Analyst suggests axing print editions of two big papers

An analyst for a big Australian-based investment bank says Fairfax Media Ltd -- which is New Zealand's biggest newspaper publisher -- could boost its earnings by ditching the print editions of The Sydney Morning Herald and Melbourne's The Age.

Macquarie analyst Alex Pollack estimated the Fairfax titles would deliver an extra $A5 million ($NZ6.28m) in earnings this year if the publisher delivered the content exclusively via e-readers, such as Amazon's Kindle and Apple's iPad, said The Australian newspaper, which is owned by rival group News Corp.

News Corp has been one of the strongest advocates of charging for online content as the industry continues to grapple with how to profit from the internet. Mr Pollack told The Australian that the same analysis could hold true for some News Corporation publications.

Consultants Bain&Company are reviewing a strategic plan compiled by Fairfax chief executive Brian McCarthy, which Macquarie said would be released with the group's 2010 results later this month. Mr Pollack, a former SMH journalist, said the plan includes a controversial proposal to combine the editor-in-chief roles for both print and online.

Mr McCarthy said last month that Fairfax, whose Australian Financial Review already charges for online access, would move more and more to a paid internet model. But it would need to enhance its offerings.

"Where you have unique content, you can receive money. Offering generic news cannot be like that," he said in the July edition of the Panpa Bulletin, published by Australia's Newspaper Publishers' Association.

"Over time Fairfax will have two models -- a premium model and free, more basic service."

Earlier this year, Fairfax said its printing costs would rise by as much as 6 percent in 2010.

It also reported strong revenue growth for its online businesses, including Fairfax Digital in Australia and Trade Me in New Zealand.

Mr Pollack yesterday told clients that Fairfax might broaden a strategic review of its operations to consider the savings from axing print editions of two biggest daily papers in Australasia.

Dropping the print editions could boost the two papers' earnings to $A55m, a 10 percent lift on the bank's 2010 forecast.

Mr Pollack suggested Fairfax give away 100,000 e-readers - such as Kindle -- at a cost of $A50m, to "seed" the migration of readers away from print.

Newspapers across the world have struggled in the face of competition from online platforms.

Fairfax's share price has fallen from above $A5 in 2007 to $A1.48.


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