Fairfax starts NZ endgame with plans to sell or close 35% of print publications
By Paul McBeth
Feb. 21 (BusinessDesk) - Fairfax Media Group will close or sell 35 percent of its New Zealand print titles as the Australian group pursues a digital strategy for the kiwi unit, now rebranded Stuff.
Group chief executive Greg Hywood, who recently oversaw the demerger of the Domain real estate listing website in Australia, today said the Sydney-based company will exit just over a third of its New Zealand suit of print publications, which includes Wellington's Dominion Post, Christchurch's Press, Hamilton's Waikato Times, and the Sunday Star Times.
Slated for closure or sale are a string of regional giveaway newspapers and agricultural publications. Its major metropolitan and regional city newspapers are not in the extensive list of small-scale publications that Fairfax wishes to quit.
Fairfax's New Zealand media revenue fell 4.5 percent to $160 million in the six months ended Dec. 31, while earnings before interest, tax, depreciation and amortisation sank 24 percent to $20.7 million. Of that, print advertising sales dropped 15 percent to $77.2 million, while print subscriptions slipped 4.3 percent to $48.8 million. Digital revenue jumped 33 percent to $24.2 million.
"We have enormous confidence that Stuff is heading towards sustained growth as its digital business continues its strong momentum," Hywood said in a statement. "We have acted decisively to bring this forward, and are announcing today a plan to exit around 35 percent of our New Zealand print publications through sale or closure.
"The rationalisation of these smaller community titles and free inserts will deliver additional ebitda contribution over a full year and bring forward the time when increases in digital revenue outweigh declines in print."
Fairfax has written down its New Zealand mastheads to just $175.2 million as at June 30, 2017 from as much as $1.12 billion when the one-time Australian family-owned media group purchased the Kiwi business from Rupert Murdoch's Independent Newspapers Ltd in 2003.
Hywood has been a fan of the New Zealand division's shift to a digital business, highlighting the strength of Stuff's user base and the potential offered by the Neighbourly website, which it took full ownership of in November.
Fairfax had planned to merge its New Zealand business with NZME, but was blocked by the Commerce Commission over fears the resulting public interest loss of media diversity outweighed the economic benefits of the deal. That decision was upheld by the High Court, although the media companies have since sought leave to contest that decision in the Court of Appeal.
The Australian company recognised another A$247,000 impairment charge on the New Zealand unit's intangibles, investments and property, plant and equipment, and wore redundancy and restructuring charges of A$3.7 million in the half. It also booked a A$129,000 gain on controlled entities and investments, Fairfax's accounts show.
Stuff's decline in first-half earnings included a $3.6 million provision for recalculating its Holidays Act entitlements, and investing $1.5 million in its Stuff Fibre telecommunications service. It also made a $2.6 million gain on the sale of an asset.
Fairfax's ASX-listed shares last traded at 66 Australian cents and have dropped 15 percent so far this year.