The media giant made the announcement to the ASX this morning as part of its over-arching ‘Fairfax of the Future’ strategic initiative, which will cost $248 million to deliver and include 1,900 job cuts.
The $2.5 billion-turnover company said the “business is currently based around our legacy print cost base”, while audiences are increasingly migrating online.
Printed products are not the only part of the empire to be restructured in its quest for $235 million of annual cost savings by 2015 – but its newspaper business will be the site of the most drastic makeover.
Fairfax’s major metropolitan newspapers, the Age and the Sydney Morning Herald (SMH), are being redesigned into the same compact format as the Australian Financial Review.
Fairfax said there was “strong reader support” for the tabloid redesign. “A compact paper is more accessible and convenient, especially for commuters.”
The first compact editions of the Age and SMH will be released on Monday 4 March 2013.
Print production will cease at the two supersites in Sydney and Melbourne. “Due to their capital intensity and excess capacity, printing at the existing facilities has a very high marginal cost,” according to Fairfax.
The Age and SMH will instead be produced across its regional network at sites such as North Richmond, Canberra, Ballarat and Albury. The transition is expected to be complete by June 2014.
The newspaper plant shutdowns will cost $63 million in redundancies. It is unknown where else the axe will fall in the bid to remove 1,900 jobs over the next three years
Fairfax has also followed the lead of major rival News Limited and will introduce a paywall for its newspaper websites.
Fairfax has even left the door open for a complete switch to online-only content if it continues to see falls in advertising revenue across its Metro newspaper division, which comprises the Age and SMH.
However, it drew the line at a complete farewell to print – for the time being at least. “For so long as Metro print revenue remains substantial (currently circa $500 million), it is not economical to move to a digital-only model.”
Throughout 2011, it looked likely Fairfax would merge its print production with News Limited, but this deal collapsed in March.
There was also the suggestion that Fairfax would build a smaller Sydney plant, but there was no mention of this plan in today’s announcement.
Fairfax’s share price, which closed at a historic low of 60c, had risen 5% to 63.5c at time of writing. The shares sat at around $5 in the halcyon days of 2006-07.
Read ProPrint‘s behind-the-scenes profile on the Chullora plant.
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