Fairfax to Shrink Jobs, Newspapers Date June 19, 2012 Kirsty Simpson

Fairfax to shrink jobs, newspapers Date June 19, 2012 Kirsty Simpson FAIRFAX Media will axe 1900 jobs, close printing presses in Melbourne and Sydney, and convert The Age and The Sydney Morning Herald into smaller tabloid newspaper formats under radical changes designed to cut costs as readers and advertising move online. After an 85 per cent collapse in the Fairfax share price in five years - and the transfer of formerly lucrative newspaper ads for jobs, homes and cars to the internet - chief executive Greg Hywood announced what he called a ''historic'' overhaul of the company's business model. The overhaul coincides with a battle for control of the Fairfax board, with Australia's richest woman and Fairfax's largest investor, Gina Rinehart, now believed to want the deputy chairman's role, along with two other board representatives - including Hungry Jacks founder Jack Cowin. The Rinehart camp is also believed to have told the board that as a major shareholder, she and her representatives should not be restricted when it comes to editorial matters - including the hiring and firing of editors. Her demands conflict with traditional Fairfax board protocol that directors not interfere with editorial direction, and with a charter of editorial independence that has been honoured by boards since the early 1990s. It is believed the board had been considering offering Mrs Rinehart some seats in recognition of her substantial stake in the company - she now owns 18.67 per cent after a market raid last week. But her resistance to editorial independence will make an offer more difficult. While Mr Hywood refused to comment on Mrs Rinehart, senior figures from both the government and opposition expressed alarm at the possibility of editorial interference. ''What this will do is destroy the credibility of the Fairfax mastheads,'' Communications Minister Stephen Conroy said. ''If you were to start turning it into just a pro-mining industry gazette, well, I don't think you would say the rest of the shareholders in Fairfax would be too excited about the collapse in readership.'' Opposition communications spokesman Malcolm Turnbull said the board's reluctance to give Mrs Rinehart board seats was understandable in the absence of a commitment by her to editorial independence. ''If Fairfax, for example, were seen to be a mouthpiece of Gina Rinehart and a 'spokes vehicle' for the mining industry, that would undermine its business model dramatically … the business would … dwindle away,'' Mr Turnbull told the ABC. Nearly one in five jobs at Fairfax will be lost, including at least 300 more editorial staff mainly in Sydney and Melbourne after the recent loss of 66 production jobs in regional New South Wales. The closure of the two printing sites will lead to the loss of about 380 jobs and the remaining jobs will come from elsewhere in the company. The announcement drew condemnation from unions and dismay from political figures. ''Fairfax have had to make, they say, some very tough decisions to survive as an organisation at all,'' Senator Conroy said. ''It's very disappointing to see that anyone will be losing their job. As more and more sectors are having their supply chains cannibalised by the internet you have to start preparing for it.'' The decision has followed relentless pressure on Fairfax from investors and sharemarket analysts to make sweeping changes to refocus the company towards the internet as the share price fell this year from a high of $1.01 to 56.5 cents at its lowest. Yesterday's announcement pushed the share price 4.5 cents higher to 65 cents and won plaudits from market analysts. Mr Hywood said drastic changes were necessitated by a "perfect storm" of structural and cyclical forces confronting the newspaper industry and causing significant declines in earnings. ''And it is global,'' he said. ''Be you The Sydney Morning Herald, The Age, The New York Times, The Boston Globe, The Times, The Guardian … we have all experienced huge one-way changes in reader and advertiser habits.'' News Limited, Australia's largest newspaper company, is also expected to announce a sweeping overhaul within days. The decision to convert The Age and The Sydney Morning Herald to tabloid size from next March follows years of internal discussions about the prospect. Mr Hywood said the decline in print advertising had forced the changes, which he said would be embraced by readers. ''It should be a compact (tabloid) because a broadsheet was just built to hold classified advertising. It was never built to be reader-friendly.'' While the company flagged the possibility of eventually closing newspapers if they became unprofitable, Mr Hywood downplayed the prospect, saying there were many ways to improve profitability of newspapers, including lifting the cover price. ''I would expect there to be a print product around for some considerable time,'' he said. Garry Linnell, editorial director of Fairfax metropolitan newspapers, said there would be ''no push'' to change the tone and content of the newspapers as a result of the move to a tabloid format. ''Size doesn't matter,'' he told staff. But there would be ''some adjustment'' to the length of articles. ''Some stories will be shorter, some will be longer.'' Mr Linnell said foreign bureaus and weekly liftout sections would be reviewed. ''If we think there is an argument for closing one or two [bureaus], we will look at that.'' He said Fairfax's newspapers could not be ''all things to all people'' and their core business was ''news, business, sport, investigative journalism and great writing''. ''We've got sections on our newspapers that have been there for 30 years that were introduced as circulation drivers,'' he said. ''Well, they're no longer circulation drivers.'' The fourth key plank of the announcement was the introduction of paid premium digital products. The newspapers' websites will move to a subscription model early next year. Readers would be able to access a certain number of stories for free but if they want more they would have to pay - similar to The New York Times in the US. Specific details of the online pricing plans would be announced later this year. In a briefing to investors about its overhaul, Fairfax said that as long as its print revenue remained substantial - currently about $500 million a year - it would not be economical to move to a digital-only business model. However, it said the company would have significant flexibility to adjust the business model to reflect advertising and audience trends. With Bianca Hall .

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