Fairfax prepares for plan-b cuts
Fairfax Media has drawn up plans for cuts in the event New Zealand’s competition watchdog rejects its proposed merger with rival publisher NZME.
Fairfax New Zealand’s revenues and profits are continuing to fall as it waits for word from the Commerce Commission on the planned merger.
Fairfax Media reported yesterday that the revenues from its New Zealand arm for the six months to December fell 8 per cent to $168 million, while its operating profit in New Zealand was down 10 per cent at $27m.
Greg Hywood, chief executive of the Australian business, said that was ‘‘a really solid result’’ in the context of the advertising market.
He singled out a 21 per cent rise in Fairfax NZ’S digital revenues as one of the highlights in the group’s results.
Fairfax NZ reduced its costs by 8 per cent despite its digital investments. The revenue trajectory just showed the ‘‘level of stress’’ that traditional media in New Zealand was under, Hywood said, adding that media consolidation was inevitable.
‘‘We have been very frank with the commission that if we don’t [get that] we have to go down the ‘product consolidation’ route. There really is no alternative. This is not a New Zealand issue; this is a global issue.’’
He would not rule out a legal challenge if the commission rejected the merger, but said the company would ‘‘have to get on with things’’.
‘‘If the merger doesn’t go ahead we have to go straight into consolidation mode. We have planned it, absolutely.’’
Hywood would not spell out what that would involve. ‘‘We are just hopeful that the commission understands the commercial realities.’’
A Horizon poll on the merger released on Tuesday suggested most New Zealanders were concerned by the prospect of too few people ‘‘controlling’’ the news.
Hywood said people would like as many players in any marketplace as possible. ‘‘If the economics of a marketplace can’t provide that, people still want the service. That is the fundamental thing here. What we are talking about is a merger with a commitment to quality and journalistic ethics that will provide that service within the context of commercial realities.’’
Hywood defended Fairfax Media’s plan to cash out $55m from the merged firm as part of its proposed deal with NZME, saying it was necessary to ensure the merged company would be majority New Zealand-owned.
Fairfax NZ owns media assets including Stuff, The Sunday-star Times, The Dominion Post and The Press.
Across the ditch, Fairfax Media will consider spinning off Australian real estate listing business Domain into a separate listed company.
Fairfax shares jumped nearly 10 per cent to A95.2 cents on the announcement.
The company reported a 6.1 per cent rise in its total net profit for the six months to December. It posted a net profit of A$85 million while revenues for the half-year fell 4.7 per cent to A$913m.