Where did Fairfax go wrong?

Updated May 03, 2017 23:55:51

Video: Fairfax announces 25 per cent cut in editorial staff (7.30)

Fairfax's decline has been swift and sharp.

The company had around 1,000 editorial staff in 2011. After the latest round of redundancies announced on Wednesday, which will cut 125 jobs, roughly only 375 editorial staff will remain.

"It's looking like one quarter of our newsroom will walk out of here in a few weeks' time," Miki Perkins, The Age social affairs reporter said.

"All of the sudden all these stories and specialities and expertise that The Age has provided for more than 150 years is again diminished."

Deborah Snow, a senior writer at The Sydney Morning Herald, said staff "are feeling crushed".

"They're apprehensive both for their jobs but they're also apprehensive about the future of the newsroom as a whole."

John Silvester, The Age's crime reporter, said the latest redundancies "might be cutting into the core".

"Yes The Age is sustainable both in print and online, and we just have to stick to what we do. And that's a supposed commitment from management to quality journalism."

The challenges faced by Fairfax aren't unique. Classifieds, once known as the "rivers of gold" for newspapers, have been cannibalised by online competitors.

But critics say it is not just the changing media landscape which is to blame, and accuse the company of bad management and missed opportunities.

Like investing in The Age Tullamarine printing press, a massive piece of infrastructure, that it then had to sell.

And missing key opportunities like buying into internet giants RealEstate.com.au, Seek.com.au and CarSales.com.au have proved disastrous.

But beyond the cuts, Fairfax has an ace in its hand: Domain.

Owners 'aren't particularly interested' in journalism

Photo: Profits from floating Domain may not end up being invested in journalism. (ABC News)

The company is expected to float its one big remaining money maker, real estate brand Domain, worth an estimated $1 billion.

The move will inject some much needed capital. But everyone 7.30 has spoken with, inside Fairfax and out, says protecting journalism is not the end game.

"That is an interest that the fund managers, the people who actually own Fairfax, aren't particularly interested in," said Michael West, the former Fairfax business editor who was shown the door last year.

"What they're interested in is performing for their constituents, getting a financial return.

"It would be great to invest in the journalism but do we trust management to be able to do that? I mean have they got the talent there even to run a proper newsroom these days?"

He said the company's senior management also has an interest in making sure the profits from floating Domain are not frittered away on the loss-making enterprise of journalism.

"You've got the journalists and you've got management and their situations are entirely at loggerheads, because management want the share price to go up so their share options rise and they become more wealthy," Mr West said.

"The managers of the journalists are all on KPIs, key performance indicators, to reduce the cost base which is another way of saying 'sack your own staff'."

Shareholders 'only care what's in it for them'

Photo: The Sydney Morning Herald state political editor Sean Nicholls speaks at a press conference today about the job cuts. (ABC News: Nicole Chettle)

Steve Allen, media analyst at Fusion Strategy, said it is the booming value of Domain that's left Fairfax with few options.

"Shareholders really don't care about the construction, or the validity, or the exclusivity of journalism, they only care about what's in it for them," he said.

"The reason for splitting Domain out from the rest of the company is that it's the thing that investors want to jump into.

"What's holding the share price down at Fairfax is that people don't want all the legacy products that sit within Fairfax Media.

"They just want to get on the hot, fast-expanding part of the empire."

'I think we will see the company broken up'

Margaret Simons is a former The Age reporter turned academic at Melbourne University. She says that once Domain is put up for sale, the rest will be up for grabs.

"There are other little profit-making businesses wrapped up in Fairfax, such as RSVP the dating website, and some others and I think we will see the company broken up," Ms Simons said.

"I think the institutional investors see [more] value in the parts than they see value in the whole. And what happens to the mastheads after that, which is really the question that interests me most and which I think is of most concern to democracy."

This year there's been speculation about a takeover by American investment group TPG Capital.

Topics: media, print-media, journalism, australia

First posted May 03, 2017 20:58:00