It’s a manic Monday indeed for all Australians interested – or invested – in the future of local journalism, with Fairfax announcing sweeping changes to its business model.
Nineteen hundred jobs will be shed over the next three years, with 20% of those jobs to come from editorial, 20% from printing, and the rest from elsewhere. Crikey reports that 380 journalists will lose their jobs, with a ‘substantial’ number of redundancies coming over the next 60 to 90 days.
The company’s broadsheets, the Age and the Sydney Morning Herald, will go to a ‘compact’ (tabloid) format, starting March 2013.
The Age and Sydney Morning Herald websites will institute a paywall in the first quarter of next year, with limited online content still available free of charge. The pricing and plans for digital subscription will be announced late this year.
There will also be increasing sharing of content, both across digital and print platforms and between publications (or ‘territories’), as the company implements a ‘digital first’ model.
Lastly, Fairfax will close its two printing presses at Chollura and Tullamarine, by June 2014. ‘Both sites were commissioned when almost all of Metro Media’s content was delivered through the printed newspaper,’ the company explained in its ASX announcement of the changes.
‘Very challenging times’
‘No one should be in any doubt that we are operating in very challenging times,’ said Fairfax chief executive and managing director Greg Hywood. ‘Readers’ behaviours have changed and will not change back. As a result, we are taking decisive actions to fundamentally change the way we do business.’
Savings from this raft of changes are expected to reach $170 million per year by 2015.
Former Age editor-in-chief Andrew Jaspan writes at The Conversation that the newsrooms for the Age and Sydney Morning Herald will be amalgamated.
‘There will be some local differences to allow the content to be rebranded for the Melbourne and Sydney audiences, but two voices in our shallow pool of diversity will become one,’ he says.
In a leaked email to staff obtained by Crikey, Fairfax metro chief Jack Matthews said ‘the decisions underpinning these changes are difficult, but…we simply cannot shy away from them.’
‘Not only are they a response to significant revenue pressures brought about by the broader economic environment, but also sweeping structural changes that challenge the economics of our – and virtually all other – traditional publishing businesses. It is important to reiterate that the challenges we face are not unique to Fairfax.’
Is it too late to save Fairfax?
Analyst Peter Cox told Crikey that the changes are the right decision, but made too late to ensure the company’s survival.
‘Fairfax management made three big mistakes: they didn’t charge online much earlier (public now used to free content); they failed to see how many people would abandon print for online and failed to capture classified rivers of gold online.’
Andrew Jaspan pretty much echoes this analysis. ‘The seeds of Fairfax’s destruction were born in the mid 1990s when it failed to fully engage, understand and act on the disruptive threats of the internet,’ he says. He continues:
In 2007, I was asked to lead a team of three senior executives to visit the most progressive newspaper/media companies in the US and UK and report back to the then CEO, David Kirk. We went to the Wall Street Journal, New York Times, USA Today, Washington Post, the London Telegraph, the Financial Times and the Guardian.
We reported back to Kirk that every one of these had brought together ‘print’ and ‘digital’ into one resource. That is one editorial team, one advertising team and one back office. Kirk flatly opposed doing the same on the grounds the two businesses were both very profitable. And he wanted to keep it that way.
Five years later, with the company’s market value slashed from $7bn to just over $1bn, this integration will finally be imposed next month.
Waiting for Rinehart
As if all this wasn’t enough, Gina Rinehart seems poised to take control of Fairfax. Andrew Jaspan writes that she is expected to confirm that she has purchased 19.9% of the company, and to bid for an extra two or three board seats, and control of Fairfax’s editorial positioning.
‘Rinehart is not an investor in Fairfax to earn a return like the rest of the company’s long-suffering institutional investors,’ he says. ‘She is making her play to change the climate of opinion in Australia.’
This means, of course, that more radical changes may lie just around the corner.