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FAIRFAX Media (ASX: FXJ) is expecting revenues across the media group to decline by 4 to 5 percent, dragged down by its struggling mastheads, as it prepares to release details of its planned spin-off of profitable real estate digital business Domain.
The 186-year-old media company released a trading update for 2017-18 ahead of its Domain announcement, revealing that its Metro Media division which includes the Sydney Morning Herald, the Age and the Australian Financial Review will take a revenue hit of around 11 per cent.
Its Australian Community Media (ACM) division, which is a collection of local newspapers and websites, will take a 10 per cent drop in revenue along with its New Zealand asset Stuff, while Macquarie Media is down around 4 per cent.
As Fairfax prepares to separate Domain from its loss-making businesses, the pace of revenue at it star asset has also slowed with a forecast revenue growth of 13 per cent in the first six weeks of 2017-18, down from 16 percent.
Digital revenue growth at the online real estate classifieds business is expected to be 22 per cent, which is below its original of 26 per cent, with the softening being blamed on cooling conditions in the housing market and a weak listings environment.
Fairfax announced its FY17 results in August, which revealed metro media revenue had fallen 9 per cent for the year, and ACM revenue was down 11.7 per cent on the back of weak advertising revenues.
The media group released a statement to the ASX after the close of trade on Thursday, saying it was giving the update ahead of the potential release of scheme documents on Friday for its planned spinoff to shareholders of 40 per cent of Domain.
Fairfax has failed to sell the business to private equity investors, forcing the company to press ahead with its initial plans to demerge Domain.
In July, US private equity raiders TPG and Hellman & Friedman to pull out of moves to acquire the media company due to the group's unwieldy business model.
Fairfax says it will continue to implement cost savings measures across the group.
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