Guardian owners weigh dramatic switch from newspapers to an all-digital operation

Sources at the Guardian newspaper say that, for the first time, canning the print edition and switching to a completely digital product is now being seriously discussed at the top levels of Guardian News & Media. Long-serving Guardian editor Alan Rusbridger (left) is said to be increasingly isolated in his desire to retain a print version.

Apparently trustees of the Scott Trust, the ultimate owner of GNM, are increasingly alarmed at the company’s diminishing cash pile (chiefly garnered by the sale of a 50 per cent stake in Auto Trader to Apax some years ago).

The Guardian website is one of the most popular in the world, certainly at the ‘quality’ end of the spectrum, but the newspaper continues to lose both circulation and ad revenue.

Last year the company posted an operating loss of £44.2m. Digital ad revenues rose 16.3 per cent to £45.7m, about a quarter of the total, but the cost of printing and publishing the paper edition is far more. This is chiefly due to staff costs which GNM is trying to reduce but its latest voluntary redundancy scheme has not been the success it hoped for. The Guardian’s lavish new Kings Cross HQ hasn’t helped the parlous financial situation.

GNM is awaiting regulatory clearance for the £70m sale of its radio stations to Global Radio (the buy would make Global even more dominant in the UK commercial radio market) but selling the family silver is hardly a long-term strategy.

The UK’s only profitable ‘quality’ newspaper publishers are The Telegraph, owned by the canny septuagenarian Barclay Brothers, and the Financial Times, owned by education company Pearson. News Corporation’s The Times and Sunday Times lose a packet as does the The independent, owned by the Russian Lebedevs, although their free London Evening Standard is believed to have just started to make money while cut-price i at 20p has seen its circulation rise rapidly.

The Guardian, originally the Manchester Guardian, has never made money since it moved its operation to London back in the 1960s. At first it was supported by the profitable Manchester Evening News (now much reduced) and then by the inspired decision to buy used cars freesheet Auto Trader. Radio has enjoyed mixed fortunes while its purchase of magazine publisher Emap was a classic case of the buying at the top of a market that then went into rapid decline.

GNM has recently invested heavily in a New York operation for the website but it must be becoming clear to GNM directors and Scott trustees that it can’t compete successfully in the global digital market while bearing the newspaper losses (GNM also owns Sunday paper the Observer, which has never made money for anyone and it’s been going for over 200 years).

So if a slimmed-down paper is looking impossible to achieve (and there’s no evidence that it would be successful anyway) the Scott trustees seem be coming to the conclusion that they may as well bet the ranch on digital. One issue for them will be whether the small print of the Trust specifies keeping a newspaper in being or a news organisation.

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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.