Fairfax had trouble financing existing newspaper operations

The Guardian provides an update on how Fairfax, a company we features in our course 7 years ago, is doing:

Hywood counters by claiming that readership has never been higher – Fairfax’s website is the most popular news site in the country, and a barely-believable 5.1 million visitors access it every month. However, this is missing the point.

It is not readers, it is revenue that is needed to run those great full-service newsrooms. And cut-throat competition has driven online advertising through the floor – for every dollar a newspaper loses in print advertising it is lucky to recoup 10 cents online. Few newspapers are lucky enough to be owned by a trust, rather than accountable to shareholders, like the Guardian, or to attract a fairy-godfather like Amazon’s Jeff Bezos, who has adopted the Washington Post.

Hywood’s solution has been to diversify into a dozen different fields. Fairfax’s metropolitan newspapers now produce less than half its revenue. The company has morphed into selling baby goods, organising fun runs and ocean swims, a dating service, a real estate site. It has partnered with Channel Nine to launch a video-to-the-home service, though many fear this will end in tears. Apart from its unlikely name of Stan, it is about to face formidable competition from the world’s largest and most aggressive player in video-streaming, the US giant Netflix, which launches in Australia next month.

But many fear these ventures are just postponing the inevitable demise of the newspapers that have chronicled the country since the earliest days of white settlement, leaving Murdoch, at least for now, with a monopoly on everything Australians read in print. “They’ve saved the company, but f——d the papers,” as one analyst told me.