Fairfax CEO accuses REA of 'price gouging', signals new strategy
Fairfax will look to events, providing marketing services to SMEs and content marketing to boost flagging revenues as it revealed earnings from continuing business were down 23% for the year.
In a presentation to investors this morning CEO Greg Hywood accused rivals REA Group of “price gouging” and insisted “this media company won’t blink”, but admitted “leading the change means a good deal more than cost cutting”.
The group today showed a $16m loss for the last financial year.
The company also revealed its first digital subscription number, with 68,000 people signed up for paywalls for the Sydney Morning Herald and The Age, a number that is “ahead of expectation”.
He said they had expected 105,000 people to pick up a digital subscription in the full year, and were running at a “73% conversion rate” from those offered a month for a dollar to full membership, and stressed the paywall has “had a minimal impact on advertising revenues”.
Figures show Metro media advertising revenues dropped 21% in FY13 to $633.6m, with the financial review Group down $66.5m, an 8% dip.
Hywood said the circulation clean out still has a way to go, but they have “broken the back” of it, getting down to a core business and looking at a strategy of “lower circulation and higher cover prices, saying they would look at more increases in pricing this year.
Insisting they were not "casting into the wilderness to find something new" he said they would leverage the core business with growth strategies, ioncluding providing more marketing services for SMEs through its sales division.
Talking of building out a new content marketing unit Hywood pointed to the changes to the marketing mix, and the brand’s heritage in content creation, but insisted it would be a “distinct” department, and would have “rules of engagement” for interacting with editorial and sales teams.
Turning to events, which made the company $25m this year, with things like the City2Surf and ocean swims, he said: “We’re only setting out to be a small player in a large market. We see the opportunity to build a business that’s several times larger than currently.”
Looking at the improving position of Domain which made $44m, he said: “Despite continued claims of market dominance the only thing REA Group is moving away from is agents, with more and more becoming increasingly angry with price gouging.”
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