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Fairfax to cut 1,900 jobs, shut printers in huge downsize

Fairfax Media has announced it will slash 1,900 jobs, shut its main printing plants, and take its two iconic mastheads…

Fairfax Chief Executive and Managing Director Greg Hywood has embarked on the biggest restructure in the company’s history. AAP/Tracey Nearmy

Fairfax Media has announced it will slash 1,900 jobs, shut its main printing plants, and take its two iconic mastheads - The Sydney Morning Herald and The Age - tabloid in preparation for a “digital-only” future.

The massive cuts, designed to save $235 million, will take out 300 positions across the company’s metropolitan newspapers, The Sydney Morning Herald, The Age and The Canberra Times. Half of those will come from editorial ranks, Metro Division CEO Jack Matthews wrote in an email to staff: “Many of these redundancies will occur over the next 2-3 months.” The cuts will also affect up to 10% of 275 editorial staff from the Financial Review Group (FRG), which includes the Australian Financial Review and BRW magazine, FRG CEO and Publisher Brett Clegg told staff in a separate email.

Under a new “digital-first model”, newsrooms at the country’s oldest media business will converge across digital, print and mobile platforms. But digital content will be partially locked behind a paywall from next year. In a further bid to cut costs, the publisher will direct mastheads in different cities to share more editorial content, and is widely expected to go ahead with long-running plans to combine the Canberra bureaus for The Sydney Morning Herald and The Age.

Soon after Fairfax revealed the plans to the ASX, staff in newsrooms in Sydney and Melbourne expressed shock at the scale of the restructure. Award-winning journalist Kate McClymont, from The Sydney Morning Herald, said there was “numbness pervading the SMH newsroom”. Another senior reporter said that “everyone knew something was coming, but no one expected it to be this massive. People are in shell-shock.”

The news comes as mining magnate Gina Rinehart prepares to seize control of the media group this week. On Friday, the world’s wealthiest woman increased her shareholding to 18.67% in her ongoing push to take as many as three seats on the board. Rinehart is believed to be involved in a stoush with board chairman Roger Corbett over whether her presence on the board should entitle her to have a say over editorial decision-making at the group’s titles.

In its note to the ASX, Fairfax said the changes were designed to prepare the company for a newspaper-free future by providing “flexibility to move the business to a digital-only model if that is what is required”. To assist with the transition, the company will close its Chullora and Tullamarine printing plants in June 2014, and shift printing to the Fairfax network, formerly Rural Press printers. Chullora employs more than 200 staff, Tullamarine about 100. The Sydney Morning Herald and The Age will move to tabloid format from next March, Fairfax said in the statement.

Both mastheads will introduce “metered” pay wall models for their websites. The model will permit a base level of free access, beyond which users will be required to pay depending on how much content they access. Details are due by the end of the year.

Chief Executive and Managing Director Greg Hywood said that “no one should be in any doubt that we are operating in very challenging times. Readers' behaviours have changed and will not change back. As a result, we are taking decisive actions to fundamentally change the way we do business.”

By closing Chullora and Tullamarine, the publishing house expects to save $44 million in printing costs each year. In his email to staff, Jack Matthews said the move to tabloid format would make no difference to the quality of journalism or editorial standards at The Sydney Morning Herald or The Age. “Just as the smaller paper size did not diminish the quality of other broadsheets to make the switch – including The Guardian and The New York Times and many others – nor will it affect our content.”

Julie Posetti, a journalism lecturer at the University of Canberra who is contracted to provide social media training to journalists at The Sydney Morning Herald, said the news was deeply disconcerting for the industry. “But Fairfax had to make a decision to dramatically alter its approach to the digital production of journalism. I welcome the overall strategy to move to an online publication model in a truly converged environment. This is going to be a very painful transition, but it’s a transition that was inevitable and necessary if the company is to have a sustainable future.”

The view from the office of The Sydney Morning Herald in Pyrmont … Hope may be Gina Rinehart’s middle name, but staff said there was no sign of it on the newsroom floor following today’s announcement. Supplied

Ms Posetti said that the shift from print to digital journalism was not necessarily a precursor to a decline in quality. “But I would be concerned if a significant portion of those jobs that are under the axe are editorial jobs. What is important is that news organisations such as The Sydney Morning Herald and The Age, very high-profile news brands, can continue to be able to produce strong, quality, investigative journalism. That does require a significant and ongoing investment in journalists.

“You can change publication platform, and you can change processes and practises to embrace emerging journalistic approaches, but you still need to invest in journalists.”

In a staff meeting at The Sydney Morning Herald late this afternoon, Mr Matthews told those gathered that “we’re all in this together. It’s sink or swim”. One veteran reporter who attended said the mood was “remarkably passive. People seem to have given up fighting. They’re just accepting that it’s going to happen. Interestingly the talk is no longer about quality journalism, it’s about survival.”

The day’s developments had been a “major reality check”, said Andrew Dodd, a Senior Lecturer in Journalism at Swinburne University. “Under Greg Hywood’s direction, Fairfax has been fighting this, but it has manifestly failed to hold back the tide of history.

“I think we’ve got to the point now where Fairfax is so desperate that it’s had to capitulate on all fronts.

“I do believe that at least some of Fairfax management understand that content is still king, and that they have to invest in it. But it remains the most expensive component of the business. You can appreciate the pressures to downsize and get rid of reporters are enormous.

“The dilemma for any news executive is how to retain quality journalism while making the business pay. I feel for them, because there is no easy answer - and if you want to retain quality journalism, you simply have to now do everything you can to create economies of scale, which means things like tabloid presentation, combining bureaus, consolidating sub-editing - everything that everyone is doing. I don’t believe that newspapers reach these positions lightly, and we need to recognise that this is an assignment of absolute desperation.”

