7 websites and newspapers, so sure it’s journalism and sure they provide news but the process is very, very different,” he said.

“That’s not to say there wont be cooperation which will benefit both groups in terms of the use of video, in terms of cooperation where the mastheads’ stories translate into TV.”