Guardian News and Media today reported a sharp drop in losses and a significant boost in digital revenue for the year to the end of March 2013.
Digital revenue for the Guardian and Observer publisher was said to be up 28.9 per cent to £55.9m and exceeded the decline in print revenue.
Turnover for GNM rose slightly to £196.3m (compared with £196.2m reported last year) and operating losses fell to £30.9m compared with £44.2m in 2011/2012. This is the lowest level of loss for the Guardian and Observer titles since the year to April 2008. Turnover for GNM was £194.4m in 2011/2012 excluding Kable which was sold in July 2012.
GNM digital revenue has risen sharply over the last three years:
- 2010/2011: £37m
- 2011/2012: £43m
- 2012/2013: £56m.
This year display advertising and sponsorship rose from £18m to £25m and subscriptions, e-commerce and other digital revenue was up from £13m to £15m. Recruitment revenue rose from £12m last year to £16m.
Guardian Media Group chief executive Andrew Miller said: “The financial impact of our digital-first strategy, launched two years ago, is clearly demonstrated in our performance in 2012/13.
“A sharp increase in the contribution of our digital operations to revenue was a striking feature, enabling a modest increase in overall group revenues. Having committed to digital earlier than our peers, we are now reaping the benefits.
“There was a significant reduction in losses at Guardian News and Media , as it completed the second year of its five-year transformation programme.
“The reduction in losses would have been even greater, had we not chosen to invest a significant proportion of the efficiency savings in new developments.
“Investing in the future is a key part of our strategy for this news organisation – every bit as important as the target of taking £25 million out of the cost base by the end of 2015/16. Thus far, we are meeting or exceeding all our targets in this respect.”
Parent company Guardian Media Group reported pre-tax profit of £22.7m (compared with a £19.8m loss in 2011/2012) - helped by increased contributions from joint ventures Trader Media Group and Top Right Group. Last year’s figures have been restated to exclude a one-off charge related to the sale of GMG Radio.
Profits from the two subsidiaries are ring-fenced to pay down debt meaning GMG won't see any cash from its investment in the two businesses until they are sold.
But GMG's piggybank of cash and investments grew from £225.8m at the end of 2011/2012 to £253.7m as the end of March this year, fuelled by income from the June 2012 sale of GMG Radio for an estimated £70m.
Miller said: "The contribution of our portfolio companies – Trader Media Group and Top Right Group – amounted to £73 million in the year. Their performance, together with that of our cash and investment fund, is vital in giving us the headroom to allow the newspapers to take full advantage of the opportunities offered by digital, and to develop the Guardian brand on a global scale.”
In February, Guardian News and Media averted a threatened strike by avoiding compulsory redundancies and making 58 staff (50 full-time-equivalent) redundant on a voluntary basis.
The digital-first strategy has seen GMG take resources away from print and invest them in digital.
GMG is now two years in to a five-year plan to put Guardian News and Media on a more sustainable financial footing. Owner The Scott Trust does not require The Guardian to make a profit but it does have a remit to to "secure the financial and editorial independence of the Guardian in perpetuity".
The Guardian and Observer operating losses had been rising sharply since the start of the media recession:
- 2007/2008: £26.4m on turnover of £261.9m
- 2008/2009: £36.8m on turnover of £253.6m
- 2009/2010: £37.8m on turnover of £221m
- 2010/2011: £38.3m on turnover of £198.2m
- 2011/2012: £44.2m on turnover of £196.2m
- 2012/2013: £30.9m on turnover of £196.3m.
Trader Media Group, in which GMG has a 50.1 per cent share, contributed £38.3 million (compared with £37.1 million last year ) to GMG’s latest results. Top Right Group, which GMG owns 32.9 per cent of, contributed £35m (compared with £12.6 million) in the year before.
Top Right Group’s increased contribution was partly down to £29.5m profit on the sale of CAP Motor Research in May 2012.