Now the going gets tough for Fairfax Media — the promise of Domain has been turned into more than $2.1 billion for shareholders and at the same time exposed the lack of any real value in the company’s print media in Australia and New Zealand. In fact, the separation leaves the company’s core papers here and in NZ exposed to the continuing vagaries of the print market and no matter how good the company is at selling digital ads and subscriptions, it is possible the papers have no value at all.

The nearly two-year process to separate the Domain property listings website business from Fairfax Media concluded yesterday with the shares in the group starting trading on the ASX where they performed a bit better than expected. Domain shares opened $3.80 and jumped as high as $3.98 in early trading before settling back around $3.69. That valued Domain at more than $2.1 billion, while Fairfax’s market value dropped from around $2.7 billion to around $1.7 billion (the shares fell by a third to 73 cents). Fairfax’s 60% stake in Domain is worth more than $1.27 billion, meaning that the newspapers, the 50% of the Stan streaming service and 54% of Macquarie radio are worth around $430 million at most.

There’s no valuation for Stan (but Fairfax and Nine have invested well over $100 million in the service). The 54% of Macquarie Media, which controls Sydney radio station 2GB and 3AW in Melbourne, plus others in Sydney and Brisbane) is around $121 million. So that leaves the papers worth around $320 million at the moment, but less with the valuation of Stan to take into account. Stan has more than 800,000 customers, so its valuation would be in the hundreds of millions of dollars to the right buyer.

That could mean the papers have no value — even a negative value.

In the year to June the metro, regional (community) and NZ papers had total revenues of just of $1.250 billion. With the September trading update from Fairfax suggesting a fall of around 10% in revenues for the papers (and a 22% rise for Domain), the papers could end up with revenues around the $1.1 billion — which is still a solid figure.

If Fairfax manages to win its court challenge to the rejection of its merger plan with rival NZ print group, NZME, that would see Fairfax sell those papers for just over $50 million in cash and a stake of around 42%, perhaps a bit more which would be sold off over time. That would remove around $300 million in annual revenues from the company’s print group and further expose the lack of value in the Australian papers.

This will increase pressure from activist shareholders, such as Thorney Investments, for the papers to be sold off, or some of the remaining holding in Domain to enable share buybacks to be done. That’s even after the Domain spin off saw shares worth $3.69 at the close yesterday created out of thin air two years ago. But the greedy shareholders will not see it that way, they will simply look at the papers as a cash drain and continue agitating for that to stop or the rest of Domain to be sold off and the cash returned to them, not the papers to ensure their future. It also makes Fairfax a takeover or merger candidate in the merger ownership changes we are all waiting to see happen. That will again expose the papers to being treated like unwanted orphans.

So the continuing narrative for Fairfax from now on is going to be (helped by the usual useless coverage from News Corp papers) “Domain sale looms” type reporting. And don’t be surprised if a US property listings group called Zillow comes sniffing round Domain. It’s worth more than $US7.3 billion and is more than 40% owned by Australian investors.

It is a distant second in the US listings market behind News Corp’s Move (realtor.com). Australian investor Caledonia, whose chief investment officer is Will Vicars, holding a 22% stake up from 14% earlier this year. Its CEO, Spencer Rascoff, was in Australia this week talking to his company’s investors. He ruled out competing against Domain and REA Group (61% owned by News) in this market. But no one asked about buying Domain to compete in this market.