Guardian Media Group cuts losses by more than a third

Publisher of the Guardian and Observer says paid membership numbers more than quadrupled in the last financial year

The parent company of the Guardian and Observer cut its losses by more than a third to £45m in the last financial year and more than quadrupled its number of paying members, as it seeks to break even within two years.

Guardian Media Group said total revenues increased by 2.4% to £214.5m in the year to 2 April, thanks to the popularity of its membership scheme, one-off contributions and growth in international operations.

Paid-for membership,a core part of the Guardian’s plans to counteract the steep falls in print ad revenue affecting all newspaper publishers and slow digital ad growth, rose from 50,000 to more than 230,000 in the year to 2 April.

The number of readers paying for print and digital subscriptions stayed stable at about 185,000 and there have been more than 190,000 one-off contributions. A cover price increase of 20p last April also helped buoy revenues.

The Guardian increased its total digital revenues by 15% to £94.1m, a figure that includes membership income, contributions and philanthropic and grant-funded income. Foundation grant revenue surged by 65% year on year to £3.8m.

Digital advertising revenues are not split out, but are thought to have grown by less than 10%. Google and Facebook continue to hoover up nearly all of the digital ad growth, despite continuing concerns about ads running next to inappropriate content such as extremist sites and fake news.

“We have grown our digital revenues, and we are achieving strong growth in membership, subscriptions and contributions,” said the GMG chief executive, David Pemsel, who was paid £706,000 last year. “More people are paying for Guardian journalism than ever before. This is helping to build a strong foundation from which we will continue to invest in some of the most trusted journalism in the world.”

The publisher reduced its headcount by about 300, from 1,860 to 1,563 at its year end, which cost the company just over £30m in severance payments over the last two years. Staff costs fell from £150.8m to £136.2m year on year.

Losses from running the business, excluding exceptional items such as severance pay and depreciation, were £44.7m. This is down from £68.7m the previous year.

At a pre-tax level, the Guardian made a loss of just £200,000, primarily due to completing the staged sell-down of a 22.4% stake in Ascential, owner of events including the Cannes Lions festival, for £239m. The previous year, GMG reported a £173m pre-tax loss thanks to an £80m writedown in the value of its stake in Ascential and a £20.6m restructuring charge over severance payments.

The sale of the stake in publicly listed Ascential helped boost GMG’s endowment fund, which supports the newspapers’ losses, from £765m to £1.03bn.

The company burned through £67.3m in cash last year down from £72.3m the previous year.

In January last year, Pemsel and the Guardian and Observer editor-in-chief, Katharine Viner, launched a strategy to cut costs by 20% over three years.

Over the last year the company’s cost base fell from £298.8m to £268.8m, including a £9.6m provision for future restructuring.

In June, GMG announced it was moving from its Berliner newspaper format to a smaller tabloid size early next year, which includes selling or scrapping its three specially commissioned £80m printing presses, which will further cut costs.

The plan is for the newspaper operation to break even by April 2019.

“Despite the challenging market conditions faced by all news organisations around the world, our three-year strategy is well on track to achieve its financial goals and to secure the future of the Guardian,” said Pemsel. “We are reducing our costs, growing new reader revenue streams, and building our businesses in the US and Australia.”

GMG paid £622,000 in charitable donations and gifts in kind to the Guardian Foundation, an increase of more than 10% over the previous year.

After the newspaper operation breaks even, GMG forecasts it will continue to make a sustainable loss – in the low teens of millions of pounds – relating to pension contributions, capital expenditure and endowment fund costs.

“There is much to do, but the strategy is on track,” said the GMG chairman, Neil Berkett. “The successful disposal of our remaining shares in Ascential means that the business has a clearer focus and more secure financial base from which to complete our three-year strategy and ensure that we continue to create world-class Guardian journalism in perpetuity.”