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Fairfax NZ's 1H revenues and earnings down as advertising revenue falls

Wednesday 22nd February 2017

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Sydney-based publisher Fairfax Media says its New Zealand unit's revenue and earnings fell in the first half on the back of ongoing weakness in print advertising revenue.

In New Zealand, where Fairfax's assets have been packaged for a merger with the operations of NZME, earnings before interest, tax, depreciation and amortisation were down 6.2 percent at A$25.9 million versus the prior period, while revenue fell 4.1 percent to A$159.2 million.  Advertising was down 9.9 percent in New Zealand dollars terms to $107.9 million, it said. Circulation revenue also fell. 

"Weakness in print advertising revenue was partially offset by strong digital growth of 21 percent and significant expansion in the contribution of events. Circulation revenue declined 8 percent with volume declines offsetting improvements in yield," said Fairfax Media chief executive Greg Hywood. He noted, however, cost management continued with an 8 percent reduction in operating costs.

Total group operating ebitda was A$145 million, down 9.9 percent, while group revenue for continuing businesses fell 5.8 percent to A$903 million, the company said.

Separately, Fairfax Media said it was conducting a strategic review of the Domain Group in preparation for Domain's potential separation into a new Fairfax controlled ASX-listed entity. 

Hywood said he continues to expect the New Zealand Commerce Commission to make a decision on the proposed merger of Fairfax NZ with NZME by mid-March. 

The commission is due to make a final decision by March 15. The regulator's draft view was that it should reject a merger of NZME and Fairfax New Zealand, which it says would "result in an unprecedented level of media concentration for a well-established liberal democracy" with the potential loss of multiple media voices a major part of the decision.

The news organisations have said a merger would let them build a "real opportunity" to compete with the likes of online ad giants Google and Facebook, which take about 80 percent of all digital ad revenue, to create a sustainable business that supports local journalism and contributes to New Zealand's tax base.

The companies are seeking Commerce Commission authorisation for the deal, a higher threshold to cross than a clearance in that it claims an anti-competitive transaction can drive enough public benefit to outweigh any reduction in competition. 

Looking ahead, Fairfax Media said trading conditions remained muted. Trading in the first two weeks of February saw revenues around 6 percent below last year and trading in January saw revenues around 10 percent below last year "in a slower than usual start across the media industry," it said.

The ASX-listed Fairfax Media shares last traded at 87 Australian cents.

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