Fairfax Media has seen a massive jump in profits for the first half of the 2016-17 financial year, despite the fact that the media company’s revenue continues to decline.
Fairfax posted an underlying profit of $84.7 million in its half-yearly results – up 6.1 per cent from the first half of the 2015-16 fiscal year.
The company’s revenue fell 4.7 per cent to $913 million, while its real estate cash cow, Domain Group, delivered 15 per cent growth in digital advertising revenue.
Fairfax CEO Greg Hywood also announced that Fairfax is undertaking a strategic review of Domain in preparation for a potential separation into a new Fairfax-controlled entity to be listed on the ASX.
“The timing is right for Domain to consider taking this next step,” Hywood said in a statement to shareholders.
“It has achieved the scale in revenue, earnings and audience needed to operate as a standalone listed entity.
“The separation of Domain would further reshape the Fairfax portfolio by adopting a more flexible corporate structure to maximise shareholder value.”
Hywood said Fairfax would continue to own 60 to 70 per cent of Domain under the potential deal, and confirmed that Domain CEO Anthony Catalano will continue to lead the real estate business.
Meanwhile, Fairfax’s metro media segment – which includes The Sydney Morning Herald, The Age and The Australia Financial Review – saw an overall revenue decline of 8 per cent during the first half of 2016-17.
Furthemore, the segment recorded a 16 per cent decline in advertising revenue, which CEO Greg Hywood was largely due to weakness in retail and motoring categories.
Fairfax said it will issue an interim dividend of 2 cents per share.