The newspaper's big American bet hasn’t paid off — at least not yet.
The Guardian Media Group is still struggling to right its financial ship. But its new strategy of “paid memberships” (they’re not subscriptions, so don’t call them that) appears to be working, albeit gradually. That leaves the exact rate of recovery to be determined.
This week, the publisher of Britain’s venerable left-leaning newspaper announced another round of losses, but smaller than before, along with a forecast: The company will stabilize its finances in 2019.
For the financial year ending April 2, 2017, GMG’s revenues increased by 2% to £214.5 million, or $280 million at current exchange rates. The company slashed total costs by 7% to £259.2 million, or $338 million.
That obviously leaves a rather large hole in GMG’s balance sheet, to the tune of around £45 million or $59 million, but that’s a third smaller than the one incurred in 2016, when GMG posted a loss of £62.6 million, or $91 million at contemporary exchange rates.
The good news is that GMG appears to be gaining traction with its “paid memberships,” which are different from subscriptions, in that they are strictly voluntary. The Guardian has made a point of not erecting a paywall or metered access system for its Web site, leaving it free for all visitors.
But it does invite regular readers to help support its journalism by chipping in.
Remarkably — at least from a jaded media point of view — people are actually responding, and in large numbers. GMG said that the total number of full-time paying members has quadrupled over the last year, to 230,000. Another 190,000 have made one-time contributions.
Together with advertising from the Guardian’s mobile Web and app, the reader payments helped raise total digital revenue 15% to £94.1 million.
GMG also managed to replenish its long-term endowment fund, a charitable foundation that exists to support the newspaper, by selling its stake in Ascential, a business-to-business media and events group. After the contribution from this sale, the fund currently stands at just over £1 billion pounds.
That’s a big war chest, to be sure, but one that was starting to look a little less substantial after seven straight years of losses. In 2015-2016 alone, GMG was forced to withdraw £95 million, leaving the fund with assets totaling £743 million before the Ascential sale.
GMG’s management is aware that, in today’s media environment, even a 10-figure endowment can evaporate with anything less than stringent financial management. Thus, their commitment, announced last year, to cut total costs by 20% and put the company on a stable long-term footing by 2019.
Among other measures, the newspaper is abandoning its traditional “broadsheet” format for the more cost-effective tabloid layout, beginning in early 2018.