Fairfax will slash nearly 2,000 jobs, shut two printing presses and start charging people to view its key websites, in the biggest shakeup in the newspaper publisher's 170-year history.
Australia's second-largest newspaper publisher hopes the sweeping changes will ensure its survival in the digital age as people increasingly turn to the internet for news.
Of the 1,900 jobs being cut in the next three years, 300 will go from Fairfax's metropolitan newspapers The Sydney Morning Herald (SMH), The Age and Canberra Times.
Hundreds of jobs are also expected to go when Fairfax closes its printing presses at Chullora in Sydney and Tullamarine in Melbourne in the next two years.
The broadsheet pages of its flagship SMH and Age will also shrink in size to tabloid formats as part of the plan to help Fairfax reap $235 million in annual savings.
And readers will have to start paying to view parts of The Age and SMH online when paywalls for their websites are erected in 2013.
Chief executive Greg Hywood said the changes were necessary to ensure Fairfax remained a leading independent media company.
"Readers' behaviours have changed and will not change back," he said as the changes were announced on Monday.
"As a result, we are taking decisive actions to fundamentally change the way we do business."
Fairfax has struggled for years to reverse declining revenues amid falling newspaper sales, a trend mirrored by publishers worldwide.
Rupert Murdoch's News Corp is also expected to be working on plans to cut hundreds of staff from its Australian newspapers.
Fairfax flagged on Monday that it could stop printing newspapers altogether if its revenues don't recover.
It said it wanted to position its metropolitan media business to "provide flexibility to move the business to a digital-only model if that is what is required in the future".
Independent media analyst Peter Cox said Fairfax had been forced to make dramatic changes because of poor strategic decisions in the past five to 10 years.
He said Fairfax should have tried harder to hold onto its classified advertising - the so-called "rivers of gold" - which was a high revenue earner.
"The second strategic mistake they made was that they very proudly went and built the new printing presses at Chullora and Tullamarine, very expensive colour presses, for a product that was dying."
Fairfax opened its $220 million Tullamarine presses only nine years ago, while the $315 million Chullora plant was commissioned in 1996.
Half the jobs being axed at the company's metropolitan newspapers are editorial positions and will go in the next two to three months.
"There's been tears on the newsroom floor and we really don't know the full details," senior SMH reporter Stuart Washington said.
Unions slammed the cuts.
"Any further loss of editorial positions will clearly damage these newspapers' ability to produce quality journalism, regardless of whether that journalism appears in print or on digital platforms," Media Entertainment and Arts Alliance (MEAA) acting federal secretary Paul Murphy said.
The Australian Manufactures Workers Union's Tim Ayres said the news had "driven a stake into the hearts of 210 printing workers" at Chullora.
Fairfax's announcement came as the world's richest woman, Gina Rinehart, confirmed she had increased her stake in the publisher to 18.67 per cent with a recent purchase of 143 million shares.
The buy-up has fuelled speculation that Fairfax directors may finally cave in and offer Ms Rinehart a board seat.
Fairfax shares closed 4.5 cents higher at 65 cents.
