Postcards from the road to re-invention October 20, 2011 Four strategic priorities Create across platforms Monetise across platforms Transitioning print Build new profit streams The Market The local market has outperformed OECD countries in recent years… Estimated newspaper revenue decline 2007 -2009 Continued high newspaper ad spend Australia’s ad forecast is the best of the western markets Seven of the top 10 news websites are owned by newspaper publishers #1 Nine News ninemsn 2 The Sydney Morning Herald Fairfax Media 3 The Age Fairfax Media 4 news.com.au News Digital Media 5 Herald Sun News Digital Media 6 Yahoo!7 News Yahoo!7 7 The Australian News Digital Media 8 thetelegraph.com.au News Digital Media 9 BBC News BBC 10 Weatherzone Fairfax Media Source: Nielsen Online Market Intelligence Domestic August 2011. Ranking on Daily UBs. Fairfax Media: Capitalised at €1.5 billion. 440 publications, 287 websites, 9 radio licences + 23 printing centres 261 Newspaper Publications AUSTRALIA 31 Agricultural Publications 23 Magazines 287 Websites 9 Radio Licences 15 Printing Centres 72 Newspaper Publications NEW ZEALAND 4 Agricultural Publications 25 Magazines 19 Websites 8 Printing Centres USA 24 Agricultural Publications and websites A decade of diversification FY2000 EBITDA FY2011 EBITDA Broadcasting 4% Specialist Media 9% Australian Other Regional 25% New Zealand Media 12% Australian Metropolitan Printing 14% 17% Australian Online Metropolitan 19% 9 • Established in 1831 - never missed an issue • Broadsheet. Upscale skew. Circulates in the states of New South Wales and southern Queensland • 35-40 per cent subscription base • 80 per cent of revenue from advertising • Circulation Weekday 200,644 Saturday 342,979 • Readership Weekday 754,000 Saturday 1,013,000 • Upscale readers Weekday 323,000 Saturday 429,000 • Smh.com.au • Established in 1995, Younger, Affluent skew • Market leader in news and information nationally • Web Unique Browsers 630,000 / daily • Mobile unique browsers 129,000/ daily 10 Creating across platforms Create a product portfolio to target audiences as they move and change through a day Engagement Throughout The Day 12 Mobile website traffic continues to boom Mobile News Websites – Average Daily UB’s 160,000 140,000 120,000 100,000 80,000 Daily UB’s Daily UB’s 60,000 Avg 40,000 20,000 - SMH The Age news.com.au ninemsn/9 News The Australian Fairfax Media owns both The Sydney Morning Herald (SMH) and The Age, Melbourne Source: Nielsen/Market Intelligence/Mobile Total Traffic Monetising cross platform Monetise content through data-driven advertising and premium paid products Newspapers, Tablets, Smartphones, Web Sites Paid Web Sites, Smartphones, Tablets Demographic and Behavioural Data Web Sites, Smartphones, IPTV Free Display Advertising 19 Strategic framework At Home At Work On The Go Paid Data Free Multi-platform advertising sales: a strong upside • Classified sales fully integrated two years ago • Regional dailies fully integrated • Financial and agricultural divisions fully integrated • Metropolitan and national sales have recently been integrated across newspapers, magazines, online, smartphones and tablets. Teams are organised around client and agency groups with platform and brand specialists. They are supported by an in-house creative solutions teams for major deals. The Food & Wine Network From Newspaper and Online sections… To Books, Apps, Promotions and Events What started out as one book… Turned into a business… Turned into apps… Opening new sponsorship and transactional revenues… Opening new sponsorship and transactional revenues… Opening new sponsorship and transactional revenues… Opening new sponsorship and transactional revenues… Opening new sponsorship and transactional revenues… What we know about women online The female economy is real* • 5.6 Australian million women were online last month# • Women are a faster growing online audience than men# • Women are a more engaged and active social media audience^ • They are heavy media multi-taskers** • Women spend more time and view more pages on shopping sites^ • Women visit trusted communities for opinions, reviews and recommendations when researching brands and products* and * ** they share these with their friends & family. Harvard Business Review, Boston Consulting Group, 2010 #Roy Morgan, Single Source, June 2011, (women 18-54) ^Nielsen, NetView, Aug 2011 **Nielsen Online Consumer Report Feb 11 Nine trusted brands Transitioning print Australia Transitioning print • Make as much money as we can from print to fund our growth