Following a major shakeup of the senior hierarchy at Fairfax earlier this year, attention has now shifted to the rest of the conglomerate, with more job cuts looking inevitable.
In July, Stuff, Fairfax New Zealand’s largest publication, reported that the Australian head office had announced plans to cut costs by A$60 million dollars. When asked about the amount Fairfax New Zealand would be covering, Nicola Igusa, the comms and marketing manager, could not quote an exact figure, but she did say the New Zealand arm would be responsible for an amount proportionate to its revenue contribution.
The end-of-year financial results, released by Fairfax on 22 August, further accentuated the need for cost-cutting measures. Across the group, Fairfax revenue suffered a drop of 8.2 percent, while New Zealand fared slightly better but still dipped by 4.7 percent.
In addition to citing dwindling advertising income as a major reason for the loss of revenue, Igusa also said that “It has been compounded in New Zealand by the market not going back to the levels it was at prior to the GFC in 2008. It’s a case of advertisers trying to come to grips with this new world.”
And for Fairfax, coming to grips has meant contemporising the structure to make it complicit with an increasingly digitised world. Igusa explained that the job cuts should not be seen as a knee-jerk reaction to plug the revenue holes, but rather as a transformation that aims to modernise Fairfax’s approach.
“It’s a matter of really focusing on the audience and having our reader as the centre of everything we do. The type of content that you’re prepared to read on your mobile is very different from something you’d expect to read on a Sunday morning when you have time to leisurely read a three-page article.”
The shift towards digitisation of modern publications is necessary, but it also leaves the employees at the print-based periodicals of Fairfax Magazines in a precarious position. Igusa responded to questions on the longevity of the various publications, which include Cuisine, NZ House and Garden and NZ Life & Leisure, by saying “that readership every quarter has remained really strong” and she also pointed out that Fairfax Magazines was well-represented at this year's revamped Magazine Awards.
Despite this positive outlook, the winds of change have also swept through Fairfax Magazines. Kate Coughlan, editor of NZ Life & Leisure, will take up the role of editorial director, which will require her to oversee the editors across the group (she will maintain her editor's role at NZ Life & Leisure, however). Lynley Belton, previously the general manager of Fairfax Magazines, is now the distribution manager, meaning that her expertise will be used to ensure that the magazines reach their audience. As a result, she has relinquished her position on the MPA board. Steve Lowe, the manager of specialist titles like NZ Autocar, Fishing News and NZ Trucking, has departed.
Foodstuffs also announced that the next issue of Real magazine, which was contract published by Fairfax, will be the last. The most significant change, however, lies in Fairfax Magazines being included in the newly formed Northern Region as part of the restructuring process. Igusa says this was done because the head office for Fairfax Magazines is located in Auckland. At this stage, it is still unclear how this change will impact Fairfax Magazines’ employees throughout the country. But some feel as though the changes have left the magazines division leaderless and if the talk of Bauer acquiring some of APN's NZ Magazines' assets comes to fruition, the scale that Bauer can offer could put it in a very powerful position.
While Igusa conceded that staff cuts were an inevitable part of any transformation process, she couldn’t comment on the number of people that Fairfax Magazines would be letting go, saying that “it’s unfair on the staff that are going through the consultation process.”
Igusa stressed that although job cuts were on the horizon, Fairfax was also actively recruiting hires to fill newly formed roles. Throughout July and August, Seek.co.nz featured several Fairfax advertisements for—among others—business, travel and lifestyle editors. In addition to these new roles, Fairfax would also be continuing its internship tradition by bringing 15 to 20 applicants on board before the end of the year.
“This is absolutely a transformation process. It’s not just about cost-cutting. Cost-cutting is an element of it, but it’s also about preparing the business for the future,” she says.
The need for new sources of revenue has led to speculation that it’s only a matter of time before Fairfax introduces paywalls in New Zealand.
In March, Fairfax Australia introduced soft paywalls for the digital versions of The Age and The Sydney Morning Herald. Largely based on the model adopted by The New York Times in 2012, the paywalls initiated across the ditch only require readers to subscribe if they access more than 30 articles per month.
When asked about the viability of paywalls in New Zealand, Igusa was pragmatic in her response: “I don’t think anyone is under any illusion that paywalls are the silver bullet. There’s no way they are going to replace all revenue. They may be a component of revenue in the future, but we don’t have any definite plans of when or how we may bring them on.”
Alternative revenue options
Earlier in September, Nigel Tutt, who previously served as Fairfax’s general manager of digital, also transitioned into a new role, which Igusa was quite enthusiastic about.
“Nigel Tutt is in the role of product development manager, which has that concentration on finding new products—not necessarily professional news products—which offer a way of engaging with our audience and with our advertisers.”
Igusa wouldn't be drawn on whether Fairfax had its eye on any purchases, but the creation of Tutt’s position seems to follow the trend of media giants, abroad and locally, reinforcing their revenue stream by acquiring smaller, often transactional businesses, which have a high-growth potential.
In August last year, APN, Fairfax’s major competitor in New Zealand, finalised the purchase of GrabOne. Although its latest financial statement showed it is looking at selling its stake in e-tail platform Brands Exclusive.
- This story incorrectly stated that Kate Coughlan would be moving to a new role as editorial director, but she will maintain her role as editor of NZ Life & Leisure.