Not really interested might be one reading of yesterday’s market reaction to the latest restructuring announcement from Fairfax Media.
The shares slipped 3c to $1.355, which is about where the company’s shares have been trading since mid year.
That 2% loss compared with the 1.2% fall in the wider market on the day.
The changes were outlined in material sent to the ASX yesterday for the investor day discussion.
Buried in the material was bad news for those shareholders still in Fairfax for income and hoping for a boost to dividend; it won’t happen for a while.
The presentation said Fairfax would "retain a low dividend payment policy in the short term with an objective to increase in the medium term".
"Medium term" wasn’t defined.
And the company made it clear that future investment would go to digital assets and not existing low growth businesses, such as the newspapers.
Fairfax said the future considerations for the businesses included, "Increase the level of digital earnings contribution; reduce capex requirements for lower growth assets; better utilise existing assets to minimise financial outlays reduce the cyclicality of portfolio earnings; investment in transaction/subscription revenue models and increase the operational cost base flexibility".
CEO Brian McCarthy told staff in an email yesterday that Fairfax said it will adopt a new organisational structure comprising nine operating businesses.
"Fairfax Media will become an integrated, multi-platform company comprising leading media brands in Australia, New Zealand and the USA that will enable us to successfully monetise our content through any channel."
He said Fairfax will operate with five multi-platform businesses: Australian metro media, Australian regional media, New Zealand media, Agricultural media, and the Australian Financial Review Group.
The Australian Metro Media business brings together Fairfax Media’s flagship mastheads The Sydney Morning Herald and The Melbourne Age, as well as Fairfax’s NSW and Victorian community newspapers, under one operating unit.
It also includes Fairfax Media’s online outlets in Perth and Brisbane.
There will be two transactional businesses: Trade Me, a New Zealand business, and digital transactions, while there will be two single platform businesses, radio and printing.
A new position – chief executive of Australian Metro Media – will be appointed to run all the publishing and online media businesses in Sydney, Melbourne, Canberra, Brisbane and Perth, Fairfax said.
A Metro commercial director will run an integrated sales team, while a new national editor will "oversee an integrated national sections editorial team".
Moreover, Fairfax said there would be a new head of classifieds to provide "common leadership" for the publisher’s metropolitan classifieds businesses.
Mr McCarthy said these positions had not been filled and that the search had started internally and externally.
The new metro division, which will include much of the current Fairfax Digital unit and the Fairfax Community Newspapers, accounted for about 22% of Fairfax’s operating earnings in the 2010 financial year.
The big dangers for investors are that Fairfax again cuts (it’s looking for cost savings of $10 million a year, at least), when it should be investing; the national approach to the newspapers upsets readers of the Sydney Morning Herald and/or The Melbourne Age who accelerate their slow abandonment of both mastheads; and that the new national structure is botched with poor integration, which is always a chance when Fairfax management’s track record is considered down the years.
