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Fairfax writes down media assets by $1bn

AAP logoAAP 31/07/2016 Stuart Condie

Fairfax is writing down the value of its media division by almost $1 billion as it moves its real estate classifieds business out of publishing and into its own unit.

Fairfax Media says it is separating the financial results of its money-spinning Domain business from Australian Metro Media, which includes masthead titles The Age, the Australian Financial Review and the Sydney Morning Herald.

The value of the diminished media unit will be written down by $484.9 million, representing the single largest chunk in a package of pre-tax impairments totalling $989 million.

The new reporting structure makes it easier to view each part of the business in detail but, chief executive Greg Hywood, said Domain - which was responsible for more than 50 per cent of Fairfax's first-half earnings - will remain part of the company.

"Domain makes a significant earnings contribution and remains an integral and growing part of Fairfax. We have no plans for that to change," Mr Hywood said in a statement on Monday.

"We continue to invest in Domain to make it stronger and extend its business model beyond listings to capture the immense opportunity in the broader real estate ecosystem."

The online real estate business was by far the biggest contributor to Fairfax's total first-half earnings of $98.6 million.

"The new segment presentation for Metro provides a clearer picture of the operational performance of the business as it transitions to a new sustainable publishing model over time," Mr Hywood said.

Fairfax, which made a $83.2 million net profit for FY15 and is due to report its most recent full-year results on August 10, will also record a $408.8 million impairment against its Australian Community Media unit and $95.3 million against its New Zealand business.

CMC Markets chief markets strategist Michael McCarthy said: "This is a recognition that management are making the required transition, albeit late and reluctantly.

"A lot of the old media staff has been hived off and hopefully the writedown represents Fairfax largely putting behind it its previous commitment to old media and focusing on where its future lies."

Rival News Corp is also involved in real estate through its ownership of 61.6 per cent of the shares in REA Group, which is listed on the ASX separately to Rupert Murdoch's media company.

Shares in Fairfax were down 1.5 cents, or 1.43 per cent, at $1.035 at 1300 AEST.

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