Mr Dodd said there was inevitably a loss of pluralism and diversity in the media when organisations such as Fairfax were forced to downsize so dramatically. “But we shouldn’t lose heart, because there are lots of opportunities. We just need to keep working to find the ones that are sustainable as a paid endeavour.”

Margaret Simons, Director for the Centre for Advanced Journalism at the University of Melbourne, said the challenge for print media was to find a sustainable business model “and also to find out at what level that model is sustainable. Sadly I don’t think there is one that can support the large numbers of journalists presently employed in those newsrooms.

“I don’t think this is the last announcement we’re going to hear out of Fairfax. With the share price the way it is, it’s quite likely that there will be a takeover attempt and if it’s private equity that takes it over, then splitting the company up remains an option on the table.”

The move to a metered model of payment for digital access was “a logical approach because the difficulty of paywalls is to remain part of the conversation, to be able to have people to link to your content, and also get significant revenue from subscriptions. So getting that balance right is something everybody’s been playing with”.


Colleagues,

This morning you will have seen Greg Hywood’s note detailing substantial changes to our operations.

The decisions underpinning these changes are difficult, but as Greg has outlined to us all, we simply cannot shy away from them.

Not only are they a response to significant revenue pressures brought about by the broader economic environment, but also sweeping structural changes that challenge the economics of our – and virtually all other – traditional publishing businesses. It is important to reiterate that the challenges we face are not unique to Fairfax.

While we have previously announced a range of strategic initiatives to achieve efficiencies and develop new revenue streams, we need to do more to respond to the pace of structural change and the depth of the current cyclical slump in advertising revenue.

One initiative announced today is that The Sydney Morning Herald and The Age will move to a compact format, similar to the AFR, from March 2013. While this change will save the company $44 million in printing costs each year, we are determined that it will make no difference to the quality of our independent journalism or to our editorial standards. Just as the smaller paper size did not diminish the quality of other broadsheets to make the switch – including The Guardian and The New York Times and many others – nor will it affect our content at The Age or The Sydney Morning Herald.

We have also announced that we will be introducing a metered digital subscription model from the first quarter of 2013. We have done a great deal of analysis of this issue and believe that the right subscription model will both generate the level of revenue our content deserves as well as protect the size and growth of our audiences across all platforms.

Finally, and of most immediate interest to all of you, we announced that approximately 300 roles will be made redundant from the Metro division. Many of these redundancies will occur over the next 2-3 months.

Around half of the roles to be made redundant will be editorial positions. This reduction in staff numbers will be implemented in conjunction with the Fairfax of the Future project. As you know we have also been conducting an Editorial Review to position our newsrooms for the future. This project has been about transforming our newsrooms across all platforms and geographies to an audience first focus and creating an operating model that will deliver quality independent journalism. While the Editorial Review did not specifically address staffing levels, its recommendations will provide a structural framework which we will use to manage staffing levels across the editorial floors.

A more detailed communication will follow to outline the consultation process in relation to this redundancy program.

More flexible staffing models are required across all parts of the Metro business, not just editorial. In particular, we are reviewing our customer facing operations, production processes and marketing operations in order to finalise the remaining required redundancies. Further information regarding those changes and areas affected will be communicated as soon as the detail is finalised.

These changes announced today are part of a far-reaching program, designed to comprehensively restructure and reposition the business for years to come. I understand the period ahead will be difficult, particularly while there remains uncertainty as to exactly how it will be implemented and who will be affected. But we will deal openly and fairly with all concerned, and we will move as quickly as we can to remove those uncertainties. …

Jack Matthews CEO Metro Media


Dear colleagues,

This morning you will have seen Greg Hywood’s note detailing substantial changes to our operations.

The decisions underpinning these changes are difficult but as Greg has outlined to us all, we simply cannot shy away from them.

Not only are they a response to significant revenue pressures but also sweeping structural changes that have challenged the economics of our traditional publishing businesses.

I want to outline in this note what today’s announcement means for the Financial Review Group.

In alignment with the broader efforts across the group, FRG will be reducing headcount by approximately 10 per cent over the coming three months. We will continue to review aspects of our management structure and operations. In particular we have accelerated the centralisation of a range of supporting services, including technology, to deliver efficiencies and savings.

Recent changes and restructuring to streamline our commercial activities means we have already made material progress.

Today we are also announcing a voluntary redundancy scheme that applies to editorial staff under the Fairfax Media Metropolitan Journalists Collective Agreement 2011.

Our proposal entails redundancies equivalent to 5-10 per cent of our editorial staff, who currently number approximately 275 across all FRG publications.

Following a consultation period with staff and the Media Entertainment & Arts Alliance (MEAA), we intend to open the program and seek applications for up to 25 positions including full-time and part-time employees.

Prioritisation under the voluntary redundancy scheme will be given to the following: production journalists; photographers; magazines and inserts.

Over the next week, we will meet with employees and the union to discuss the proposed changes.

Michael Stutchbury, Paul Bailey, Alasdair Smith and I will be talking to staff today at 11.30am, 12:15pm, 2pm and 4pm at One Darling Island. I will also be visiting Media House in Melbourne on Tuesday for an 11.30am staff briefing in person. Paul Bailey will be visiting the Canberra Bureau on Wednesday for a staff briefing at 11:30am.

A separate email from Michelle Spinks will provide further detail of these and other scheduled meetings.

The changes announced today are part of a far-reaching program, designed to comprehensively restructure and reposition the business for years to come. The period ahead will be difficult as we work through the hard task of the redundancies. But we will deal openly and fairly with all concerned, and see this through to what I am confident will be a bright future for Fairfax and FRG.

Brett

Brett Clegg | Financial Review Group CEO & Publisher Financial Review Group

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