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June 19, 2012
Yesterday Fairfax Media announced that it will change the broadsheets ---The Sydney Morning Herald and The Age--- to tabloid-size, and sack 1900 staff — including about 380 editorial positions — as part of a $235 million cost-cutting drive to cut the media corporations cloth to the steady decline in advertising revenue. It will also introduce digital paywalled subscriptions to the metro masthead websites on a “metered” basis — apparently similar to the New York Times.
David Pope
A badly managed Fairfax is broke and its print media is declining before our very eyes due to the disruption from the internet, The old model of selling eyeballs to advertisers isn’t going to sustain Fairfax much longer since its revenues are falling faster than it can cut costs for its print media.
They need a viable business model quickly in the context of the radical restructuring taking place in the media world wrought by the digital technologies and the absence of any clearly successful blueprints for change. Greg Hywood, the CEO, is trying to reorient the group from its traditional print base to a digitally-focused future, presumably with new digital content and a growing digital audience.
However, the reality that he is trying to replace high-margin legacy revenues with low-margin digital revenues compounds the degree of difficulty of executing the transition. That means Fairfax is vulnerable to takeover from Gina Rinehart, who now owns 18.67 per cent, and whose current proprietorial demands are for three seats on the board including the deputy chairmanship, and the right to have input into editorial matters.
Her demands are in conflict with Fairfax board protocol that directors not interfere with the editorial direction of the media group and a charter of editorial independence that has been honoured by the board since the early 1990s.The danger here is that Fairfax mastheads become mining industry mouthpieces (a mockup) thereby destroying the remains of what Mike Seccombe calls Fairfax's perceived value.
Fairfax, Seccombe says, has endured years of staff cuts and online mediocrity to the point where it is now questionable whether readers be sufficiently confident of finding something of value behind the wall to justify paying. Therein lies the problem.
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"its print media is declining before our very eyes due to the disruption from the internet"
The total readership of all Fairfax outlets is growing - up 30 per cent in the past five years, it says - readership of its print products is declining so that today a mere 34 per cent of its customers get their news in print, compared with about half five years ago.