Guardian owners plan 20% cost cuts, may charge for content

The publisher of the Guardian and the Observer newspapers has announced plans to cut costs by 20% in order to break even by 2019, but management would not comment on potential job losses.

The paper's operating group Guardian News & Media (GNM) also aims to grow revenues with a renewed focus on data, growth in US and Australia, and plans to rejig the membership and advertising models, including possibly restricting some of its articles to paying members.

After operating costs climbed by more than 20% in the last five years to £268m, GNM is eyeing cuts amounting to around £54m over three years.

Editor-in-chief Katharine Viner and chief executive David Pemsel unveiled the new three-year business plan which included measures to better align editorial and commercial operations, an advertising model that "tracks evolving market trends, notably around branded content, video and data", and a new data and insight team that will support editorial and commercial innovation.

A new membership offer will be launched with the aim of doubling reader revenues.

“Over the next three years, a growing and far deeper set of relationships with our audience will result in a reimagining of our journalism, a sustainable business model and a newly-focused digital organisation that reflects our independence and our mission,” said Viner, who was promoted to the top job last March.

Viner had previously been editor-in-chief of Guardian US and the new plans set out measures to "focus international growth on US and Australia, increasing their contribution to the overall business".

Viner and Pemsel told GMG’s global staff that the plan was designed to safeguard the long-term future of the Guardian’s newspaper and websites and that work would begin immediately.

Pemsel apparently told staff: “It’s very easy to look back and say the Guardian has made mistakes.”

In its last full year, to March 2015, GNM increased revenues 3% to £214.6m thanks to a 20% boost in digital revenues, cutting losses before interest, depreciation and amortisation down to £19.1m from £19.4m in the previous year.

Investments at group level meant operating losses across GNM parent Guardian Media Group increased from £40.6m to £45.3m, partially offset by an increase in profits from its 32.9% stake in publishing company Ascential, formerly Top Right Group and before that Emap, from £16.8m to £22m.

In September, GNM announced a major reorganisation of its commercial operations, with the creation of three new business units: one focusing on its relationships with readers; one on agencies and clients; and a third on GNM’s print business.

The planned sale of Ascential, the owner of the Cannes Lions advertising festival and trade magazines including Drapers and Retail Week, by GNM and majority owner Apax Partners would see the separated business valued at between £800m and £1.2bn, according to different estimates.