Fairfax finished its round of redundancies last night, with 30 forced out of a total of 100. Nobody should be surprised to learn that this won’t be the last round – it is almost certain there will be another when the company ceases printing the Sydney Morning Herald and The Age from Monday to Friday, which it confirmed last week.
It gives little pleasure to have been right on this (we first tipped it in 2010). FXJ’s strength as a publisher was made possible by the classified and display rivers of gold which flowed under its printing presses. Once the company stops printing during the week, it will lose the last of its print display revenue. Some of this will flow to News Corporation, but not all, since the audience isn’t the same.
It’s a salutary less in the way disruption rolls – it takes years for companies to adapt, forcing ever deeper cuts as revenue pools dry up. Media and entertainment were innately digital businesses, so perfect targets.
For investors, it means risks are often piling up in companies unseen, as new rules are written and new financial pathways created through technology. What is next? We are well into the disruption cycle for oil and transport, and this will be a big one. Suffice it to say, far from over-reacting to the falling oil price, markets are getting this one pretty right – the benefits of a lower oil price will be matched off against economic dislocation which is coming. The ride over the coming years will get very rough.