Fairfax Media has moved to shore up its balance sheet and will look to cut costs by $235 million over the next three years as it positions itself for its digital future.
The company announced it will attempt to achieve this by closing its printing presses, selling down its stake in TradeMe, and culling staff.
The media company has taken obvious restructuring steps, and rejected more radical options such as the potential breaking up of the company. However, the publisher said it is now targeting $235 million in annual savings from its cost reduction program by 2015, up from its earlier target of $170 million.
The company did not break out the cost of axing 1900 staff over three years.
Of that $235 million in cost saving, the company expects to achieve $215 million by June 2014, indicating that it will move fast to streamline operations and cut expenses. The statement by Fairfax provided no major hints about new investment, apart from the move to integrate its digital, print, and mobile platforms.
Fairfax Media chief executive Greg Hywood stressed in his announcement that the Metro business has to stand alone as a profitable business, adding that “we will not cross subsidise it with the earnings of our other divisions.”
The publisher also confirmed it sold a further 15% of New Zealand auction site TradeMe this morning, reaping $160 million. Its stake in TradeMe will fall from 66% to 51%. That stock sale enabled Fairfax to reduce company debt to around $800 million.
The Chullora and Tullamarine print operations will be closed by the middle of 2014, netting $44 million in annual cost savings. The one-off cash cost for shutting the cash costs will be $40 million.
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