Mulholland: Observer will lose readers but break even

Observer editor John Mulholland has admitted that his relaunch of The Observer unveiled this month will probably lose readers.

But he has said that the slimmed down four-section Observer, launched on 21 February, will break even financially from next month for the first time in at least two decades.

Interviewed in the March edition of Press Gazette magazine, Mulholland says: "I don't think anybody is naïve enough to think that we won't lose some circulation. What it's about is losing some of the promiscuous purchasers who come and go and catering on a more coherent and systematic basis to those people who are core Observer readers.

"What we would hope to have is a slightly smaller but more committed, less promiscuous and more loyal audience."

The Observer was threatened with closure in August last year as Guardian News and Media explored a range of cost-cutting options aimed at stemming losses for the national newspaper business which ran at £36.8m in the 2008/2009 financial year.

Speaking out for the first time about the six-week-period of uncertainty last year where the future of The Observer was in question, and a public campaign was launched to save it, Mulholland said: "I don't think you can underestimate the seismic financial shock that this and other companies have sustained over the last two to five years and it was difficult to know that at the extreme end of those investigations the existence of The Observer was being looked at.

"But I think it was a reasonable thing for this company to do and the reason I never despaired was because me and my senior colleagues at The Observer were centrally involved in that process."

Asked how close The Observer came to closure, Mulholland says: "All you can say is that given the extremely serious financial context which the company found itself in I think it was reasonable that they investigated all possibilities. Once something is suggested as a possibility it doesn't mean that it's likely to happen...How likely was it or not? It didn't happen and that's all that matters."

Mulholland says that following the cutbacks of the last year, and a voluntary redundancy programme, his title is left with 70 Observer-only staff – including five dedicated news journalists who don't have to share their news-lists with Guardian colleagues.

But it also draws on the combined cross-media editorial teams working in areas like the environment, media and education.

The result of the removal of all these staff, and pages, is a paper which could turn a profit for the first time in two decades this year.

Mulholland says: "This [paper been put together with a view to it being at a break even figure from the start of the new financial year.

"The budget we have put together is now extremely close to break even assuming the assumptions in revenue are met. That had to be the end game for the Scott Trust and the Observer that in its new iteration it couldn't become a drain on the resources of a trust which is constitutionally committed to guaranteeing Guardian journalism in perpetuity."

To read the full version of this interview see the March print edition of Press Gazette magazine:

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