One of the biggest shareholders in Fairfax, an insto with 9% of the stock, has ominously (for current management) welcomed a bid from biggest shareholder Gina Rinehart, as Deutsche Bank has publicly tallied up the break-up value of the company to be quite low, around 53 cents a share..
Deutsche warned that extracting that value would be no mean feat though, suggesting to us the share price might fall even lower.
The misery and frustration of it has the previously silent, large Fairfax investor publicly saying the previously unthinkable, even suggesting a spin-off of the troubled Sydney Morning Herald and The Age:
“Perhaps you need to look at the metro papers in a different light. Make them stand or fall by themselves.”
VEXNEWS understands that as many as half of the editorial staff at The Age and Sydney Morning Herald will go.
It is also considered inevitable that there will be industrial action as various issues like redundancies are resolved.
The announcement makes it clear enough that the two metropolitan newspapers will not be printed for much longer. The Sydney/Melbourne metro printing presses will close, with the regional printing presses, will clearly not be a long term viable option. Equally difficult will be transitioning their considerable online audience into paying for the product. We hear News Limited’s experiments with that have not been especially rewarding.
No new owner, no sensible shareholder will be pleased with any of this very slow approach to dealing with loss-making enterprises. There are profitable, strongly viable parts of Fairfax that are being imperilled by the insistence of its nostalgic management on propping up the loss-making newspapers.
Many journalists feel very squeamish about even discussing this, for a variety of sentimental or self-interested reasons.
The Financial Review itself – a viable newspaper that has been revitalised by its new editor – openly canvassed the complete closure of these publications over the weekend, much to our surprise. It’s a debate many shareholders, including the biggest one Gina Rinehart, will want to have. Is the company worth more dead than alive?
As it turns out, the Fin was ahead of the game, perhaps aware what the Fairfax CEO had planned for today.
We note with interest Communications Minister Steve Conroy being asked this morning about the prospect of taxpayer/state subsidy for ailing print publications of the Fairfax kind. He ruled it out. A shame really, as we’d be the first to put up our hands for at least $50 million per annum to feed the half-starved, ready-to-roll VEXNEWS Investigations Unit who are only accustomed to being paid by KFC, and even then, we can be slow in discharging our fried chicken obligations to our hard-working crew.