Fairfax’s NZ assets halved
AUCKLAND: Fairfax Media Group more than halved the value of its Kiwi assets, attaching just $A40 million ($NZ44 million) to mastheads that were once the core of a billiondollar investment.
Sydneybased Fairfax is pursuing a $A2.2 billion deal with Nine Entertainment Co where the television company will effectively take over the publisher in Australia’s biggest media consolidation since rules were changed allowing the ownership of print, television and radio assets. That deal did not place much emphasis on the opportunities provided by the New Zealand division, Stuff, which again had the value of its intangible assets slashed.
Fairfax cut $A60.5 million from the value of Stuff’s licences, mastheads and trade names — including the Sunday StarTimes, Dominion Post and Press newspapers — to $A39.8 million. Those assets were valued at $NZ1.12 billion in 2003 when the formerly Australian familyowned media group bought the Kiwi business from Rupert Murdoch’s Independent Newspapers Ltd.
‘‘The New Zealand media business is facing similar structural print revenue declines as Australia,’’ Fairfax said in its annual report. ‘‘Digital revenue is expected to grow, albeit from a smaller base, which doesn’t mitigate or offset print revenue declines.’’
Stuff’s earnings before interest, tax, depreciation and amortisation shrank 27% to $NZ40.5 million in the year ended June. Revenue fell 7.5% to $301.4 million. Earnings were squeezed by a $3.4 million provision as the media group reassessed its Holidays Act liabilities and invested $2.6 million in the Stuff Fibre telecommunications retail service provider.
The New Zealand unit also bore the brunt of restructuring costs in a year when it sold or closed a third of its unprofitable community and regional publications. It accounted for $A16.2 mil lion of the group’s $A36 million of annual restructuring and redundancy charges.
Stuff’s digital revenue climbed 21% to $NZ47.8 million, driven largely by Stuff Fibre and Neighbourly. Fairfax attributed the growth to greater use of those services by its existing 2.1 million online audience. Other revenue gained 14% to $17.6 million.
‘‘The pain of restructuring efforts will prove to be worth it as the benefits start to flow in future years and bring forward the time when increases in digital revenue will outweigh declines in print,’’ chief executive Greg Hywood said in the annual report.
That will take some time. Stuff’s print advertising revenue slid 17% to $140.8 million. Print subscriptions were also down 5.9% to $95.2 million. At the current rate of decline in print advertising and subscriptions — about 13% — it will be five more years before digital and other revenue surpasses that income, provided the new income streams can maintain a 19% growth rate.
Fairfax has not given up hope the Court of Appeal will allow a merger of Stuff with NZME.
Mr Hywood noted the NZ division’s strong digital assets put it in the box seat to participate in any domestic media consolidation. A tieup with freetoair TV and radio operator Media Works has been mooted as an option if Stuff is carved out in the Nine deal.
The New Zealand division’s performance lagged behind a 1.2% increase in group ebitda to $A274.2 million, despite a 3.1% revenue decline to $A1.69 billion. The company reported a net loss of $A53.6 million, due to $A175.9 million of impairments on the Stuff and Australian community divisions. The board declared a final dividend of A1.8c per share, payable on September 6.
The ASXlisted shares fell 3.1% to A86.25c, having gained 14% so far this year.
❛ The pain of restructuring efforts will prove to be worth it as the benefits start to flow in future years