Does the Guardian’s newspaper and digital strategy actually add up?

The Guardian has said it may be forced to make compulsory redundancies as its efforts to persuade journalists to leave voluntarily have failed. It was seeking up to 100 voluntary redundancies but only 30 or so people signed up.

According to the FT it wants to save £7m from its current editorial budget of £69m by reducing its 650 editorial staff to around 550.

But even this isn’t going to help very much as in the year to April operating losses at the Guardian and its sister paper, the Observer increased to £44.2m from £31.1m despite strong growth in online revenues. Digital revenues rose 16.3 per cent to £45.7m (about a quarter of the total), while the newspapers’ online audience rose 38 per cent.

Which still leaves you with a loss of around £37m a year and the strong prospect of this increasing as the Guardian newspaper’s ad revenues decline as its circulation falls. The Guardian circulation fell 11 per cent in September (year on year) to just over 204,000. Online ad revenues, although growing, are hardly like to compensate.

Last week we wrote that some senior people at the Guardian and its owner The Scott Trust Limited (as we’ve now learned) were discussing the switch to an all-digital Guardian, canning the newspapers. This was robustly denied by editor Alan Rusbridger and Guardian press blogger Roy Greenslade. But, as we also remarked, if they weren’t discussing it they jolly well should be.

Once a consumer newspaper’s circulation in the UK tumbles beneath 200,000 (as opposed to a specialist title like the FT) then the writing really is on the wall. Media agencies just won’t put their clients’ money there unless the paper agrees to give most of it back in ‘sur-commission,’ which the Guardian is surely too honourable to do.

When such a fall happened at the London Evening Standard its owners, the Lebedevs, took the bold step of going free and upping the circulation to around 750,000. It’s since gone higher and the Standard is in serious danger of making money.

Now the Standard’s market is different of course. As a very good free paper it has once again become the go-to option for job ads in London and also entertainment via film, theatre and concert advertisers. It’s doubtful that such a strategy is open to the Guardian newspaper, although the Independent’s cut-price 20p i is performing relatively well, in circulation terms anyway.

But even this might not do the trick. The Guardian didn’t make money when its circulation was hovering around the 400,000 mark and it was stuffed with public sector and media jobs (it was, really). The UK ad market has performed reasonably strongly over the past difficult few years but most quality newspapers are losing out to other media, chiefly digital.

Which is where we came in. I can’t for the life of me see any way that a paper and digital strategy for the Guardian can possibly work, job cuts or not. The numbers just don’t add up.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.