How can paywalls be the way of the future for Fairfax in Australia, but not NZ? CEO Allen Williams fronts to NBR ONLINE. UPDATED 4pm: Fairfax sells down Trade Me stake, announces plans to lay-off 1900 and make Melbourne Age and Sydney Morning Hera
UPDATE 4pm: A plan to cull 1900 Fairfax Media staff, or 20% of its workforce, is specific to the company's Australian business, Fairfax NZ CEO Allen Williams told NBR ONLINE.
There are no plans to paywall Fairfax sites on this side of the Tasman, he said, or to take broadsheet titles tabloid.
Asked why Fairfax would paywall The Melbourne Age and Sydney Morning Herald in Australia but not its online properties here - which include Stuff and the websites of the Dominion Post and the Christchurch Press - Mr Williams said it was a case of "two different markets, in two different timeframes".
What's so different?
"The shift of audience away from print and into digital has been at a faster pace in Australia," the CEO said.
Another difference is that Fairfax's metro papers in New Zealand have no daily competition in print while "In Sydney and Melbourne it's much more competitive," Mr Williams said.
Asked if he would rule out paywalls for Fairfax NZ sites altogether, Mr Williams replied "Never say never. We'll continue to assess it, and continue to research it."
The Ultrafast Broadband (UFB) rollout and increasing data caps were one factor that would change the media consumption landscape in the years ahead, the Fairfax NZ CEO said.
Asked if paid tablet apps could appear before paid website content, Mr Williams agreed that was a possibility. Fairfax NZ could leverage work done in that area by Fairfax in Australia, he added.
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Fairfax sells down Trade Me stake; says mass layoffs, website paywalls on the way
UPDATE 2pm: In a statement to the NZX, Trade Me has confirmed media speculation that Fairfax has sold down its stake.
The sale, handled by investment bank UBS, saw a 15% holding sold for $A2.70 a share to a small small group of investors - raising $A160 million as Fairfax's Trade Me stake was reduced from 66% to just over 50%.
Trade Me shares [NZX:TME] jumped 4.49% as they came off a trading halt. Fairfax shares [ASX:FXJ] , which closed Friday at a historic low of 60.5c, rose to 65c in early ASX trading.
Many pundits praised (then) Fairfax CEO David Kirk for buying Trade Me for $700 million in 2006, recapturing lost classified ad revenue.
Today, even with its debt crunch, some are saying it is a mistake for the Australian media company to sell down its stake in its best-performing business unit. In The Australian, John Durie said the sale was "Dumb ... Even though Fairfax will retain a controlling stake, it makes more sense to control more of the revenue it can in a growing business. The fact it can’t tells you how tough life is for the company right now."
Layoffs, paywalls, tabloid shift
Separately, Fairfax CEO Greg Hywood says the company will lay off 1900 as part of a "sweeping reorganisation" over the next three years.
Fairfax has around 10,000 staff across Australia and NZ.
Changes include The Melbourne Age and The Sydney Morning Herald being moved to tabloid format from March 2013, and the closure of two printing plants, located in Sydney and Melbourne.
The Herald and Age websites will introduce a paid subscriber model under the reorganisation, using a metered model similar to the New York Times (which gives readers 10 free articles a month before they have to start paying).
Pricing and more details of the paywall plan will be announced "by the end of 2012" Fairfax said in a statement to the ASX
The two papers' key rival in the metro market, the Murdoch-owned Australian, has already erected a $A2.95 per week paywall around its website.
Fairfax also says a "digital first" publishing strategy will see "greater sharing of editorial content across geographies and across platforms."
The cost cutting will save $A235 million a year by 2015, but cost $A248 million in the short term, Fairfax says.
The company also said its debt - minus the $A160 million lumbered onto Trade Me - was now "less than $A800 million". In June last year, before the float of 33% of Trade Me's shares, it stood at $A1.49 billion.
The company - whose shares have recently been trading at an all time low (see chart above right) - recently hit headlines with a plan to outsource 60 sub-editing jobs from Australia to New Zealand. Australia's upper house passed a motion calling on the Fairfax to abandon the plan.
Trade Me in trading halt amid reports Fairfax has slashed its stake
9am: Trade Me shares [NZX:TME] have been placed in a trading halt pending "the release of material information by Fairfax Media Limited at approximately 11.30am."
Struggling Fairfax Media retains a 66% share in Trade Me following the action site's partial float on the NZX and ASX in December.
The Fairfax-owned Australian Financial Review is reporting that Fairfax has sold another 15% of its stake, taking its holding down to just above 50%.
The shares were reportedly sold at A$2.70 apiece, a 3.2% discount to their price at the close of Australian trading on Friday.
A sale on those terms would have raised $A160 million for Fairfax.
Some shareholders have been pushing for the Australian company to sell more shares in Trade Me, or off-load its stake all together, to cut debt.
Fairfax struggling
Last week, Fairfax cut its full-year earnings guidance by 18% in what's shaping up to be its worst operating performance since 2008.
The media company expects earnings before interest, tax, depreciation and amortisation of about A$500 million in the 12 months ended June 30, down from A$607.4 million a year earlier
Trade Me was a rare bright spot in Fairfax's December half-year result, with a 12.7% increase in revenue to $67.3 million and ebitda up 9% to $52 million.
Since listing in December, Trade Me beat its pre-tax profit forecast by 2.2% as it attracted more sales of new goods through its platform.
Rinehart raiding, private equity circling
Fairfax has been fighting running battles on several fronts in recent months, with its biggest shareholder Gina Rinehart (who raised her stake to 18% last week) pushing for two seats on the board, an Australian strike over outsourcing production to New Zealand, and speculation its plunging share price might attract a hostile takeover from a private equity player.
Trade Me shares fell 2.5% to $3.56 in Friday trading, and have surged 32%t from their sale in November. Fairfax shares rose 0.8% to 60.5 Australian cents on the ASX on Friday, having dropped 16% this year.