investments • Reallocate resources for tomorrow • Re-invent scarcity and specialisation around print content offering Australia Profitable circulation Make every channel sale profitable Price, distribution and platform review Create self-funded marketing promotions… Book promotions as newspaper promotions… Books created as newspaper promotions… Books created as newspaper promotions… Music, TV shows and movie Dow downloads as newspaper promotions eBooks downloads Traditionally, the paper would have funded a weekend promotion of a CD giveaway. As part of the profitable circulation strategy, this CD was funded by the partner. Print subscribers were offered the album as a free download in advance through iTunes, as part of a wider campaign to capture and update print subscribers’ email addresses. New profit streams Australia 1. Long Video: How to go from nothing to thousands of hours of TV programming in six months Australia The emerging trends… Online video is booming Explosion of video-capable devices High levels of illegal file sharing Smart consumers want smart programs How do you feel about watching TV programs online? 45% 41% 40% 34% 35% 30% 25% 20% 14% 15% 10% 8% 5% 2% 0% Love it Like it Neutral Unsure at the moment Don't like it Our audience are already embracing it Have you watched a movie or TV program online in the past 3 months? 100% 84% 80% 60% 40% 16% 20% 0% Yes No Who brings what to the party Content Fairfax owner Audience X Content X Distribution X Technology Buy in Sales X Brand X Marketing X Who else could do it Content Fairfax Retailer* owner Audience X X Content X Distribution X X Technology Buy in Buy in Sales X X Brand X X Marketing X X Tesco in the UK and Walmart in the US have both bought video-on-demand IPTV businesses Australia So what happened: We’re now serving 684,348 shows a month Watched by 221,818 people With factual, timely programs the hit Peak viewing is after web peak: evenings and weekends Australia 2. Live Experiences Create an expanding portfolio of high-growth events, specialising in food & wine and sport WhichAustralia tap into … • clients’ below-the-line marketing spend • public promotional dollars While… • deepening engagement with our brands • and raising millions for charity After…. • treating the business as a small start-up • and minimising the risk Transactions TransactionsAustralia A portfolio of high margin, high growth businesses. Dating, holiday rentals, property data and services, managed funds, trade directories and e-tenders. Achieving a 42 per cent profit margin in FY11 with 31 per cent growth. Serving over 1 million consumers each month Producing 500,000 transactions and $7 million of revenue each month CaseStayz studyleading Vacation the way homes in Australia Brand: Stayz 11% market share* of accommodaon site visits 1,074,018 unique visitors** 31,000 proper1es in 1,200 locaons 230,000 enquiries per month 119,000 consumer recommendaons 500,000 newsleCer subscribers * Source: Hitwise custom category ‘accommodation’ March 2011 ** Source: Nielsen Netratings The private holiday rental market is estimated at $1.8 billion in Australia Share of Domestic Visitor Nights 19% of nights booked is private rental 2% 1% 17% Luxury hotel 17% of all accommodation takings. 29% Standard hotel ($1.8 billion)* Serviced apartments Rented house / flat / appt Estimated 213,000 Holiday rentals in 25% Caravan & camping B&B Aus for rent 27+ weeks of the year^^ Backpacker 19% 7% * Source: TRA Factsheet “Accommodation Fact Sheet 2009”, Domestic visitors ^ Source: Euromonitor International, from WotIf FY10results. www.wotifgroup.com/reports/2010/docs/2010_WTF_Annual_Report.pdf ^^ Source: Internal calculations from BIS Schrapnel, “Holiday Home Market in Australia 2006”, 2011 estimate 66 Why consumers are choosing private holiday rentals Standard Serviced Rented Caravan/ B&B/Guest hotel Apartment house Camping house Visitors (‘000) 13,556 2,425 5,835 8,204 1,089 Average length of stay 3 nights 4 nights 5 nights 5 nights 2 nights Expenditure (per night) $298 $339 $235 $135 $378 Source: Accommodation Fact Sheet Tourism Research Australia, May 2010 It’s media but not as we knew it Audience Brands Sales Marketing Inventory E-commerce Live x x x x Exploit/ x experiences create IPTV x x x x buy - Vacation x x x x create x rentals Auctions x x x x attract x Property x x x x create x data Trade x x x x attract x directories Dating x x x x attract x Australia Summary Think multi-platform. Organise for multi-platform. Create & monetise for multi-platform. Re-allocate investments. Now. .