Shares of multi-platform media group, Fairfax Media Limited (ASX: FXJ), have plummeted 5.2% on the back of a trading update issued earlier in the day.
At the Macquarie Australia Conference in Sydney, Fairfax CEO Greg Hywood said that during the period between 1 January 2015 and 26 April 2015 the company had achieved revenue growth of 1%, versus the same period last year.
"While this is pleasing, it is important to note that we continue to incur costs to take advantage of growth opportunities," Mr Hywood said.
In February 2015, Fairfax acquired the remaining 50% stake in Metro Media Publishing (MMP) and 100% of Macquarie Radio Network in April 2015. Both of these businesses were included in the 1% revenue growth result, however, the divestment of 96FM was excluded.
Fairfax's Metro Media, which houses the company's Domain business, increased revenue 7%. Despite publishing revenues falling 7%, the 54% surge in Domain's overall revenue (which included the benefit of the MMP and the Allhomes acquisition in October 2014) bolstered growth.
Australian Community Media, which includes rural and regional newspapers and digital services, saw revenues fall 8%, whilst revenue from the New Zealand business was up less than 0.5%.
Following the sale of 96FM and including just four weeks of the combined Macquarie Radio network, Fairfax's Radio business experienced revenue growth of 9%.
Should you buy Fairfax shares?
Since booking an 86% fall in half-year profit earlier in 2015, Fairfax has continued to transform its operations in response to the rapidly changing digital landscape. So far the jury appears to be out on whether it'll be a success.
Whilst investors are likely attracted to Fairfax's Domain property listing business, which is looking to emulate the success of REA Group Limited (ASX: REA), it's important to consider how this fits with the rest of the group. In time shares of Fairfax may prove to be a bargain, however, I'm happy to watch it from the sidelines for now. At least until we can get a better gauge on the success of its turnaround strategy.
