Analyst: Fairfax should axe two print papers

Posted by Erina Lin on August 5, 2010 at 4:43 PM

An analyst for a big Australian-based investment bank suggested that Fairfax Media Ltd. could gain its earnings by shutting down the print editions of The Sydney Morning Herald and Melbourne's The Age and focusing on e-readers and online, The National Business Review reported.

According to the report from Macquarie, Australia's biggest investment bank, dropping print editions and delivering content via e-readers could "boost earnings from the two papers to A$55 million - $5 million more than the bank's 2010 forecast, the Australian reported.

Analyst Alex Pollak said Fairfax could "get the ball rolling by spending about $50 million to give away 100,000 e-readers to seed the migration of readers away from print."

"The point is such a move is likely, but not in its entirety on day one -- a seismic structural shift like this will take time for Fairfax to convince both advertisers and consumers alike of its merits," he added.

Fairfax has hired consultants to perform a review of its five-year strategic plan compiled by chief executive Brian McCarthy, which, according to Macquarie, would be released along with its 2010 results, the Australian reported.

Pollak said the plan includes a proposal to combine the editor-in-chief roles for both print and online, and added Wednesday that Fairfax might consider the savings from closing down print editions of two biggest dailies in Australasia.

"We believe that a more far-reaching examination of the Fairfax business cannot be ruled out, including the elimination of newsprint altogether in The Sydney Morning Herald and The Age," said Pollak.