Fairfax Media slumps to 315.4 mln US annual loss
Australia's second-largest press group Fairfax Media on Monday reported an annual net loss of 380.0 million dollars (315.4 million US) as the global downturn and the Internet hit earnings.
Fairfax, which publishes the flagship Sydney Morning Herald and the Age in Melbourne, said the same factors that had caused numerous newspaper closures around the globe weighed on the bottom line.
"Over the past financial year, the company has faced a business environment unprecedented in its long history," it said.
"Three factors have had a major impact -- the speed of the economic slowdown, particularly in the second half, cuts to discretionary advertising (and) the necessity to respond to online challenges."
The result for the year to June, which included writedowns of 664.3 million dollars, turned around a 386.9 million dollar net profit in the previous financial year.
Fairfax, said net profit excluding writedowns was down 40 percent at 226.7 million dollars.
"Performance for the 2009 financial year reflects a fundamentally profitable business with a number of one-off charges," the company said.
It said most of the one-off costs related to writedowns in the carrying value of its mastheads and goodwill.
Fairfax, which announced at the start of the financial year that it would slash five percent of its workforce or 550 jobs, said underlying earnings were down 27.2 percent at 605.0 million dollars.
The company said it would not pay an annual dividend but offered some hope that advertising revenues were stabilising.
"Trading results in the first seven weeks of the new financial year indicate that the decline in advertising revenues appears to have bottomed but a material recovery in advertising has not yet commenced," it said.
Fairfax managing director Brian McCarthy said he would be open to discussions with Rupert Murdoch's rival News Corp. about charging consumers to access online news content.
"We're looking at all the options and if that's one of the options we'll look at it," McCarthy told reporters, saying that any discussions would have to bear in mind potential concerns from Australia's competition regulator.
News Corp. chairman Murdoch said in May he wanted to start charging for access to online news content this financial year to combat falling advertising revenue.
Fairfax shares were up six cents or 4.1 percent at 1.47 dollars in early afternoon trading on a rising overall Australian stock market.
JPMorgan analyst Laurent Horrut said the result was in line with expectations and included some positive developments.
"It's still early days in term of an ad spend recovery, but revenues have bottomed out and that's reasonably positive," Horrut told Dow Jones Newswires.
"Also, I think they're doing a good job on the cost side and their guidance for a lower cost base next year is good."