Fairfax tips slower second half

Australian newspaper publisher John Fairfax Holdings says its first-half net profit rose 26 per cent on stronger advertising revenue, but it forecasts slower growth in the second half.

The circulation of metropolitan newspapers had fallen, said Fairfax, which publishes the Sydney Morning Herald, Melbourne's Age and the Australian Financial Review.

Chief executive Fred Hilmer, who is due to depart as soon as the company finds a replacement, said Fairfax would like to "marry" with a local television network and would consider any takeover offer put to it.

"We are going to see some slowing in advertising revenues and also classifieds, including employment and housing ... but the prospect of some corporate activity further down the track could keep the stock pretty buoyant," said fund manager, Ausbil Dexia chief executive Paul Xiradis.

Fairfax said net profit before one-off items rose to A$126.1 million in the six months to December 31 from A$100.1 million a year earlier.

First-half earnings before interest and tax rose 17.7 per cent to A$212.9 million, but second-half growth would be slower.

"We don't expect the percentage of improvement we delivered in the first half to be the same in the second half," Hilmer said. "This is very much a volatile business."

Fairfax declared an interim dividend of 7.5Ac a share, up 36 per cent.

Hilmer said a combination of Fairfax, which has no dominant shareholder, with a local television network would create opportunities in cross marketing, ad sales, content sharing and back-office economies.

"If we were able to marry our business with a television network in a way that made sense to shareholders ... we would see it as strategically a good direction in which to move," Hilmer said.

Australian media stocks rallied sharply after the Government won back control of the Senate, the upper house of Parliament, at an election in October.

That could pave the way for changes to media ownership laws after July, making some media companies takeover targets and others potential predators.

Under present laws, a company is not permitted to own a newspaper and TV network in the same large city.

It also said it had appointed to the board David Evans, president and chief executive of Crown Media Holdings, which owns Hallmark Channels.

- REUTERS