Fairfax follows News Corp to the pay wall party

It’s a big day today for media investors with the country’s two largest publishers Fairfax Media (ASX: FXJ) and News Corp (ASX: NWS) both releasing investor presentations that run to over 100 pages.

There were three major points of interest from Fairfax’s presentation for investors. Firstly, guidance of a fall in second-half earnings of up to 39% which given its recent history of poor profit results won’t have shocked too many. Secondly, a further $60 million of costs saving were announced. This is on top of the previously identified efficiency improvements which are expected to create $250 million in cost savings. Thirdly, the long awaited pay-walls for the Sydney Morning Herald and The Age were announced. While Fairfax has had in place a subscription model for its business-focussed Australian Financial Review for some time, it has only just followed News Corp’s lead and locked-up content to its daily domestic newspapers.

Fairfax’s move to erect pay walls leaves the struggling, indebted regional APN News & Media (ASX: APN) as the only major domestic publisher to still be offering its content free online. It also comes as The Washington Post gets set to launch its pay wall next week, having remained one of the few US newspapers to offer its online version for free until now.

Foolish takeaway

The old saying “you get what you pay for” hasn’t been the case for newspaper consumers over the past decade, with consumers enjoying quality journalism for free online. For investors and management this has been a significant structural shift which they are still grappling to come to terms with.

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Motley Fool contributor Tim McArthur owns shares in News Corp.

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