The financial results of The Guardian’s parent company reveal that the global beacon of liberal journalism has a mountain to climb if it is to secure its future.
The trading loss of £69m has contributed to a fall in the value of its endowment by £73.3m from £838.3m to £765m.
The Guardian’s owner the Scott Trust has a remit to protect the journalism of the 195 year-old title in perpetuity. At the current rate (even with the £200m it may yet earn from the sale of its stake in business publisher Ascential) it has little more than a decade left.
The big idea to increase revenue, a membership scheme which does not offer exclusive access to content, looks like a failure to me.
Since the launch of Guardian Membership two years ago some 50,000 have signed up as paying supporters. We don’t know at what tier, but it seems safe to assume most are at the £49-a-year rate – meaning they may contribute around £2.5m to the annual bottom line. That would cover around a tenth of last year’s redundancy costs.
The Guardian points out that it has a further 180,000 readers who pay to subscribe to print and digital editions and apps. A premium tier subscription to the smartphone app costs £2.49 per month.
Online advertising has become so squeezed by Facebook and Google that, despite record global website traffic, The Guardian’s digital revenue actually shrank last year.
Perhaps it should look to two other great British liberal journalistic institutions for inspiration.
The Economist and Financial Times are of a similar vintage to The Guardian and have achieved exactly what it is trying to do (whilst also making bundles of cash).
They have record combined print/digital circulations and editorial independence. They’ve achieved this by focusing on quality, embracing digital journalism, going global (and crucially) valuing what they do enough to charge for it online. The Guardian has three out of the four ingredients for success.
Both the FT and Economist started with metered paywalls which they have made progressively more restrictive, to the extent that readers can now access just a few articles a month before they are told to pay up.
They are special cases in the sense they have a more narrow focus than The Guardian. But The Times has shown that high quality general-interest newspapers can also make paywalls pay.
Historically The Times and Sunday Times have lost just as much money as The Guardian and Observer. But in the year to June 2015 they reported a pre-tax profit of £10.9m.
The Times titles now claim digital subscribers up 10,500 year on year to 182,500.
Why wouldn’t a similar number pay for The Guardian which is, afterall, a much more sophisticated website?
The catastrophic turnaround in The Guardian’s finances over the last year show that it will only be safe once it has found a way to shift its dependence away from advertising, both in print and online.
It’s worth noting that just 12 months ago Champagne corks were practically popping at King’s Place as Guardian News and Media reported operating losses of £19m.
At the time chief executive David Pemsel (pictured top) said: “These results give us the confidence to invest further in the world-class journalism, digital innovation and growing international readership which has made the Guardian such a powerful global brand.
“That, in turn, will help deliver long-term financial and editorial sustainability.”
In an email to staff a month earlier, Pemsel described The Guardian as “global, digitally-focused, financially secure. The foundations we now have in place are really very strong indeed.
“We are perfectly poised to build on our international audience, to capitalise on the many commercial and digital opportunities, and, above all, to ensure that our journalism thrives in the years ahead.”
In March 2015 GMG said in a statement: “2014 was the year we secured the financial future of the Guardian. This year we must prioritise targeted investment and strategic delivery.”
At the same time, as The Guardian announced Andrew Miller’s departure as chief executive, GMG chairman Neil Berkett said: “The outstanding partnership between Andrew and Alan [Rusbridger] has positioned GMG to pursue continued revenue growth and significant investment. This promises to be another year of encouraging progress as our business and editorial transformation continues.”
The 69 Guardian journalists now taking redundancy from the business must be wondering how their commercial bosses got it so wrong.