When the Fairfax newspaper group this week unveiled its redundancy program at The Age, The Sydney Morning Herald and The Sun-Herald, it cited these reasons for the decision:

  • Since January 2005, the revenue performance for the Company’s metropolitan newspapers has been lacklustre.
  • Our metropolitan newspapers are facing significant structural
    pressures and we expect revenue growth may be modest at best for the
    near future.

But if revenue has been “lacklustre” for the
past nine months, that’s a rather different message to the one CEO Fred
Hilmer and the crew at John Fairfax Holdings have been sending to the
market about the state of health of the publishing company since
January. Here are some of the statements released to the media and to
the ASX over the past six months:

21 February: Fairfax half-year net profit report – CEO Fred Hilmer said: “We are well positioned for further revenue and earnings growth,
and to take advantage of opportunities that may be afforded by any
changes in the media laws,” said Fred Hilmer, CEO. And a report in
Fairfax’s Age stated: “Fairfax said while it was too early in the second half to provide meaningful guidance, advertising revenue growth was continuing. It said it expected further growth in earnings before interest and tax (EBIT) this half, the level of which would depend on the vitality of overall trading conditions.” And the Fairfax SMH
reported: “Revenue growth accelerated towards the end of the first
half, with strong gains in employment and retail advertising, along
with significant overall growth in gross display advertising, which was
up 9.4 per cent.”

5 May: Speaking at a presentation to a Macquarie Securities Conference in Sydney, Hilmer said: “Results were better in the March 2005 quarter,
and further improvements are being implemented,” and in his slide show,
under the heading “Outlook from February 2005” were the words: “While
it is too early in the half to provide meaningful guidance, advertising revenue growth is continuing.
The Company expects further EBIT growth this half, the level of which
will depend on the vitality of overall trading conditions.”

31 May: Speaking at the World Newspaper Congress in South Korea, Hilmer said: “…our metros business is continuing to grow, but not as rapidly as our other businesses.”

29 August: Announcement of Full Year Underlying Net Profit of $234.1m up 23.7% – Hilmer said: “Metro publishing revenue was up slightly during the year
as strong growth in retail, national and employment display classifieds
advertising were offset by the overall weakness in the NSW economy and
a declining market for real estate listings in both NSW and Victoria.”

CRIKEY:
To say in October that “since January 2005, the revenue performance for the
Company’s metropolitan newspapers has been lacklustre,” while making
bullish statements over that time, raises the fundamental question for
investors: has the company been open with us?

By revealing in
late October what has been happening to revenues “since January” really
stretches the definition of continuous disclosure. If you were a
Fairfax shareholder you would have to question the company’s commitment to full and
frank disclosure.