FAIRFAX MEDIA CHAIRMAN SAYS COMPANY MUST DIVERSIFY TO SURVIVE

It follows news that sub editors would be contracted out and further staff cuts likely as potential strikes loom at the company’s key mastheads at the Sydney Morning Herald and The Age newspapers.

The outsourcing decision will result in sub editing contracted to Pagemasters as well as cuts to printing operations – where 350 jobs are on the line. The cuts will save the diversified media company a reported $15 million a year.

Speaking to Gold Coast Business News following an Australian Institute of Company Directors event at Crowne Plaza in Surfers Paradise, Corbett says it’s matter of adapting to the times - or perish.

“These are very hard decisions and no one likes what has been done, no one likes it. But if we don’t make those changes, we will not survive,” says Corbett.

“I am very concerned about the staff. We didn’t go out and ask for the digital age, it has been thrust upon us. People used to make slide rules, horse and carts, a variety of things. They’re not building them because we now have motor cars or calculators. Time changes and yes there are some people that lose their jobs and we will do everything that we can during that process to help them find other jobs.”

The former Woolworths CEO and current Reserve Bank of Australia (RBA) director says that amid falling advertising revenues and a decline in circulation, the decisions made now are survival strategies.

“It’s a process - we wouldn’t do it if we didn’t think it was going to work,” he says.

“The newspaper industry is facing a combination of cyclical and digital challenges. Only the publications in the world that move are those that will survive. There will be no Australian, there will be no (Daily) Telegraph, there will be no Sydney Morning Herald, unless we do a few things – one, we get massive processes efficiency out of it – secondly, we’ve got something to sell and we build our journalism, which we are in the process of doing, and thirdly, we explore with a great deal of imagination, all of the digital delivery mechanisms that we can and move with the times.

“Retail advertising is soft and it has been soft for quite some time and is undoubtedly a reflection of consumer conservatism. In the next few years the industry is going to go through enormous change. The digital capacity I think is changing and will change this space for all time. Every media company has to manage this digital onslaught appropriately and some will survive and some won’t."

Corbett let leak that over the course of the ‘next few weeks’ the publisher will bring out a ‘revolutionary’ iPad application to position the media giant at the forefront of the digital space.

“Fairfax is about to bring out a colossal iPad application which I think will be revolutionary,” he says.

Corbett says the company must diversify as it can no longer rely upon the masts of the Finacial Review, Sydney Morning Herald and The Age.

“If you take the internet, a lot of news is available for free. If masts like The Australian and the Financial Review are to exist, they have to exist because they have something to sell that’s not available and part of what they have to sell is the name and therefore the quality – in terms of accuracy, liability, and quality,” he says.

Corbett also commented that the retail recovery in Australia is being hindered by a spooked consumer and further challenged by a ‘bi-polar’ economy with mining ‘and the rest’.

Fairfax (ASX:FXJ) shares closed slightly down yesterday at $1.14.