Fairfax Media and News Corp agree to share printing services Media Man Int

Fairfax Media and News Corp agree to share printing services -18th July 2018

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Fairfax Media chief executive Greg Hywood has struck a deal with News Corp to combine printing assets. Photo: Louie Douvis

By Jennifer Duke

Fairfax Media's newly minted printing deal with rival publisher News Corp Australia builds on the success of another pragmatic tie-up with internet giant Google, says the company's chief executive Greg Hywood.

Fairfax's share price shot up 3.25 per cent on Wednesday when the deal with News Corp, which will save the company $15 million a year, was announced.

Mr Hywood told Fairfax Media (the owner of The Sydney Morning Herald and The Age) the new deal was a "more efficient way, a reduced cost way, of producing that adds to the life of newspapers rather than the contrary".

Fairfax will see a full-year benefit of about $15 million from the end of the first half of fiscal 2019. Mr Hywood said it was a rational decision, pointing to a recent Google partnership for programmatic advertising as a similar commercially-focused choice.

“The beauty of [the Google deal] is it’s a commercial arrangement which is good commercially for us and it’s good commercially for them, so it’s not some sort of cross-subsidisation of journalism, it’s a commercial arrangement that works.

"They’ve got scale, we’ve got premium inventory, we need scale, they need premium inventory and away it goes," he said.

“We have to deliver the numbers in the deal,” he said, confirming they were reaching targets. “We’re doing well.”

He pointed to the partnership with the search giant, subscriptions growth and riding out the worst of the print decline as major achievements.

"And we’re doing these back-end arrangements within the industry to continue to push out the life of newspapers," he said, noting the growth in digital subscriptions was "more than offsetting the decline in print subscriptions", helping to mitigate the print revenue declines.

"There’s no doubt that the mix between advertising and subs has substantially changed," Mr Hywood said.

"That subs as a proportion of total revenue is much greater than it used to be. A decade ago it was 85 per cent advertising, 15 per cent subs, now it’s 50/50. It’s reduction in print advertising but also a growth in subs."

In February, Mr Hywood flagged “efficiencies” between the rival publishers, noting advisers had been appointed to “pursue deeper strategic opportunities” around printing and distribution. The two companies previously collaborated with shared trucking and printing in Queensland.

News Corp is expected to provide printing services for Fairfax across NSW and Queensland, while Fairfax will print News Corp publications from its NSW-based North Richmond plant.

This will mean closing Fairfax’s print centres in NSW’s Beresfield and Queensland’s Ormiston after a transition period. It is understood about 120 staff, including permanents and casuals, could be affected by the closure of the two plants, with redeployment opportunities to be considered.

News Corp Australasia executive chairman Michael Miller said in a statement the commercial deal provided scale and efficiency and made better use of its existing print facilities.

“As a publisher, we have absolute confidence in the ongoing significance of newspapers. Within this framework, we need to continue to look at the most effective and efficient ways to produce newspapers,” Mr Miller said.

He said talks continued in addition to the NSW and Queensland agreement, which starts this month.

Neither publisher’s content is affected by the agreement, with no impact expected for readers in terms of the availability of titles.

Fairfax Media's share price jumped 3.25 per cent to 80c on Wednesday.

(The Sydney Morning Herald)