'Guardian' Warns Of Steep Losses

The Guardian has made big inroads in the U.S. news marketplace in recent years, but the left-leaning UK-based newspaper continues to struggle to achieve a firm financial footing. That's judging by the latest guidance from the Guardian Media Group, which publishes both the flagship newspaper and its sister publication The Observer.

The publisher expects to lose around £90 million in its fiscal year 2017, which is set to end in April, or around $114 million at current exchange rates. That’s down slightly from last year’s net loss of £95 million, which works out to around $145 million using the exchange rate before the steep decline triggered by the Brexit referendum vote in June.

The losses are paid for by withdrawing money from the Scott Trust, a nonprofit trust that exists to support the work and ensure the long-term viability of The Guardian, which operates on a for-profit basis. Last year’s withdrawal of £95 million left the fund with assets totaling £743 million, meaning it can easily accommodate another round of losses  — but not many more.



The newspaper’s management has embarked on a turnaround plan intended to stabilize its finances with a combination of stringent cost-cutting, including some layoffs, and new growth initiatives. The latter will focus on areas such as native advertising and digital audience revenues in the form of voluntary donations.

More recently, Guardian was said to be considering a switch to a cheaper tabloid-style format in print to cut production costs.

Overall, the company's management has estimated it must cut costs by 20% in order to to break even within three years. That works out to around £50 million pounds of savings, or $71 million, per year.

The cost-cutting initiative represents a dramatic reversal, following the newspaper’s success building one of the most popular newspaper Web sites in the world, in large part, by parlaying its English-language editorial base to enter new markets like the United States.

However, the huge digital audiences did not translate into commensurate growth in digital ad revenues, while print ad revenues continue to tumble in the UK.

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