Publishers: watch the Guardian very closely

26 Jul 2017  |  Raymond Snoddy 
Publishers: watch the Guardian very closely

As it cuts its losses by a third, Raymond Snoddy argues that, to a considerable extent, the Guardian should be viewed as a bellwether of the national newspaper industry

By any standards the Guardian produces significant journalism in the public interest - everything from the phone-hacking investigation to the Pulitzer prize for the Edward Snowden-NSA revelations. It was also one of the brave pioneers in an aggressive move to digital.

What if such a newspaper business and the funding of its journalism should turn out to be unsustainable over the longer term?

We would be all the poorer, of course, whatever you think of the paper’s liberal political stance - and if the Guardian, with its strong tradition and culture, cannot make it in the battle with the tech giants, who can?

Or to be more precise, could any other newspaper group survive that is committed to keeping its journalism as openly available as possible and avoid the paywall and subscription route.

According to the Daily Telegraph, however, the paper has a fully-developed contingency paywall plan ready to go if all else fails but the commitment to the open approach remains strong at the moment.

The Guardian also has the remarkable additional benefit of not having to make a profit - just manage to fund its brand of journalism in perpetuity.

Again if such a paper is unable to make it...

Luckily the word about the patient this week is “much improved” although the business was truly never on a life support system despite burgeoning losses because of the impressive financial reserves that would make many media businesses jealous.

In fact, the financial pile has actually risen over the past year and now stands at £1.1 billion, thanks in part of the phased sale of the group’s stake in Ascential, the events and business magazine group.

You could still see the gradual sale being used to fund current operations and losses against a finite timeline leading to an impoverished future.

Yet at the end of the first year of a three-year plan developed by chief executive David Pemsel and editor-in-chief Katharine Viner the numbers are heading in the right direction.

Total revenues increased by 2.4 per cent to £214.5 million in the year to April, losses were cut by more than a third to £45 million and costs at £252 million were down 6 per cent.

Part of that means fewer jobs - the headcount is also down 300 to 1,563.

If present trends continue GMG is on course to break even between revenues and costs by April 2019.

Perhaps more importantly the three-year plan has set out a coherent set of targets and approaches against which the plan and the management can be judged.

The most visible is next year’s move to a tabloid format and farewell to the current Berliner shape.

To decision to comb Europe, if not the world, to find a replacement for the Guardian’s traditional broadsheet presses destroyed by an IRA bomb was a touch self-indulgent, if not downright eccentric, even though it was a decision taken in a different world.

Berliner presses in the UK meant limited the options for contract printing.

Now that the Guardian is moving to having the paper printed by Trinity Mirror under contract millions will be saved.

Perhaps the most significant element of all the thought and design work now going into the new tabloid is the continuing commitment it demonstrates to print.

Many have pondered whether the Guardian would be the next to follow the Independent into the ether. They have their answer at least for now and that will remain the case as long as Guardian readers continue to value a print version.

The big drive forward, and the one that is keeping any paywall plans in the cupboard, is the heavy emphasis on membership and knowing who those members are.

The Guardian down-played its previous commitment to huge live events - including taking over the enormous Midland’s Goods Shed near its headquarters in King Cross - in favour of promoting its membership scheme.

Live is huge, events are huge; was the Guardian really going to make more money to underpin its journalism by persuading readers to become members who will pay for the rather nebulous privilege of joining up?

Rather surprisingly the answer seems to be yes - and certainly the commercial risk of moving into events big-time is less.

Paid-for membership, paying regular amounts a month, rose in the year from 50,000 to more than 230,000 and GMG also attracted 190,000 on-off payments. The number of readers paying for print and digital subscriptions - though that must be mainly print - was stable at around 185,000.

Apart from their financial contributions the members will make a further valuable contribution to the future of Guardian journalism. Their relatively well-educated and up-market characteristics can be mined and sold to the advertising as real people, rather than programmed, anonymous bots.

More experimentation is on the way with efforts to crowdfund major journalistic investigative efforts in the US, although the Guardian will have to be careful about shaking the collection tin too vigorously. If a story is worth covering it should be covered by a company which has revenues of more than £200 million a year.

Whether it has been wise to continue to sell-off media assets and create a cash mountain when interest rates are low, rather than holding unto streams of profits and dividends, is a moot point.

But at least the Guardian has its cash comfort blanket in its own hands in uncertain economic times.

There is no single way to fund newspapers in future - open access/membership models along Guardian lines will probably survive alongside the paywalls of The Times with hybrid versions in between.

By April 2019 as the UK leaves the European Union we should also know whether MGG has found its route to the future.

In the absence of further seismic changes in the advertising market the chances look good. At the very least it will soon be time to remove the drip-feed.

(Raymond Snoddy interviews GMG chief executive David Pemsel in the current issue of InPublishing)


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