■ Weekday digital only transition not far off: We believe the ongoing decline in metro print advertising revenue means that the move to a weekday digital only publishing model is getting closer. In this report we analyse the potential impact on revenue and costs. We estimate the cost savings required to maintain profitability under a digital only weekday model are achievable, particularly given Fairfax’s strong track record on cost control. Metro Media would become a smaller, but more stable and sustainable business.
■ Lower revenue, but lower cost: We calculate circulation revenue would decline by c. A$77 mn on the move to a digital only weekday model. Weekday print ad revenue would also decline, but that revenue is falling away rapidly anyway. We expect some offset from higher online revenue. We estimate that Fairfax would need to generate A$117 mn of cost savings over the next three years to maintain Metro Media profitability under a digital only model (25% of cost base). The majority of savings would come from print production and distribution savings as volumes halve. Savings required are substantially less than the A$235mn achieved under the Fairfax of the Future programme.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
