sábado, 17 de outubro de 2015

Guardian faces cutbacks after ‘difficult’ year


Guardian faces cutbacks after ‘difficult’ year

An era of lavish spending is over, says a newspaper insider. “We have to be realistic.”

By ALEX SPENCE 10/15/15, 9:50 PM CET Updated 10/16/15, 10:54 AM CET

LONDON — The Guardian is preparing for steep editorial cuts after a slowdown in advertising sales. Job losses are highly likely, insiders at the media company said.

“This is shaping up to be one of the most difficult … periods we’ve faced in many years,” David Pemsel, Guardian Media Group’s chief executive, said in an internal memo obtained by POLITICO.

Spending on new hires, salaries, travel and other expenses will be reined in as the company tries to reduce its losses, Pemsel added. He did not mention job cuts in the e-mail but several people at the company said there will need to be a reduction in the workforce to stem the red ink.

Pemsel is half of a new leadership team that took over at the newspaper company in the summer, with Katharine Viner the editor-in-chief. The duo are struggling with a problem vexing all newspaper bosses: generating enough money from digital products to make up for diminishing income from print.

This year has been “incredibly challenging” for all the major players on Fleet Street, Pemsel said, with print advertising falling at an alarming rate in the first half of the year. Across the whole market, print advertising will be down by about 20 percent, he said. Circulations are also falling.

The Guardian, which has expanded more ambitiously online than many of its rivals and now generates about 40 percent of its income from digital, was less exposed to a slump in print. But online advertising has also slowed, as “spending migrates to the likes of Facebook and Google at a far faster rate than previously seen,” Pemsel said.

“These are changes which will not be reversed, and GMG is not immune to them,” the chief executive added.

The slowdown will result in the Guardian missing its target for revenue growth this year, Pemsel said.

He did not give specific figures, but another source at the company said full-year revenues are on track to grow by about 2 percent, when they were budgeted to be about three times that.

In the last financial year, for the 12 months that ended in March, the Guardian grew its online revenues by more than a fifth to £82 million. Among U.K. news websites, only Mail Online had comparable income.

The digital sales helped increase overall revenues by 2 percent to £210 million, and operating losses narrowed from £30 million to £23 million.

However, with growth slowing, costs will have to be brought under control if those day-to-day losses are not to balloon again, people close to the company said.

A large unionized newsroom

Pemsel and Viner have launched a strategic review of the business, known internally as “Project 2021,” the chief executive said in the memo.

“We must … do everything we can to balance the books,” Pemsel said. “By doing so, we will create some financial room to maneuver, which will — in turn — enable us to continue investing in areas of growth.”

Viner, the former U.S. editor, was appointed to replace Alan Rusbridger in March after winning a staff ballot. She is the first woman to run Britain’s most influential left-wing publication.

She inherited a newspaper that had, under two decades of Rusbridger’s editorship, vastly expanded its reach by embracing the Internet — the audience online has grown to more than 140 million worldwide — and won international acclaim and prizes for a succession of big scoops.

But there was a cost to Rusbridger’s global ambition: the Guardian racked up losses of more than £550 million from its day-to-day operations on his watch, according to company accounts.

The paper’s financial situation is not desperate: It has an £840 million cushion after selling its share of Auto Trader, a classified advertising business. Those reserves are expected to swell to more than £1 billion when it offloads other non-essential assets.

That gives it more time than many of its peers to find a business model that can sustain a sizeable newsroom. However, it still faces tough challenges and the Scott Trust, the non-profit body that governs the Guardian, is determined that it won’t keep burning through money at the rate that it did under Rusbridger. “Those days are over,” an insider said. “We have to be realistic.”

Among executives, there’s a sense that the company is carrying too many people given the state of the industry.

While other newspapers contracted through waves of job cuts, the Guardian’s workforce increased by more than 300 in the last few years. It now has 872 newsroom staff and 1,512 employees overall, who cost £87.1 million last year, according to the latest company accounts.

In contrast, the Telegraph had 662 people in its newsroom and the Times and Sunday Times employed 454 people across their editorial operations.

The strength of the unions at the Guardian makes it difficult for management to undertake a significant retrenchment, but there is provision for them to make compulsory redundancies in extraordinary circumstances.

The company declined to comment on its plans beyond Pemsel’s email.

Authors:


Alex Spence  

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