Fairfax Media Annual Report 2018 Media Annual Fairfax Information | Marketplaces | Entertainment | Marketplaces Information
Total Page:16
File Type:pdf, Size:1020Kb
FAIRFAX MEDIA ANNUAL REPORT 2018 MEDIA ANNUAL FAIRFAX FAIRFAX MEDIA ANNUAL REPORT 2018 INFORMATION | MARKETPLACES | ENTERTAINMENT FAIRFAX MEDIA PUTS A SPOTLIGHT ON LIFE - AND HAS DONE SO FOR 187 YEARS. OUR JOURNALISM SHINES BRIGHT. TODAY. TOMORROW. AND BEYOND. We have hit our stride - going for growth - maximising the growth drivers of our core assets and stepping into the future with great confidence. Our quality independent journalism, deeply engaging content and great experiences have long been part of the everyday for millions of people. Our information brands, marketplaces and entertainment assets excite, engage and enrich the lives of millions of Australians and New Zealanders every day. We are at the heart of conversations that matter and creating connections that count. We are the trusted voice, informing and enlightening with our newspapers, websites, radio stations, events and dynamic digital venues for commerce and information. We are a positive force in our communities, playing an essential role in guaranteeing transparent and open democracy. Our journalists perform their jobs with independence, insight and integrity. They chase the truth and shine light on institutions and powerful leaders by asking questions that they cannot or will not ask of themselves. Our people are highly energised and passionate about our mission, bringing vibrancy to their work. Our customers and audiences are the centre of everything we do. We are at the forefront of the contemporary media sector, driving innovation and growing shareholder value. Fairfax Media’s thriving, modern, diversified portfolio - spanning media, marketing services, real estate services, data, entertainment, and beyond - sustains the important work we do in the communities we serve. INDEPENDENT. ALWAYS. 2018 SNAPSHOT Information AUSTRALIAN AUSTRALIAN STUFF METRO MEDIA COMMUNITY MEDIA LEADING NEW ZEALAND LEADING METROPOLITAN LEADING RURAL AND DIGITAL MEDIA, DIGITAL MEDIA, REGIONAL NEWSPAPERS, NEWSPAPERS AND EVENTS NEWSPAPERS AND EVENTS DIGITAL MEDIA AND EVENTS Metro is focused on strengthening ACM is focused on optimising its Stuff’s strategic focus is on leveraging earnings and long-term growth operating structure to grow digital the enormous power of leading by driving digital performance and and maximise cash flows from low local digital platform Stuff.co.nz and maximising the print contribution. New capital intensive and profitable hyper-local community platform products, a simplified technology stack print. A network of more than 150 Neighbourly, while rationalising and commercial innovation underpin regional and local titles, together print. Stuff and Neighbourly have a a next-generation publishing model. with leading agricultural and combined membership base of 1.2 Australia’s number one masthead specialist mastheads and events, million and an impressive monthly The Sydney Morning Herald, along reaches and monetises highly- audience of 2 million. This engaged engaged communities. Agricultural and loyal membership base has fuelled with The Age, The Australian Financial titles were particularly resilient. category expansion via internet service Review and other titles, leverage quality Strong growth in B2B revenues was provider Stuff Fibre, new release movie journalism and content to engage underpinned by the delivery of a full on-demand streaming service Stuff large multi-platform audiences. suite of digital marketing solutions Pix, lead generation partnerships with Metro includes other digital assets to local businesses via Fairfax utilities and financial services providers, and Events and Entertainment. Paid Marketing Services. Subscriptions and Neighbourly property classifieds. digital subscribers for the SMH, The are expected to grow with new local The renaming of the NZ business as Age and Financial Review reached news packages being progressively Stuff during the year recognises the around 313,000 and support a growing introduced including paid digital tremendous power of the Stuff brand, digital subscription base. A world-first subscriptions in key markets. the role it plays in everyday Kiwi life, and partnership with Google maximises ACM is making progress in growing its position at the centre of a significant the value of digital audience and its digital presence while optimising digital growth opportunity. Digital and programmatic advertising inventory. its currently profitable long tail of other non-print revenue is 18% of total Cost initiatives offset print advertising print publications. Continued cost and growing rapidly. Ongoing efficiency declines, with a new era of industry efficiency somewhat offset advertising measures delivered an underlying 