Fairfax on a Job, Cost Cutting Mode

Even if Australia's richest woman Gina Rinehart invested $86 million into Fairfax Media last week after she upped her stake to 19 per cent, the company still needs to wield its axe and chop off some jobs and costs.

Reports said that Fairfax will lay off one-fifth of its workforce or 1,900 workers and slash $235 million costs over the next three years. Other major changes that Fairfax will put in place following a disclosure last week that its second-half revenue would be 8 per cent lower compared to 2011 are a reformat of its flagship dailies to tabloid size, closing of its printing presses at Chullora in Sydney and charging for content on its The Sydney Morning Herald and Age Web sites.

The 1,900 positions to be cut would be spread across the editorial desks at The Age, The Sydney Morning Herald and the Australian Financial Review. The Age and The Sydney Morning Herald would also be purely online due to the continuous drop in its sales and advertising income.

Paul Murphy, acting federal secretary of the Media union, warned that more losses of editorial jobs would damage the paper's ability to come up with quality journalism whether it is in print or digital platforms.

The editorial lay offs are worse than the initial plan to send offshore some sub-editing jobs to New Zealand which was protested by Fairfax employees.

Although those measures are believed to have appeased investors for the moment amid the drop of Fairfax share prices last week to record-low of 56.6 cents, some investors are backing Ms Rinehart's call for an extraordinary general meeting.

That meeting could lead to the ouster of Fairfax Chairman Roger Corbett and other directors and pave the way for the entry of Ms Rinehart, now the company's largest stakeholder. The Herald Sun reports that Ms Rinehart may be offered a board seat but on the condition that she would not meddle in editorial decisions.

To improve its finances, Fairfax also sold part of its share in TradeMe, New Zealand's Internet auction site, for $160 million. The amount is expected to offset Fairfax restructuring costs estimated at $208 million.

On Monday, Fairfax shares closed 7.4 per cent higher at 65 cents.