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Fairfax reaps benefit of ‘big decisions’: CEO

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Fairfax Media chief executive Greg Hywood has heralded the financial position of the publisher in a trading update this week, highlighting the strategic growth of the company through its core assets.

At the annual Macquarie Australia Conference, Mr Hywood presented the company’s results for the first 17 weeks of 2018 which demonstrated the strong outlook of publishing assets.

“We have hit a new phase in the development of the business. We have taken big decisions

around cost. We have taken big decisions to create businesses such as Domain and Stan. Our continued focus is on organic value creation opportunities – going for growth – maximising our existing core assets,” Mr Hywood said.

In the period from December 25, 2017, to April 22, 2018, Fairfax’s overall group revenues fell 1 per cent below last year.

Mr Hywood outlined Fairfax’s strategy, which puts an emphasis on simplification and innovation – already paying off to the tune of $500 million in annualised cost savings.

“The new revenue model underpinning our publishing business is multi-faceted and moves well beyond the traditional reliance on advertising, print subscriptions and circulation,” he said. “It continues to leverage premium brands, quality journalism and audiences which have never been larger in the company’s history.”

The company has put a premium of effective and sustainable revenue models over a high rate of return.

“While this model has lower revenue than in the past, it is more sustainable and valuable,

featuring multiple business models and diversified revenue streams,” Mr Hywood said.

Domain Holdings Limited, in which Fairfax has a 60 per cent stake, increased its total revenue growth by 13 per cent, with digital revenues improving by 21 per cent.

The growth of the real estate arm helped accommodate the fractional losses in the print arm of the business, with Australian Metro Media down around 2 per cent, Australian Community Media down 9 per cent, and New Zealand media arm Stuff down around 8 per cent (when accounting for currency impact).

The strong performance of Australian Metro Media – which includes capital city titles The Sydney Morning Herald and The Age alongside national masthead The Australian Financial Review – came down to Fairfax’s ability to leverage trusted legacy brands to maximise their advertising and audience capabilities.

Fairfax partnered with Google in December 2017 in a programmatic deal to optimise advertising inventory across national and metro titles.

While the monetary value of the partnership was not revealed, Mr Hywood said: “This partnership is indicative of the developments in the industry that will help sustain publishing earnings into the medium and longer term”.

On the back of a redesign of several metropolitan masthead websites, The SMH, The Age and The AFR continued growth in digital subscriptions, reaching 283,000.

The results continue the trend of growth in metro media with digital and non-print share of revenue increasing from 28 per cent to 35 per cent over the past four years and digital subscriptions revenue growing around 150 per cent over the same period.

Australian Community Media was impacted most in the reporting period falling 9 per cent, but the publisher is putting strategies in place to improve the long term outlook.

The continued push into the digital sphere for ACM titles has seen digital and other non-print revenue increasing from 4 per cent to 7 per cent over the past four years.

Strengthening programmatic presence across regional titles has been a key driver to advertising revenue, while the progressive rollout of digital subscriptions is helping to monetise audiences.

The increasingly diversified New Zealand media business Stuff Limited is now reaching 90 per cent of the population via its various assets.

Hyper local social network Neighbourly is increasingly becoming a star asset, monetising audiences through targeting and data products and allowing greater insights.

Stuff has recorded an 8 per cent loss during this period but has seen impressive growth over the past four years, with digital and other non-print revenue up from 5 per cent to 17 per cent.

Other non-publishing assets are also competing within their respective markets. Video streaming site Stan, which is 50 per cent owned in a joint partnership with Nine Entertainment, has seen active subscriber growth increase to 930,000 in three years.

Majority-owned Macquarie Media has increased pro forma EBITDA by 93 per cent since it was acquired in 2015.

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