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Domain and digital the focus for Fairfax

AAP logoAAP 9/08/2016 Lilly Vitorovich

Newspaper publisher Fairfax Media says it expects to get more than half its future earnings from its prized real estate advertising business, Domain, after posting a $893.5 million full-year loss.

Fairfax said digital and non-print operations, led by Domain, will account for 55 to 60 per cent of underlying earnings this year, up from 42 per cent in the year ended June 26.

The group's net loss for 2015/16 was driven by $1 billion in significant items, including the recently announced $485 million writedown on its media operations.

Fairfax chief executive Greg Hywood, announcing the results on Wednesday, said the underlying result was proof that the transformation of the company, begun in 2012, "has succeeded".

Mr Hywood pointed to flat underlying revenue of $1.83 billion and a 1.4 per cent dip in underlying earnings of $283.3 million as signs of stabilisation.

"We have reshaped this company into a high-value, broadly-based, digital rich business," he said.

Domain lifted annual revenue 33 per cent to $296.3 million for 2015/16 but revenue growth was 10 per cent in the first five weeks of 2016/17, compared with a 53 per cent jump over the same period a year earlier.

Fairfax blamed the slowdown in new listings on the "dampening effect" of the long federal election campaign but Mr Hywood said he expected revenue to improve over the year as Domain's product offering expanded.

The metro media division - which publishes the Age, Sydney Morning Herald, and Australian Financial Review - booked a 45 per cent drop in earnings to $39 million due to a 13 per cent drop in advertising revenue and the cost of investments in the Digital Ventures and Events businesses.

Mr Hywood added no comment on plans to end weekday printing of flagship newspapers, saying the move would happen when it was "beneficial to the business" and met consumer demand.

Fairfax also announced a review of its regional newspaper operations, which includes the Canberra Times, following a 10.4 per cent fall in earnings.

News Corp's Australian newspaper on Monday reported Fairfax is considering the sale of the unit.

Mr Hywood said Fairfax and Nine Entertainment's jointly owned video-on-demand business, Stan, gained market share during the year, with more than 500,000 active subscribers and was expected to break even in 2017/18.

Since embarking on the 'Fairfax of the Future' transformation plan, Fairfax has moved broadsheets to tabloid formats, introduced a digital-first editorial model, closed printing facilities and laid off 1,900 staff.

Fairfax shares were down 3.5 cents to 96 cents in afternoon trade.

FAIRFAX SWINGS TO NET LOSS

*Annual net loss of $893.5m, from a net profit of $83.2m

*Revenue fell 2pct to $1.83b, from $1.87b

*Partly franked final dividend unchanged at two cents a share

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