When Greg Hywood, Fairfax Media’s shaven-headed $2.8m-a-year, Maserati-driving chief executive announced at a teleconference this week a “solid outcome” for the company for the last half of last year, there were more than a few of the brokers and analysts listening online shaking their heads.

In spite of another year of relentless cost-cutting, layoffs, and the shuttering and sale of the vast printing plants where the company’s flagship newspapers were once produced, profit, in reality, was down a “solid” 86% on the year before, to a wafer-thin $26m, one of the worst results on record.

That brought the ailing media company’s accumulated losses since Hywood took the helm four years ago to an eye-watering $2.5bn. To be fair, though, most of this was due to writing down the book value of Fairfax’s stable of city and country newspapers across Australasia, in some cases to zero. Hywood’s bold plans to turn the business around is self-evidently not working – except to enrich the company’s executives, who have awarded themselves tens of millions of dollars worth of cash and shares by way of bonuses for their dismal performance.

It was, of course, terrible news for any investors who have stuck with Fairfax since the heady days of the dot.com boom when its shares topped $6 – they have been languishing under $1 for years. This week’s results barely nudged the price, largely because the market had been expecting bad news since the company’s biggest shareholder, the mining billionaire Gina Rinehart, sold all her stock and abandoned her plans for media mogulhood a few weeks ago. Now Fairfax is nobody’s, to the great relief of most of the board, executives, editors and journalists – though not necessarily investors and readers.

One doesn’t have to be Warren Buffet to see why Fairfax – along with most newspaper companies around the world – is in such diabolical, some would say terminal, trouble. The company’s main titles, the Age in Melbourne and the Sydney Morning Herald, floated comfortably along for nearly two centuries on what Rupert Murdoch enviously dubbed the “rivers of gold” of their thousands of columns of classified advertisements.

If you were looking for a house, a car or a job in the country’s two biggest cities the only places to go were the country’s two most profitable and prestigious broadsheets. Some Saturdays they weighed 2kg, some of the heftiest papers ever published anywhere, and subscribers complained of damaged plants and injured pets as they were hurled over front fences by delivery boys.

All that began to change as the internet connected households with a far faster, far cheaper online marketplace. Under the lacklustre leadership of a board and a former chief executive in Fred Hilmer with no newspaper experience – none at all – Fairfax failed to see the locomotive coming and dawdled and dithered while nimble new online upstarts stole their lunch. Online advertising revenue overtook print newspapers two years ago, and by 2018 will command more of Australia’s $10bn-a-year advertising market than newspapers, radio and TV put together.

Worse, Fairfax allowed some of those great revenue rivers to be seized by its rivals. Murdoch’s realestate.com.au is the country’s richest real estate market; James Packer made a fortune out of the biggest online car sales site. And now, 10 years on, management consultants are wandering Fairfax’s corridors still snickering about “managing a declining industry,” and talking about further layoffs in newsrooms which have now dwindled to half the size they were.

It is not just quantity, it is quality that has suffered from the greatest exodus of journalistic talent the country has ever seen. Although the papers still have their stars like Kate McClymont, they are thin on the ground – harried reporters complain of having no time to check their facts or make that extra call before slamming their stories online. Subbing has been outsourced to cut-price operators in New Zealand; subs have actually been abolished on some of Fairfax’s regional newspapers. There is no quality-checking at all.

As well, there has been a creeping compromising of the papers’ much-vaunted independence and objectivity. Russia Today, a Kremlin propaganda sheet masquerading as a newspaper, is published as a paid insert. Reporters are told to find “sponsorship” if they need to travel – a weasel word for begging someone else to pay for travel and accommodation. Recently Fairfax’s Good Weekend magazine published a profile of the Japanese department store Uniqlo – many would have questioned the story’s objectivity when they saw that the reporter had been flown to New York by the company.

As well, many older readers take issue with the way “click bait” is dumbing down the news judgement of Fairfax’s websites, with celebrity, sex and sport consistently swamping more serious news. On Friday afternoon, for example, stories about Kim Jong-un’s new haircut, a rugby union player caught selling cocaine, and a fuss over a racist comment on an American comedy show were judged more important than the cyclone battering coastal Queensland, or the Productivity Commission’s report on childcare, which may change the lives of millions of parents.

The latest data show that the decline in Fairfax’s print circulation is accelerating rather than bottoming out, as many had hoped. The two great broadsheets are now selling fewer copies than they did in the depths of the second world war when newsprint was rationed and Sydney and Melbourne were one-third the size they are today. Both have weekday figures of under 100,000 in sight, half what they were five years ago.

Hywood counters by claiming that readership has never been higher – Fairfax’s website is the most popular news site in the country, and a barely-believable 5.1 million visitors access it every month. However, this is missing the point.

It is not readers, it is revenue that is needed to run those great full-service newsrooms. And cut-throat competition has driven online advertising through the floor – for every dollar a newspaper loses in print advertising it is lucky to recoup 10 cents online. Few newspapers are lucky enough to be owned by a trust, rather than accountable to shareholders, like the Guardian, or to attract a fairy-godfather like Amazon’s Jeff Bezos, who has adopted the Washington Post.

Hywood’s solution has been to diversify into a dozen different fields. Fairfax’s metropolitan newspapers now produce less than half its revenue. The company has morphed into selling baby goods, organising fun runs and ocean swims, a dating service, a real estate site. It has partnered with Channel Nine to launch a video-to-the-home service, though many fear this will end in tears. Apart from its unlikely name of Stan, it is about to face formidable competition from the world’s largest and most aggressive player in video-streaming, the US giant Netflix, which launches in Australia next month.

But many fear these ventures are just postponing the inevitable demise of the newspapers that have chronicled the country since the earliest days of white settlement, leaving Murdoch, at least for now, with a monopoly on everything Australians read in print. “They’ve saved the company, but f----d the papers,” as one analyst told me.