Friday, May 15, 2009

NZX and CPL update

John Drinnan reports in today’s Herald that:
Fairfax Magazines New Zealand, publisher for some of this country’s biggest titles, is inviting staff to go on to a nine-day fortnight so it can avoid job losses.
Staff were told yesterday but it was not linked to a Standard & Poor’s surprise move to downgrade Fairfax Media’s credit rating. [. . .]
Fairfax Magazines is not alone among media companies stung in a dramatic advertising downturn. All media are having to adjust.
But corporate management at Fairfax Media in Australia faced another disappointment yesterday when Standard & Poor’s lowered long-term corporate credit and debt ratings for the media company to BB+ from BBB-.
The decision adds $10 million to the interest bills for Fairfax in the coming financial year.
Standard & Poor’s said that this and another rating action reflected ongoing deterioration of Fairfax’s advertising earnings.
Earlier this week, Fairfax warned its fiscal 2009 underlying earnings would fall by 27 per cent to about A$600 million due to a sharp deterioration in advertising revenues.
This result is less about New Zealand than it is about Fairfax Australia, which merged with Rural Press in a $A9 billion deal in May 2007. (Though this report from Crikey suggests that the resulting company is really Rural Press trading as Fairfax.) Still, the precipitous drop in advertising has hit all media hard on both sides of the Tasman.

Which brings us to NZX’s new publishing arm CPL, which like Rural Press aims its publications at farmers and other rural readers. Its stable includes Farmers’ Weekly, Dairy Exporter, Deer Farmer, Country-Wide North and South, the excellent new Young Country and more. They are all solid, respected magazines. But they are very dependent on advertising as they are generally sent out free to rural readers.

According to CPL’s website, in the 16 March ABC survey (I couldn’t find this on the ABC website to confirm it), Farmers’ Weekly has 596 paid subscribers and 84,754 on the free list. Healthy figures – but that huge free list tells you that the magazine is a giveaway and dependent on advertising for its revenues, since it makes next to nothing from sales. Dairy Exporter is less vulnerable with 7726 paid subscribers and 13,479 on the free list, but then Country-Wide North has 498 average net paid sales and 56,676 on the free list. For Country-Wide South it’s 306 and 25,586.

What is happening to Fairfax – and to APN and News Corp – makes this a very odd time for NZX to invest in print media, and especially in magazines that are reliant on such a shaky source as advertising for their income.

Cactus Kate has more on NZX’s core business here and here.

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