Company Overview - Fairfax Media Limited is an Australia-based multi-platform media, marketing services and real estate services company. The Company is engaged in publishing of news, information and entertainment; advertising sales in print and digital formats, and radio broadcasting. The Company's segments include Australian Community Media, Metropolitan Media, New Zealand Media, Radio and other. The Australian Community Media segment is engaged in newspaper publishing and online for Australian regional, community and agricultural media. Its Metropolitan Media segment includes metropolitan news, sport, lifestyle and business media across platforms, such as print, online, tablet and mobile, as well as classifieds for metropolitan publications and transactional businesses. The New Zealand Media segment includes newspaper, magazine and general publishing, and online for New Zealand media. The Radio segment includes metropolitan radio networks. Its other segment includes corporate and other entities.


FXJ Dividend Details
 
Strong ongoing Domain business performance growth: Fairfax Media Ltd (ASX: FXJ) delivered a total revenue growth of over 2% to 3% during year to date of fiscal year of 2016, as compared to the prior corresponding period. The group has been building a diversified revenue stream to offset the ongoing pressure of declining print advertising revenues at domestic as well as at international markets. Accordingly, its Metro Media generated over 10% increase driven by ongoing strong Domain’s overall revenue growth of 68% on a year over year basis during year to date of fiscal year of 2016. The group’s digital business improved by 43% during the period while its domain.com.au rose over 45% boosting Domain’s overall revenues. Macquarie Radio Network rose around 56% on an ongoing business basis (excluding 96FM contribution which was sold during early of this year) while there was an increase of 29% on a reported basis during year to date of fiscal year of 2016. Fairfax Media had earlier posted a revenue growth of over 0.3% yoy for the first time in fiscal year of 2015 driven by its solid 45% increase in domain group revenues. Fairfax investments in its growth business like Domain, Life Media & Events, and Stan have paid off during fiscal year of 2015 and year to date of fiscal year of 2016 as the diversified revenue base was able to offset the pressure from print business. The group introduced over $39 million of further growth-related operating expenses during FY15 for its growth areas. Fairfax Media digital advertising revenue enhanced by 36.4% year on year (yoy) in FY15 and grew its agent subscribers and listings by 20% and 16% respectively. The group’s real estate sites visits also rose by 30% in FY15.  On the other hand, Fairfax Media operating EBITDA declined over 3% to $287 million in FY15 as the group invested over $42 million in operating costs for its Domain, Events and Stan business. As a result, FXJ reported a statutory net profit after tax of $83 million impacted by $61 million of significant expense items after tax as compared to $224 million in 2014 fiscal year leading to earnings per share decrease to 6 cents in FY15 from to 6.3 cents in prior corresponding period (pcp). There are media news about Facebook partnering with Fairfax Media in view of the global rollout of Instant Articles.
 

 
Built a diversified media portfolio (Source: Company Reports)
 
Expanding Domain and Events business: Fairfax Media Limited invested over $150 million in acquisitions like Canberra’s leading property portal Allhomes, while bought entire stake at MMP, Victoria’s premium real estate and lifestyle-focused magazine business to boost its domain business. The group is focusing to achieve a parity between agents and listings in order to generate a further audience growth having a specific focus on mobile product development. Accordingly, Domain now developed over 67% of agent leads through mobile platforms while its application has the highest consumer ratings and consumer traffic. Fairfax Media has made heavy investments in its Digital Ventures business which comprises its digital-only publishing, Stan coupled with wide range of transactional and early stage investments. The group launched HuffPost Australia in August of 2015, which is a local edition of a major global source of news and information, The Huffington Post. FXJ invested over $20 million in Digital Ventures in fiscal year of 2015 (which does not include the group’s investment in Stan). The group is investing over $50 million in Stan for a multi-year period which includes investments for marketing and advertising activities. Stan is a $10 a month service which offers subscribers with access to the largest content library of TV shows and movies in Australia. The group has been delivering a decent subscriber base increase for Stan since its launch. Meanwhile, Fairfax Media is enhancing its Events business by joining it with its Life Media brands, to enhance its audience and commercial links base. Night food markets and Openair Cinema business are adding support to its Events business, and the division intends to leverage the growing demand for face-to-face contact in entertainment. As per the radio segment highlights, the group combined Fairfax Radio Network with Macquarie Radio Network to derive cost and revenue synergies via consolidation.
                                                                                                                             

Domain business is building a stronger real estate media and service business (Source: Company Reports)
 
Restructuring Australian Metro Media publishing business: Fairfax Media Limited is reorganizing its Australian Metro Media publishing business by focusing on digital publishing as well as controlling costs. The group shifted from a legacy-based, vertically-integrated structure to a leaner and agile organization, with editorial production, advertising, sales and contact centers. FXJ launched digital subscriptions for the SMH and The Age. The group’s Australian Community Media (ACM) businesses at six geographic operating regions are working together as well as sharing resources across many newspapers, websites and events. The group’s ACM’s eighteen month restructuring program is on track as Fairfax intends to build a stronger, sustainable and modern media network. FXJ is upgrading its newsrooms and working efficiency through new technology, new systems and contemporary editorial production practices to enhance its efficiency. As a result, Fairfax expects its restructuring plan to generate over $60 million of annualized cost benefits by the end of fiscal year of 2016, while maintaining a strong footprint for local news, content and sales capability.The group’s New Zealand business strategy is also focusing on audience monetization via digitalization. Stuff.co.nz delivered a decent performance as a modern digital news product.
 
 

Australian Metro Media publishing business performance highlights (Source: Company Reports)
 
Balance sheet highlights: Fairfax Media Limited has been decreasing its net debt from the past few years and built a solid balance sheet with a net cash of $64 million. The group is positioning itself to fund its growth activities as well as undertook capital management strategies to boost shareholder returns. As a result, the group reported a market buy-back of up to 5% of ordinary shares in February for twelve months. Fairfax Media already finished over 80% of this buy-back program.
 
Stock Performance: The shares of Fairfax corrected over 4.35% in the last six months (as of December 11, 2015) impacted by the ongoing decline in print advertising revenues. On the other hand, the group’s restructuring and revamping efforts of the traditional media model coupled with its diversification of investments is adding support to its performance. Accordingly, Fairfax media’s stock has been consolidating since the last three months and slightly rose by 2.33% (as of December 11, 2015). The group started off the fiscal year of 2016 on a positive note by delivering a better performance during this year to date driven by its ongoing growth from domain and digital business. We believe that the group would be able to maintain its growth track for the second consecutive year as well (for FY16) after posting a positive growth in fiscal year of 2015 after eight years of loss. On the other hand, Fairfax Media Limited built a diversified revenue base to offset the ongoing Metro print advertising pressure and is improving performance with its digitalization and other growth areas contribution. The shares of Fairfax surged over 15.79% in the last fifty two weeks (as of December 11, 2015) and we believe that this positive momentum in the stock would continue in the coming months. The group is has a decent dividend yield of 4.55%. Based on the above, we give a “BUY” recommendation on this stock at the current price of  $0.86
 
 
FXJ Daily Chart (Source: Thomson Reuters)

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