Guardian Media Group plans to cut 250 jobs, about 13 per cent of its total workforce, as the lossmaking newspaper publisher battles to return to profitability following a steep drop in advertising revenues.
About 100 of the job losses at the publisher of the Guardian and the Observer will fall on the editorial team, which has grown in recent years as the Guardian built one of the world’s biggest news sites. The group’s global headcount has increased by 479 to 1,960 since its last round of redundancies in 2012.
The company also said it would abandon a plan to build an events hub near its King’s Cross headquarters.
The publisher has come under increasing pressure over the past year as the value of its investment fund declined at the same time as newspaper advertising revenues tumbled.
The Guardian expects to record an operating loss before exceptional items of about £50m for the year ending this month — up from £45m in the previous year.
The group announced in January it would reduce its cost base by a fifth and may make some of its journalism available only to paying members in an attempt to break even within three years.
In an email to staff on Thursday, editor-in-chief Katharine Viner and chief executive David Pemsel said the “volatile media environment” had led to an “urgent need for radical action”.
£735m
Value of the Guardian Media Group’s investment fund
“Our plan of action has one goal: to secure the journalistic integrity and financial independence of the Guardian in perpetuity,” they wrote.
Ms Viner and Mr Pemsel added that they hoped the job cuts would all be voluntary and that compulsory redundancies would only be considered “if necessary”.
Rasmus Nielsen, director of research at Oxford’s Reuters Institute, said: “The Guardian has made some very big bets on the digital future, but not all of those bets have paid off.”
In particular, he said, the Guardian appeared to have overestimated the amount of money that it could generate from its website and apps. Most of the growth in online advertising spending in recent years has gone to Google and Facebook, which have far greater scale and technological expertise than news publishers.
The Guardian is among the most financially secure publishers on Fleet Street, even though it has been lossmaking for more than a decade. Guardian Media Group has an investment fund of about £735m, thanks in large part to the 2014 sale of its stake in car classifieds business Auto Trader.
The announcement comes after a torrid year for the UK’s newspaper industry. Print advertising across the sector fell 25 per cent last year, the Guardian has said, while growth in online revenues has been too feeble to compensate.
In February, the Independent announced the closure of its daily and Sunday newspapers, choosing to focus on its website.
To restore profitability, the Guardian aims to double reader revenues by 2019 — from their current level of £30m — partly through its membership scheme, through which readers can pay between £5 and £60 a month to support its editorial independence and access events. It will also try to increase revenues from branded content, also known as native advertising.
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