24/08/2009 - 09:38

Media mainstays post big losses

24/08/2009 - 09:38


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Newspaper publisher and radio station owner, Fairfax Media and the country's largest radio network, Austereo Group posted big losses FY2009 and both organisation's agree the difficult market conditions are set to continue in the short term.

Newspaper publisher and radio station owner, Fairfax Media and the country's largest radio network, Austereo Group posted big losses FY2009 and both organisation's agree the difficult market conditions are set to continue in the short term.

Fairfax Media, which owns local radio radio stations 6PR and 96fm and news website WAtoday.com.au, reported a net loss of $380 million and says advertising revenues have bottomed but a recovery is yet to begin.

While Austereo and its popular Perth stations, 92.9 and ratings mainstay Mix 94.5, says its annual profit has fallen 15.2 per cent and it is bracing for a challenging 2010.

Austereo said its full year profit was $41.4 million, down 15.2 per cent from the profit in 2007/08 of $48.8 million.

Fairfax posted earnings before interest, tax, depreciation and amortisation (EBITDA) of $605 million in the year to June, down 27.2 per cent on the previous year.

Fairfax's net loss for the year to June 30 included $664.3 million in significant items, $513 million of which related to a reduction in the carrying value of its mastheads and goodwill.

The newspaper publisher posted a net profit of $386.9 million in the previous corresponding period.

Net profit excluding impairments and significant items for 2008/09 was $226.7 million.

Revenue for the financial year was $2.6 billion, 10 per cent lower than the previous year.

No final dividend will be paid.

"Trading results for 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 demand has not yet commenced," Fairfax said in a statement on Monday.

"Influential factors on performance in the year ahead will be lower interest charges, a lower cost base, a team approach to entrenching Fairfax brands, and online businesses that will improve further as business conditions recover."

The speed of the economic slowdown, cuts to discretionary advertising and the challenges presented to online media were the major impacts on the company's operations in 2008/09, Fairfax said.

Fairfax managing director, Brian McCarthy, said the company had achieved the best financial performance possible in an unprecedented and difficult business environment.

"Among the challenges we've faced have been reshaping Fairfax for the future at the same time as dealing with depressed advertising markets," Mr McCarthy said.

"The emerging company will be a stronger force in the market place."

Mr McCarthy said Fairfax would continue to look at new business opportunities.

Charging readers for online access to its websites, beyond The Australian Financial Review, was "one of the options" the company was looking at.

Interestingly, Mr McCarthy said he would be "happy to talk" to rival News Corp about a plan to charge readers for accessing online news content.

Rupert Murdoch, chairman and chief executive of News Corp, said in August his global media group would start charging for access to online news content this financial year to combat falling advertising revenue.

News Corp owns newspapers around the world but currently only charges for access to the Wall Street Journal online.

"We need to understand the detail (of Mr Murdoch's plan)," Mr McCarthy said.

"We've got to be careful here because we are competitors in the market.

"There is a group called the ACCC [Australian Competition and Consumer Commission] and whatever we do, we have to make sure we're doing it within the law.

"Putting that to one side, as I said I'd be happy to talk to anybody about any suggestions."

Fairfax will continue to examine strategies that enhance its existing operations and provide growth prospects, the company said.

A $624 million capital raising earlier in 2009 helped reduce Fairfax's net borrowings to $1.78 billion, it said.

Fairfax's Sydney and Melbourne metropolitan publications, including The Sydney Morning Herald and The Age, saw a 46 per cent drop in EBITDA compared to last year, to $96.9 million, while regional and community publications EBITDA dropped 16 per cent to $174.9 million.

Its printing division posted an 18.7 per cent drop in EBITDA to $58.1 million, while online EBITDA was down 0.8 per cent to $108.7 million.

As expected, the company did not declare a final dividend.

Shares in Fairfax were up six cents at $1.47 at 1113 AEST.

In a statement to the stock exchange on Monday, Austereo said underlying revenues from continuing activities was $258.924 million, down 2.9 per cent.

Company chairman, Peter Harvie said he was expecting a tough 2010.

"Austereo's positive set of audience and sales figures would provide a powerful springboard to deal with expected challenging media conditions for the first half 2010," Mr Harvie said.

"Our focus is on costs, and our continued leadership in audience and sales shares.

"There are some early indications of marginal improvement in some client sectors but we would certainly not call an end, in the immediate future, to the current complexities."

Austereo chief executive officer Michael Anderson said he was cautiously optimistic on future advertising.

"While some advertising categories came under pressure, Austereo saw growth in the food, services, entertainment, medical and media categories," Mr Anderson said.

"The ongoing renewal of many of the major client contacts provides grounds for guarded optimism, while the retention rate for the Group's top forty clients was an exceptional 97.5 per cent," he said.


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