Fairfax Media, publisher of the Sydney Morning Herald, has launched a sweeping review of its operations as it seeks further cost savings to offset the impact of a difficult advertising market and a rapidly changing media landscape.
Addressing investors at the company's annual investor day in Sydney on Thursday, chief executive Greg Hywood said the "step-by-step" review would cover all of Fairfax's 431 publications, 337 websites and seven radio stations.
"Ongoing cost management is now in our DNA," Mr Hywood said, promising an update on the review with annual results in August.
Australia's traditional media companies are looking to reduce costs as they battle a cyclical downturn and the migration of advertising to the internet. Fairfax, which counts Gina Rinehart, Australia's richest person, as its biggest shareholder, has been hit particularly hard because of its reliance on classified print advertising.
These tough conditions were highlighted recently by Rupert Murdoch's News Corp. Last month it took a US$1.2bn-US$1.4bn impairment charge against its Australian and US newspapers, which are being folded into a separate publishing business to be spun off later this year.
News Corp said the charge reflected weak advertising trends, particularly in its Australian newspapers, and warned against a quick turnround citing slowing economic growth in Australia.
Unveiling digital pay walls for its two flagship titles - The Age in Melbourne and the SMH - Mr Hywood said conditions remained "pretty tough" with group revenues for the year to date 9-10 per cent lower than the same period last year.
As a result, earnings before interest, tax, depreciation and amortisation for the six months to June would be A$129m-A$135m, down from A$205m in the first half of the company's financial year. That was broadly in line with market forecasts.
Mr Hywood said a move to a new organisation structure had generated a further A$60m of cost savings on top of A$251m in cuts identified last year when Fairfax announced plans to axe a fifth of its workforce, or 1,900 jobs, and close two printing plants.
"The savings will come from reducing duplication right across our business, but with an emphasis on minimising the impact on content and sales," he told investors.
He said there were no current plans to stop printing copies of The Age or SMH.
"We do not have any intention to reduce the frequency of print publication of any of our major mastheads in the foreseeable future. Why? Because they are profitable," he said.
Earlier this week, Goldman Sachs analysts said Fairfax would abandon print editions of metropolitan mastheads in 2015 because the "relentless" migration of advertising away from print would see the papers generate significant operating losses.
The analysts said additional subscription revenues from the introduction of digital pay walls would not be large enough to offset the decline in print advertising.
Shares in Fairfax fell 1.7 per cent to A$0.59 on Thursday.
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