Fast forward at Fairfax

Media headlines over the last two weeks have been dominated by Fairfax. Firstly it was the (ongoing) battle for board representation from Gina Rinehart and then yesterday Fairfax announced major restructuring plans that will transform their business and business model.

The four key elements of this are:

  1. Metro Mastheads (The Sydney Morning Herald/The Age) to move to Compact format (same as the AFR) from 4th March 2013.
  2. Digital Subscriptions will be introduced to the Metro Mastheads during the first quarter of calendar 2013. A “metered” model will be adopted with a base level of free access to the websites retained.
  3. Closure of Chullora and Tullamarine printing plants by June 2014. Printing of Metro papers will be reallocated to the Fairfax printing network.
  4. Digital-First Editorial Model: The editorial function will be restructured to ensure full integration across digital, print and mobile Fairfax platforms. There will be increased flexibility with greater sharing of editorial content across geographies and across platforms.

Each of these elements have implications for us, however, it is worth noting that these changes come into effect over a period of time starting next year. This gives us both the time to fully understand the impact and negotiate the best outcomes to take advantage of them.

OMD Point of View

The Shift to Compact

  • We see this as a positive move. The compact format is easy to read and more transportable.  The experience with the shift of Business and Sport sections to this format has been positive and demonstrated how it can work well.  In addition ,the AFR has shown that you can deliver a quality newspaper in compact format so there is not the same broadsheet/tabloid quality divide that existed in the UK.
  • We use the papers to deliver specific audiences. Assuming that they continue to deliver the same standard of editorial content, we do not see change in format impacting on the audience that they will deliver.

Digital Subscriptions

  • Based on the detail released so far, they are introducing a similar model to The New York Times.  This maintains traffic volumes and then charges users who are looking for a deeper level of content. These people are the ones who are most highly engaged and therefore most likely to pay. This makes more sense than a pure pay wall approach.

Printing Plant Closure

  • Tullamarine and Chullora were both designed to have the capacity to print the big classified filled editions of the paper. This is a clear sign that we can expect the smaller book sizes that we now see to continue.

Digital First Editorial Model

  • The shift in focus from print to digital is key to the future model that is being put forward by Fairfax. This is in keeping with the ‘follow the sun’ strategy that they have been pushing where news is delivered on your platform of choice, when you choose to interact with it. Equally important is the statement about sharing across geographies. This is a clear sign that we will see more ‘shared’ content across Sydney and Melbourne markets.

Overall we see these moves as positive for Fairfax as a business however the changes do not come into effect until 2013/14 so there is significant opportunity for them to change. The two main factors that may influence this are:

  1. Further structural change – The ASX release from Fairfax states that these proposed changes provide them with the flexibility to move the business to a digital-only model if that is what is required in the future
  2. The Rinehart factor – It is now a matter of how many board seats as opposed to if she will get board seats. As the largest shareholder she will be able to influence the future approach and as yet we do not know her views or opinions on the direction of the business.
Loading Facebook Comments ...

Leave a Reply

Your email address will not be published.