Add this to the growing list of retrenchments by large firms, which will add to the the list of unemployed and social security recipients.
Fairfax to shed 1900 staff, erect paywalls
June 18, 2012 – 10:19AM
Fairfax announces an overhaul of its operations. Photo: Michel O’Sullivan
Fairfax Media will cut 1900 staff and erect paywalls on the websites of its two main metropolitan newspapers as it adjusts to shrinking advertising revenue.
Fairfax, publisher of this website, will also shift to compact-sized versions for those two newspapers, The Age and The Sydney Morning Herald, from the first quarter of 2013. The size of the broadsheet papers will shrink to the tabloid format used for the sister newspaper, the Australian Financial Review.
The job cuts will come over three years and generate annual savings of $235 million by 2015, Greg Hywood, Fairfax’s chief executive officer, told staff in an announcement this morning. Of that total, $215 million will be achieved by June 2014.
Some 20 per cent on the job cuts will be in editorial, Mr Hywood said, without elaborating.
“The period ahead will be difficult as we move through the redundancies,” Mr Hywood said.
A shift to online by audiences around the world has undermined traditional business models for many media companies, with newspaper firms particularly hard hit.
Fairfax has also been in the spotlight lately, as mining magnate Gina Rinehart has moved in to buy at least 18 per cent of the company, making her the largest single shareholder.
Ms Rinehart has been demanding at least one seat on the Fairfax board and understood to be aiming for at least a 19.9 per cent holding in the company.
The one-off costs associated with the plant closures and staff cuts will be $248 million on a net basis, including the proceeds of land sales, the company said.
Fairfax shares rose 4 per cent in early trade, or 2.5 cents, to 63 cents. Earlier today, the company said it had sold a 15 percent holding in its Trade Me subsidiary, raising $NZ211 million ($166 million).
Prior to today, shares in Fairfax had dropped 87 per cent over the past five years.
Fairfax said that both the SMH.com.au and theage.com.au websites were launched when “almost all” of the metro media departments content was delivered through printed newspapers.
“They have legacy presses with significant surplus capacity which is no longer required,” Mr Hywood said.
“The changes announced today have been selected after considering the merits of a full range of structural alternatives, including a demerger,” said Mr Hywood. “The package of strategic initiatives is bold, and several are difficult, particularly as they will impact on some of our people.”
“However, we believe that they are in the best interest of Fairfax, our shareholders, and ultimately the majority of our people,” he said.
“They are necessary to ensure Fairfax retains its position as a leading independent media company and a key voice in our markets,” said Mr Hywood.