Advertisement

Fairfax profit jumps but mooted Domain sale now a giveaway

Fairfax chief Greg Hywood says new cuts will be needed after its NZ merger was rejected.

Fairfax chief Greg Hywood says new cuts will be needed after its NZ merger was rejected. Photo: AAP

Fairfax Media has almost tripled its profit, posting net earnings of $83.7 million for the December half, despite a continued decline in revenue of 4.7 per cent to $913 million.

It also made public its widely rumoured plan to divest between 30 per cent and 40 per cent of the Domain property listing business, creating it as a separate company in the process.

But the plan is conditional on favourable outcomes of discussions with the Australian Taxation Office over the effects of the move and agreement from Fairfax shareholders in a vote, CEO Greg Hywood said.

“The time is right for Domain to consider taking this next step. It has achieved the scale in revenue, earnings and audience needed to operate as a standalone listed entity,” Mr Hywood said.

The bottom line for Fairfax.

The bottom line for Fairfax.

Domain Group CEO Antony Catalano will continue in his job after any restructure.  “The separation of Domain would further reshape the Fairfax portfolio by adopting a more flexible corporate structure to maximise shareholder value,” Mr Hywood said.

But in a surprise element of the divestment plan, the 30 to 40 per cent of the new Domain entity will be distributed to existing Fairfax shareholders. Many in the market had expected the new shares to be sold off in a capital raising that would have brought new cash in the door for the media group.

“The current intention is that no new capital will be raised,” Mr Hywood said.

Excluding one-offs, Fairfax’s underlying profit of $84.7 million was up a more modest 6.1 per cent.

““Domain delivered 15 per growth in digital revenue, supported by further depth penetration, yield increases and strong growth in Media, Developers & Commercial,” Mr Hywood said.  It’s over all revenue growth was 12 per cent but the print side of domain saw a revenue slide of 11 per cent as a result of lower real estate listings.

Metro papers fall

Metropolitan newspapers are still on the slide with advertising revenues down a whopping 16 per cent. But the digital transition is helping circulation revenues hold up.

Circulation revenues rose 1 per cent with digital helping defray a continued loss in hard copy sales. Rising cover prices also helped bridge the gap.

“Metro digital subscription revenue of $22 million was up 22 per cent. This was supported by a digital subscriber base of 226,000 across the SMH, The Age and The Australian Financial Review,” Mr Hywood said.

“All three titles delivered year-on-year growth, particularly the Financial Review. “Metro publishing costs improved 9%. We expect to maintain a similar run-rate in the second half,“ he said.

Fairfax will issue an interim dividend of 2 cents per share.

With ABC

Stay informed, daily
A FREE subscription to The New Daily arrives every morning and evening.
The New Daily is a trusted source of national news and information and is provided free for all Australians. Read our editorial charter
Copyright © 2024 The New Daily.
All rights reserved.