Fairfax Media to sell 28 New Zealand titles as half-year profit slumps

Fairfax Media half-year profit has slumped by more than half and the company has announced it will close or sell off 28 of its New Zealand newspapers.

The drop in earnings to $38.5m, down from $83m a year ago, comes a day after real estate listings company Domain, which Fairfax spun off into a standalone entity in November, also reported a drop in profits.

Greg Hywood, chief executive and managing director, said 35% of the smaller community titles in the NZ company, now known as Stuff, were being offloaded to “bring forward the time when increases in digital revenue outweigh declines in print”.

Up to 60 staff across titles including NZ Dairy Farmer and Christchurch Mail could be affected, according to reports.

But there was good news on the digital front as online subscriptions to the Australian Metro mastheads, the SMH, the Age and the Australian Financial Review, increased by almost 50,000 from August 2017 to more than 283,000.

“Metro’s next-generation publishing model is delivering a step-change for consumers with the launch of new websites and apps to grow engagement and drive subscriptions and revenue,” Hywood said.

Earnings before interest, tax, depreciation and amortisation were up 1.3% to $146.9m and underlying net profit – which excludes significant writedowns – slipped 9.9% to $76.3m. Hywood pointed out earnings per share of 3.3 cents.

“This result reflects the increase in minority interests associated with the separation of Domain from 22 November 2017 and the improved Macquarie Media results.

“We will pay an interim dividend of 1.1 cents per share, 100% franked. We note Domain declared a 4 cents per share dividend for the half.

Hywood signalled Fairfax would collaborate with Rupert Murdoch’s Australian newspaper arm to bring down printing and transport costs for the two competing media giants.

“We will take advantage of opportunities arising from media consolidation as and when it occurs,” Hywood said. “Any decisions we take will be in the best interests of our shareholders.”

“We have progressed our recent positive discussions with News Corp Australia to seek industry-wide efficiencies in printing and distribution,” he said.

“We have had successful collaborations around shared trucking and printing titles for News in Queensland. Building on this collaboration we have jointly appointed advisers to pursue deeper strategic opportunities.”

Fairfax’s joint venture with Nine, streaming service Stan, has an active subscriber base of 930,000, Hywood said, and an 83% growth in subscription revenue was driven by original content such as Romper Stomper and new seasons of Unreal, Billions, Better Call Saul and Younger.

The cuts to the NZ business come as Fairfax appeals a high court decision to uphold the New Zealand competition regulator’s decision to block a merger between NZME and Stuff.