20 Jun 2012

Fairfax investor warns metro papers in jeopardy

1:59 pm on 20 June 2012

The third biggest investor in media company Fairfax has warned that two of the firm's major metropolitan newspapers in Australia could close if the company's restructuring plan fails.

The media firm has has announced it will cut 1900 jobs in Australia and overhaul its publishing operations to cut costs.

Funds management group Allan Gray, which holds a 9% stake, says Fairfax might be forced to sacrifice The Sydney Morning Herald and The Age in Melbourne to focus on the more profitable rural publishing and digital businesses, the ABC reports.

Allan Gray's managing director, Dr Simon Marais, said newspapers were in real jeopardy as Fairfax faces hard truths.

"I think the reason you buy Fairfax is not for the metro papers. They've got lots of other assets. And I think the other assets are probably worth more than the current share price," he told the ABC.

"What the market's effectively saying is the metro papers are already worth less than nothing. They're a liability. But if that continues you'll probably just shut them down at some point. I think that's a real possibility."