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Fairfax to take almost $1bn writedown hit

Business

Fairfax Media will record almost $1 billion of impairments when it reports its full-year results next week, with half the hit coming from the unit containing its Australian masthead newspapers.

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Fairfax says it is separating the results for its lucrative Domain real estate advertising business from its Australian Metro Media unit, the value of which will be written down by $484.9 million as part of a total $989 million in pre-tax impairments.

“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,” chief executive Greg Hywood said in a statement today.

More than 50 per cent of Fairfax Media’s first-half earnings came from the online real estate business, making it by far the biggest contributor to the media group’s total six-month earnings of $98.6 million.

Although the move to separate the reporting structure makes it easier to view each part of the business in detail, Hywood said Domain would remain part of Fairfax.

“Domain makes a significant earnings contribution and remains an integral and growing part of Fairfax. We have no plans for that to change,” he said.

“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.”

Rival News Corp owns 61.6 per cent of the shares in real estate group REA Group, which is listed separately to Rupert Murdoch’s news provider.

Fairfax, which is due to report its FY16 results on August 10, also says it will record a $408.8 million impairment against its Australian Community Media unit and $95.3 million against its New Zealand business.

The company reported a $83.2 million net profit for FY15, down from $224.4 million the previous year.

Shares in Fairfax were down 1.75 cents, or 1.67 per cent, at $1.0325 at 1013 AEST.

-AAP

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