Fairfax seeks new revenue sources

Fairfax Media will create marketing businesses as it chases new revenue sources. Source: AAP

FAIRFAX Media will create marketing businesses to chase new revenue streams after weak ad markets and declining revenues contributed to a $16.4 million full year loss.

The result was an improvement from a $2.7 billion loss in the previous financial year, helped by $118 million in cost cutting and an 80 per cent reduction in net debt to $154 million.

But the company did incur a $406 million impairment charge on the value of its regional and agricultural businesses.

Revenue declined by 9.5 per cent in its key metropolitan media business - which includes the Sydney Morning Herald, The Age and the Financial Review Group.

Revenue in its regional publications declined by 7.5 per cent, and 4.7 per cent in New Zealand.

Chief executive Greg Hywood acknowledged the tough conditions, but said Fairfax would continue to cut costs in its traditional print operations and invest in new digital revenues.

"In these tough times this media company will not blink," Mr Hywood said.

"We're responding to difficult conditions by transforming our operations, evolving the way we engage with customers and audiences."

Mr Hywood said Fairfax would pursue new revenue in three areas - online marketing services to small business; events management (expanding on ventures such as Sydney's City To Surf fun run); and content marketing, with a new business to be set up in coming months.

He declined to say what earnings from the new "revenue adjacencies" would be.

The company launched metered paywalls for news websites in July, and Mr Hywood said 68,000 new digital subscriptions had been added with "minimal impact" on site visit numbers.

Within Fairfax's metro media business, print and digital news and classifieds revenue suffered a 16.7 per cent decline.

Metro print ad revenue fell 25 per cent while digital income, from online news, classifieds and transaction sites such as RSVP, increased 3.4 per cent.

Radio, including Perth's 96fm and Melbourne's 3AW, was a strong point for the company, with a 7.7 per cent rise in underlying ad revenue and underlying earnings up by 35 per cent.

BBY analyst Mark McDonnell said Fairfax's management had done well in cost cutting but revenue declines remained a problem.

"Everything they have done has been credible and creditable but I'm still struggling to find where the point is that they are going to stabilise their earnings line," he said.

Mr Hywood said further cost cutting was to come.

Mr Hywood received no bonus on top of his $1.6 million fixed salary, with no senior executives received bonuses as short term financial benchmarks were not met.

Fairfax shares closed 0.5 cents higher at 58.5 cents.

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