4% cooperation expected to deliver declines, with further cost reduction reduction in costs, somewhat offsetting material cost benefits in FY19. measures being implemented. print advertising declines. -6% +9% +8% -9% -6% -22% -8% +21% -27% TOTAL DIGITAL EBITDA TOTAL OPERATING EBITDA TOTAL DIGITAL EBITDA REVENUE SUBSCRIPTION (UNDERLYING) REVENUE COSTS (UNDERLYING) REVENUE REVENUE (UNDERLYING) REVENUE 2 | FAIRFAX MEDIA ANNUAL REPORT 2018 Marketplaces Entertainment DOMAIN GROUP STAN MACQUARIE MEDIA REAL ESTATE MEDIA AUSTRALIA’S LEADING LEADING NATIONAL AND SERVICES LOCAL SVOD SERVICE NEWS/TALK/SPORT RADIO NETWORK Domain achieved the milestone of Stan broke through 1 million active 54.5%-owned Macquarie Media is a becoming a separate ASX-listed entity subscribers in June 2018. The news/talk/sport radio powerhouse in November 2017. Fairfax’s 59.4% compelling subscription proposition with high-profile talent and the shareholding remains a key strategic is underpinned by the exclusive number-one stations in the key asset. Underpinning Domain’s value Australian output deals with markets of Sydney (2GB) and is strong agent relationships across SHOWTIME, Starz, MGM, a range Melbourne (3AW). Capital city residential and commercial, effective of exclusive content rights with stations 2GB, 3AW, 4BC and listings parity, large and highly-engaged global studios as well as investment 6PR and the new Macquarie multiplatform audiences, compelling in original local productions. Sports Radio franchise provide editorial, and data and insights. These Subscriber growth, combined with targeted quality programming and strong fundamentals provide for the first price increases since launch content, and opportunities for geographic expansion opportunities and 3.5 years ago, underpinned 72% cross promotion to build network further growth in established markets. growth in subscription revenue. audience strength. A loyal and Product innovation leadership has The strength of the operating valuable audience of almost 2 resulted in consistently high consumer model is reflected in revenue million is monetised through strong ratings for Domain’s app. Domain has growth far outpacing the increase advertiser relationships and new partnered with specialists to operate in operating costs. Financial and advertising categories. The merger Domain Loan Finder, Domain Insure and Compare & Connect. Home loans, brand support of strategically of Fairfax Radio Network (FRN) and insurance and utilities connections are aligned 50:50 shareholders Macquarie in 2015 has clearly been a large markets adjacent to Domain’s core has leveraged the mass market success, with significant operational being leveraged to grow transactions consumer marketing reach of synergies delivered including a revenue. Cost increases reflected both companies. Stan is strongly cost-efficient national sales and investment in staff, property and positioned to continue its growth programming footprint and network transactions businesses, somewhat trajectory and in a changing sales upside. Macquarie’s EBITDA offset by savings in print. Core digital landscape is well placed to benefit margin of 23.8% is significantly margins increased reflecting strong from further strategic alignment ahead of FRN’s EBITDA margin growth in core digital EBITDA. with global studios and networks. of 16.4% prior to the merger. +12% +20% +13% 1.1M+ +72% +23% +4% #1 +3% TOTAL DIGITAL PRO FORMA ACTIVE SUBSCRIPTION OPERATING TOTAL STATIONS IN EBITDA REVENUE REVENUE EBITDA1 SUBSCRIBERS REVENUE COSTS REVENUE SYDNEY AND (UNDERLYING) (UNDERLYING)2 MELBOURNE 1. Domain's pro forma reflects Domain's financial results on a separated basis for the full 12 months. Domain separated from Fairfax Media on 22 November 2017. 2. Macquarie Media revenue excludes disposals (as reported by MRN). Openair Cinema in Sydney's Bondi, operated by Fairfax Events & Entertainment GOING FOR GROWTH | 3 A NOTE FROM THE CHAIRMAN NICK FALLOON We are grateful for your investment in potential by leveraging increased scale key metropolitan titles, Metro digital Fairfax. Your support has enabled the of audiences and marketing inventory advertising growth in the second half Company’s multi-year transformation to grow. of the year, and a strong performance from digital subscriptions. and has allowed us to completely The proposed merger of Fairfax and reshape a traditional media model Nine brings together aligned strategies Group expenses decreased around with a large fixed cost base, into a of using expanded audiences and 4% to $1,408.9 million, reflecting diversified, contemporary portfolio marketing inventory to drive growth: continued cost discipline and efficiency of multimedia, digital and growth- measures, notwithstanding continued • Achieving greater scale and focused assets such as Domain and investment in growth initiatives. Stan, with