The West Australian newspaper has recorded a significant fall in profit in the 12 months to the end of June.
The newspaper, part of Kerry Stokes’ Seven West Media group, posted an operating profit of $39.2 million, down almost 25 per cent.
Revenue plunged 12.4 per cent to $228.5 million on the back of a 16.5 per cent drop in advertising and a 9 per cent drop in circulation.
The newspaper’s average weekday circulation is now 145,000, down from 157,000, while the weekend edition of the paper averages 241,000, down from 258,000.
However, it has managed to slash costs by almost 10 per cent, from $209.2 million to $189.3 million.
Financial analyst Tim Treadgold said the poor performance was part of the reason the newspaper had moved to cut costs with staff redundancies.
“The problem is that advertising has dried up to a large extent, the WA economy is not performing well, there is a lot of competition now in the international advertising space, people are spending less on advertising, that’s hurting all publishers,” he said.
“It’s not terminal but it’s very worrying.”
Newspaper attempts to future-proof brand
Journalism lecturer at Curtin University Sean Cowan said advertising in traditional media had fallen off a cliff.
“You think about how quickly for instance retail has taken up Pokemon Go. It’s all of two weeks old and already retail businesses are using it to draw customers actually to the shop front,” he said.
“When those sorts of things come onto the market the staid old newspaper and television advertising just doesn’t cut it anymore.
“The West is trying to future-proof its brand … through e-commerce, digital advertising and new businesses, including events management and a travel club.
“I think it will help. Whether it’s going to actually save the business in the long-term is another thing entirely. But they are investing and diversifying.”
Media, Entertainment and Arts Alliance state media section president Martin Turner said it was clear the newspaper’s model was broken.
He said at least 12 staff had recently been made redundant but the paper was looking to sack more as it tried to reduce costs further.
It had wanted more than 20 editorial staff to leave the organisation, but even after an extension of time, there were not enough takers, Mr Turner said.
Newsroom ‘reeling’ from savage cuts
The MEAA’s Tiffany Venning said there was a sense of despair in the newsroom.
“It’s grim up there, I’m not going to sugar coat it,” she said.
“Everyone’s sort of reeling at this point of time.
She said there were 35 confirmed redundancies, voluntary and involuntary, but a few more were pending.
“Across the whole group there are some very senior people leaving, and there will be a big hole to fill … for the folk left remaining,” she said.
“It’s always a sad state of affairs when forced [redundancies] is the way forward.
“Having stories reported, important stories being told, obviously going to take a hit in this, in terms of people on the ground, who are out there finding the stories and reporting on what the general public need to know.
“It’s a sad indictment on our society and where it’s headed.”
Editorial staff in forced redundancies
It is understood five employees were targeted for forced redundancies on Monday, including senior journalists, photographers and an illustrator. Two more staff members were told to go today.
A source at The West said the atmosphere in the newsroom today was “absolutely toxic” and “dire”.
Seven West Media CEO in WA Chris Wharton did not receive a bonus this year, after receiving a $125,000 short-term incentive bonus last year.
The company’s overall earnings, posted today, were slightly below expectations with a net full-year profit of $184.3 million, after last year’s loss of $1.89 billion.
The company is preparing to buy the Sunday Times newspaper and its perthnow website, with the deal being reviewed by the Australian Competition and Consumer Commission.
Shares in Seven West Media have slumped by more than 15 per cent on the profit report and were trading at 0.875 cents on Tuesday morning (AWST).
The company has announced it will pay a fully-franked dividend of 4 cents per share.