News to shrink divisions in cost-cutting sweep

CHRIS ZAPPONE
Last updated 17:20 20/06/2012

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Rupert Murdoch's News Ltd will slash its operations along Australia's east coast in a move that is expected to lead to major job cuts.

The revamp, announced to staff this afternoon by News Ltd chief executive Kim Williams, will reduce the number of its business divisions in New South Wales, Queensland and Victoria from 19 to five.

While he is yet to confirm how many jobs will go, Williams reaffirmed the company's commitment to its newspapers, which include The Daily Telegraph, the Herald Sun and The Australian.

The company employs about 8000 people nationwide, and unions and insiders fear some 1000 positions are at risk in the overhaul.

"The new model addresses areas where we have skill shortages and are duplicating functions," Williams said in a statement to staff.

"At this stage we cannot say how many roles will be made redundant as full details will be resolved with the implementation," he said. "Although there will be retrenchments, many roles will be retired through natural attrition."

The News rejig caps another big day for Australia's media industry. Earlier today, News announced it was making a A$1.97 billion ($2.5 billion) bid to take over Consolidated Media Holdings. ConsMedia is half owned by James Packer, and includes a quarter stake in Foxtel and half of Foxtel Sports. Packer supports the move by News.

Fairfax Media, the country's second-largest newspaper group behind News, earlier this week revealed plans to cut about one in five of its staff, or 1900 positions. The company's board is also under pressure to grant as many as three seats to billionaire mining magnate Gina Rinehart, owner of almost one-fifth of Fairfax shares.

Lengthy review

The moves at News follow an extensive six-month review of the company under the recently appointed Williams, who took over the helm at the Sydney-based news organisation in December last year.

At the time, Murdoch - News Corp chairman and chief executive - also gave himself the title of chairman of the local arm.

Like Fairfax, News Ltd's hand has been forced by the rapidly declining profitability of print newspapers. Print revenues have been savaged by the weak advertising market but also a shift of readers from print to online services.

Print advertising around the country is expected to plunge by 9 per cent this financial year from a year earlier.

The company said in February it expected the full-year results of its Australian businesses could be down ''around A$100 million''.

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Divisions shrink

Today's revamp will leave three major divisions in New South Wales, Victoria and Queensland, folding in those states' metropolitan, regional and community operations as part of a "one city, one newsroom" strategy.

The national broadsheet, The Australian and NewsLifeMedia, the magazine arm, will continue to function as separate national divisions, the company said.

The new divisions replace The Herald and Weekly Times in Melbourne, Queensland Newspapers and Nationwide News in Sydney.

The move is designed to centralise News' editorial, sales, marketing, finance and administrative operations, the company said.

The company will also spend A$60m to roll out a new editorial computer system, Methode.

Media in the mix

The company also confirmed the acquisition of Australian Independent Business Media, which publishes online business opinion site Business Spectator and the investment newsletter the Eureka Report.

Media reports had put the price on the company, partly owned by ABC TV presenter Alan Kohler, between A$22m and A$30m.

News Ltd's A$1.97b takeover bid for ConsMedia will require approval from competition regulator, the Australian Competition and Consumer Commission. If given the nod, the deal would give Murdoch a dominant slice of Australia's pay television industry.

Telstra owns the other half of Foxtel, and earlier today welcomed the bid for ConsMedia by News.

"We've worked successfully with News Ltd as partners in Foxtel and look forward to this partnership continuing to deliver value for Foxtel's shareholders and a great Pay TV experience for customers, a Telstra spokesperson said.

Another media magnate, Seven's Kerry Stokes, is likely to have a say in the tumult now under way in the industry.

Stokes, who owns 24 per cent of ConsMedia, has indicated an interest in expanding further into Australian pay TV.

- AAP with Chris Zappone and Kirsty Simpson, BusinessDay

- AAP

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