Stand by for a bumpy ride: The point is approaching at which the lean financial management which made Rural Press a darling of investors and financial analysts collides with the once-grand edifice which was Fairfax, writes Peter Coleman.
And for starters, at least, the stockmarket is loving it.
News that Fairfax Media will shed 550 staff in Australia and New Zealand – or about five per cent of its fulltime workforce to bolster profits – led initially at least, to a corresponding increase of almost five per cent in the company’s share price.
It is after all, what financial markets had hoped for in the appointment of former Rural Press chief executive Brian McCarthy as deputy chief executive of the expanded Fairfax Media business. And McCarthy’s name was on the statement which announced cuts which will include “integration of staffing” on the ‘Sydney Morning Herald’ and its Sunday stablemate, the ‘Sun-Herald’.
Fairfax says editorial jobs will account for about a third of the cuts.
Earlier in the week, there had been reference to the revenue decline at the ‘Herald’, with the newspaper itself – usually so upbeat about its own achievements – acknowledging that it had not been immune from the advertising downturn and was “feeling the pinch”.
The scene set, McCarthy and his immediate boss, chief executive David Kirk announced the “far-reaching programme, designed to comprehensively restructure and reposition the business for years to come” in a statement on Tuesday (August 26). “We wanted to make a major change today across the company in order to accelerate our building of a strong and dynamic integrated media business.”
The announcement said that this was the third stage in a three-year plan to make the business more efficient. Streamlined editorial production and outsourcing of “a number of sections and special reports” will come over the next three months. Fairfax will follow APN and others in outsourcing some production to AAP's Pagemasters service, a business of which it owns almost a half share.
The 160 jobs to be cut in New Zealand include some already announced. There are also production changes to come, with prepress and production departments in regional Victoria and South Australia being “better aligned to increase efficiency and productivity”.
Fairfax expects the job cuts to save $25 million this financial year, rising to $50 million a year after that. Redundancy payments will lead to a one-time cost of $50 million.
Media, Entertainment and Arts Alliance federal secretary Chris Warren has described the moves as “one of the most significant job losses in Australia this year” and said the union will hold meetings in Sydney, Melbourne, Newcastle and Wollongong and seek negotiations with management.
“It's obviously going to have a serious impact on the ongoing quality of the company's papers, magazines and websites,” he said.
While the cuts have been identified by analysts as a logical progression from the Rural Press merger and the move from Darling Harbour to a new Pyrmont building late last year, they will also be seen as a one-off opportunity to recast a sensitive industrial culture in the metropolitan centres which dates from the years in which Fairfax floundered through successive change and often without strong management leadership.
Kirk and McCarthy reject suggestions that the changes will compromise the editorial quality of the metropolitan mastheads … and they need not. Staff have been told the initiative has been “carefully constructed by the publishers with full regard for the integrity of their mastheads”. The newspapers will “remain true to their heritage and their values of quality and excellence.”
All possible, especially in this era of integrated print and online publishing, and the technology which supports it. Interestingly, Fairfax Digital – which increased its revenue take by a third last year to almost $250 million, and profits by 41 per cent – has been left out of the announced cuts.
Figures presented earlier in the week do not include specific revenue figures for metropolitan and regional publishing, and Australian printing, but the quoted 2.8 per cent fall in the metros’ revenue was enough to dent profits for that division by 8.9 per cent.
The need for savings “opportunities” was discussed at last Thursday’s briefing. Now it is being taken, hopefully along with the ‘opportunity’ for cultural change. However, the course ahead is fraught with danger and will almost certainly involve industrial action.
Even before the announcement, there were suggestions that trouble might come over the weekend of the AFL and NRL finals. Coincidentally, this was also the weekend being mooted for the Australian Single Width Users Group conference – a training and development-focussed event attended by numerous Fairfax and Rural Press technical managers, and presided over by now chief executive (web printing) Bob Lockley.
The event was moved last month to a new date in March. Now if the call goes up for ‘all hands on deck’ on a weekend in late September, Lockley and his team won’t be far from their jobs.