Fairfax, publisher of the Sydney Morning Herald and The Age newspapers, will cut 1,900 jobs, put paywalls around online news and shut down its major printing presses under a drastic restructure announced on Monday.
The changes, which will also see its flagship broadsheet papers downsized to tabloid format, were announced as mining magnate Gina Rinehart confirmed she now owns nearly 19 per cent of Fairfax - heightening speculation that she will bid for control of the company.
Fairfax chief executive Greg Hywood said the company will cut costs by $235 million a year by 2015 as it moves to a "digital first" model that will require subscriptions to access some online content by early 2013.
Pricing of the metered access model, under which some stories will be free, will be announced by the end of 2012.
The company said its audience had grown 30 per cent since 2007 but 77 per cent of those now read news online and the print business was a costly legacy.
"Readers' behaviours have changed and will not change back," Mr Hywood said in a statement to the Australian Stock Exchange.
The restructure will cost $248 million and will result in 300 people losing their jobs from Fairfax's "metro" operations that cover the Herald, Age and The Canberra Times, with half of those being editorial positions.
Printing presses in the Melbourne suburb of Tullamarine and the Sydney suburb of Chullora will be closed by June 2014.
The Australian Manufacturing Workers Union said the decision to close the Chullora presses had "driven a stake" through the hearts of 210 workers based there.
Former Age editor-in-chief and current editor of online journal The Conversation, Andrew Jaspan, said the changes announced at Fairfax were positive but "should have been done a long time ago" as the plunging share price had allowed Ms Rinehart to buy a fifth of the company for as little as 60 cents a share.
"It's too late but at least they now have a plan," he said.
Fairfax shares gained 7.4 per cent, albeit from historic lows, to 65 cents on Monday.
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