In one of the starkest reminders of financial distress, TheGuardianis preparing to slash costs by around 20% in order to “safeguard” the newspaper’s future, the publishers revealed in a meeting with employees on Monday.
The newspaper’s parent company, Guardian News & Media, plans to cut £52 million from its annual operating expenses of £268 million, or about $74 million from a total $382 million at the current exchange rate.
Operating costs ballooned 23% over the last five years, from £218 million, while revenues grew just 10% over the same period, to £214.6 million in 2015.
Print advertising revenues, still the core of the newspaper business, plunged 25% in the UK over the last year, somewhat offset by the growth of revenues from new sources like Guardian Labs, its in-house native advertising studio, which now contributes 16% of the total. At the same time costs have increased because of ambitious overseas expansion projects, including in the U.S. and Australia.
Operating losses for the year through March are expected to reach £53 million, giving a pretty good indication where the cost-cutting target comes from. After blowing through a total £80 million of cash in the last year, the value of the endowment held by the Scott Trust, the independent charitable foundation that owns The Guardian, fell from £838 million in July to £735 million today.
The publisher hopes to break even within three years, through a combination of cost cutting and continued growth, including increased revenues from a membership program. But this won’t be easy.
According to a report in the newspaper, GNM CEO David Pemsel described the tough balancing act facing the venerable left-leaning newspaper: “Growing the cost base more than revenue is simply not sustainable. We need to create a confident and secure footing to then be able to be as innovative and progressive as we’ve always been.
"I don’t want to just pile on the ‘let’s be innovative and bravely go into this new world’ when the foundation is that fragile.”