Fairfax Media chief executive Greg Hywood has confirmed the mid-week print editions of the Sydney Morning Herald and The Age, as well as the Saturday Australian Financial Review, will "inevitably" close as circulation of the newspapers continues to decline.

But in an interview with RN Breakfast, the Fairfax boss said that the company was not at that stage yet.

"We are not close at all because the metro publishing businesses, of which those mastheads are a part, are still very profitable," Hywood said.

"But we wanted to point a way forward and not just say each year, 'yes we are going through structural change', 'yes print revenues are down', and not give people a sense of what that inevitably meant. I guess that's being frank and honest."

Fairfax Media posted a net loss of $894 million for the year as it continues to write down the value of its mastheads, a process that has seen hundreds of Fairfax journalists retrenched over the past five years.

Pre-tax earnings for the division which houses the capital city newspapers were down 45 per cent in 2016 to $39 million, while profits for the company's successful real estate listings website Domain jumped 40 per cent to $120 million.

Domain has now been separated out from the Metro publishing division in a move seen as the first stage towards a possible listing or sale.

Mr Hywood said the business would remain as a "core" part of the group, but he said the underlying results were proof that the transformation of Fairfax Media over recent years had succeeded.

"If you look at the component parts of where those earnings came from, three years ago we got 20 per cent of our profits from our 'digital plus' businesses. That's improved to 42 per cent this year and it will rise to 60 per cent next year," he said.

"This is a 185-year-old newspaper business that had to transform itself into a digital business and that's what we've done."

Hywood 'confident' of surviving social media

The Fairfax chief said he was "absolutely confident" the company could survive the challenge of Facebook and Google which were not only snapping an increasing amount of digital advertising revenue, but were now becoming the main source of news and information for more and more people.

One recent survey found almost half of Australians now use social media as a source of news, with almost a fifth saying it is their main source.

"We reach well over 11 million Australians — nearly half the population — every month. Our audiences have never been larger," Mr Hywood said.

"We get the advertising because we put a better product out. We also use that audience and that marketing inventory ... to drive other businesses."

No changes planned for sponsored content

Mr Hywood also defended the company's increasing use of "sponsored" content — or advertising presented as news items.

Fairfax has this year done a commercial deal with the Chinese government that will see it insert into Fairfax publications what's been described as a two-page propaganda sheet called China Watch.

"Many newspapers around the world, including The New York Times, do similar inserts," he said.

"I don't see any difference between a company inserting their material and a country inserting their material — as long as people know what they are reading.

'There is no doubt it's Chinese government material."