10 April 2012

Fairfax Media: The death spiral continues

One year ago, in InSight 175, I wrote a short piece on the state of print media advertising, specifically the sad state of job ad volumes in the My Career section of The Saturday Age. In that piece I commented; 

‘... the actual number of job ads listed seems to be in freefall. I counted 32 tabloid-sized pages of job ads in the 26 March 2011 edition of My Career. This is being generous, as there are many Fairfax internal self promotional ads (eg Green Guide, Epicure, My Career app etc) placed throughout these pages.' 

I thought it would be an interesting exercise, a further twelve months down the track, to see what had changed, so I read through the My Career that was included with The Saturday Age on 31 March 2012. 

Well, the news is all bad for Fairfax Media. Very bad. The 32 tabloid sized pages on ads which had appeared on 26 March 2011 has now shrunk to 17 tabloid sized pages of ads and that's still being generous considering how many internal Fairfax ads and ads for training courses were scattered throughout those pages. 

Jobs in teaching, health and local government covered 95% of the ads that appeared and the two ads (yes ... two in total) that appeared under the HR/Recruitment sub-heading were for roles at the City of Port Phillip and the Hillcrest Christian College, respectively.

This is what I said in last year's piece about the Fairfax share price; 

‘On 3 May 2007, Fairfax Media was trading on the ASX at AUD$4.99. In mid-October 2008, as the world digested the impact of the Lehman Brothers collapse, the share price slipped under two dollars. It's never got back to that level since. Last Friday, 1 April 2011, Fairfax Media closed at AUD$1.29.' 

Sadly for Fairfax Media shareholders, the market has delivered a financial verdict consistent with the slide in ad volumes. My year-on-year analysis of My Career job ads showed a 47% decline between the last Saturday of March 2011 and the last Saturday of March 2012. The share price is now (on Tuesday 10 April 2012) trading at 73 cents which is a 43% decline from the same time a year ago. 

Interestingly my own consumption of Fairfax Media products has increased substantially in the past 12 months. The iPad app for The Age is excellent and I now read The Age seven days a week via the app (compared to two days per week prior to getting the app). Sadly for Fairfax, they haven't worked out how to turn me into a paying customer as this fabulous service is currently available to me for free. 

This remains the dilemma for the last century businesses still relying on last century's (or the century before that) business model - how to convert customers into consistently profitable revenue streams. 

The famed Fairfax ‘rivers of gold' classified ad revenues are now little more than a trickle and the best efforts of (relatively) new CEO, Greg Hywood clearly aren't enough to stem the death spiral. 

Will there even be a paper version of My Career this time next year? I'd say that's probably an even money bet at this stage.

3 comments:

  1. Hi Ross
    Really interesting correlation between print media revenue and share value.

    Have they not figured out how to move the jobs revenue to the online model?

    Best regards
    Alan

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  2. Thanks for your comment, Alan. Given Seek started up in 1997 and Fairfax have had 15 years to work out how to do what you suggest I would guess that as they haven't been able to do it by now they won't ever do it. Seek's lead is too big and now LinkedIn is the new competitor. It's all over for Fairfax Media now.

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  3. Comment is free but balance sheet and revenue analysis is golden.

    ReplyDelete