Fairfax to shift readers away from newspapers, flags pay walls and content sharing

Media giant Fairfax Media says it will migrate consumers away from its newspapers “over time” and increasingly look to monetise its content in a bid to make the company a “true multi-platform business”.

The strategy update comes after Fairfax beat analyst expectations by reporting a net profit of $282.15 million for the year to June 30, compared with a $380.05 million loss in the previous year. Analyst had tipped a profit of about $260 million.

The result was driven by improved advertising revenue in the second half of the 2009-10 year and cost reductions. Across the year, total revenue fell 4.5% to $2.482 billion, down from $2.605 billion in the prior year.

However, the company provided a cautiously optimistic outlook for the current financial year, noting ad revenue is continuing to improve.

“Trading for the first seven weeks of the new financial year has been similar to the 2010 second half with revenues more than 5% higher than the corresponding weeks last year,” Fairfax said in a statement.

“Should current market trends continue, we would anticipate high single digit earnings growth in the first half.”

But the result wasn’t the most anticipated part of today’s announcement. Fairfax management recently employed management consulting group Bain & Co. to review its strategy, and analysts have been speculating for months about the company’s next direction.

One analyst recently argued that Fairfax would be better off shutting down its newspapers, saving on printing costs and delivering content to companies via digital and online portals.

Fairfax didn’t release too much detail today, but did emphasise in its investor presentation that the company is investing heavily in a multi-platform strategy which will allow it to deliver content via the web, via smartphones and via other devices such as tablet computers.

Key planks of the strategy include building new revenue streams through online content sales and “short-form” video, “greater sharing of editorial content and collaborating across print, online and mobile” and development of new applications for platforms including Apple’s iPhone and iPad, and Google’s Android platform.

However, the presentation does appear to include an acknowledgement that the long-term future of Fairfax’s newspapers are in question.

It says that one of the key strategies for its metro newspaper business is “distribution of our content to new audiences on new platforms and migration of existing audiences from the papers over time.”

Just how long this timeframe might be isn’t clear, but it is clear that Fairfax is now very keen to position itself as a “new media” company.