Guardian News & Media has lost nearly £200m in the past six years as it pursues its ambition of being the “world’s leading liberal voice”.
The Guardian’s editor-in-chief, Alan Rusbridger, has expressed the wish to “cut our way out” of this perilous financial environment by aggressively expanding into overseas markets. Yet The Guardian’s plans are challenged by Britain’s most famous international media brand, the BBC, a traditional editorial ally but a fierce rival when it comes to overseas advertising revenues (which the Corporation may earn from its global output).
Andrew Miller, chief executive of parent Guardian Media Group, which spans The Guardian and The Observer newspapers, the guardian.com website and a portfolio that includes GMG Property Services and large stakes in the car-classifieds company Trader Media Group and events company Top Right Group, sounds exasperated. “The BBC is a frustrating competitor for us,” he says in an interview with The Independent. “It’s like a very good friend and has the great traits you love, but then several things really annoy you about them. I get frustrated that the BBC is the biggest state-subsidised Internet [operation] in the world. It is a global competitor for us in those different market places…to the advertising revenues that we go for.”
The least the BBC could do, he argues, is to give a leg up to media companies from back home – like The Guardian. Mr Miller believes the BBC should be prepared to do joint advertising deals with his company in foreign markets. “The one thing the BBC could do more for UK brands and businesses is to partner with them outside the UK – given that the UK is subsidising the build out of the Internet for the BBC,” he says.
GMG already enjoys advantages over some of its commercial media rivals. Ownership by the Scott Trust means it does not have to answer to shareholders. The group has a cash and investment fund of £254m. Those other assets such as its 50 per cent stake in Trader Media Group and a 33 per cent share in Top Right are security for the loss-making news business.
Mr Miller has already sold GMG’s radio business last year for £70m, partly over further frustration with the BBC’s “disruption” of the market. “Because of the enshrined nature of the BBC’s local radio I took the view that we should be divesting,” he says.
Two years ago, as he committed GMG to a “digital-first strategy”, Mr Miller warned staff the newspaper’s losses were so great it could run out of money in “three to five years”. The latest losses of £31m for the year to the end of March were an improvement on the £44m of the previous 12 months and he took succour from a 28.9 per cent rise in digital revenues.
But lately he has had to rethink his plans, after a stabilising in daily print circulation at 199,000. “The paper has confounded us,” he says, adding that “there are no plans to close the newspaper”.
At the same time, Mr Miller is focusing closely on the success of younger news services, such as the entertainment-led BuzzFeed, youth brand Vice and business-based Quartz, which he collectively defines as “Wave Two” of a process that began with “Wave One” of newspapers putting content online. The Guardian website has more than 78 million monthly users worldwide, around one-third in America. Mr Miller concedes that attracting advertising dollars is a much more difficult task in a very conservative market.
The international audience is critical to The Guardian’s survival. “The financial metrics around digital mean that there isn’t enough scale in the UK to survive at the moment – maybe in time it will change,” he says. Having set up a digital news operation in Australia in May (followed by the Daily Mail this week), he has his sights on India, which has “huge potential”.
But rather than thinking of geographical territories, Mr Miller and Mr Rusbridger have been discussing the “themes” which will give The Guardian international growth. Asked for examples, the chief executive cites environmental issues, a strong political voice and investigative journalism. The paper’s coverage of National Security Agency whistleblower Edward Snowden has raised its global profile.
The audience for these themes are the world’s “progressives”, Mr Miller says. He is against the idea of a hard digital paywall (such as that used by The Times) and considers a “freemium” soft paywall (as used by The Daily Telegraph) to be “the worst loyalty scheme in the world” because regular users are charged.
His own preference is a “membership”, with users signed up to have “deeper engagement” with the paper. Mr Miller also wants members to be “participating in little events” which are Guardian-branded.
The paper already uses King’s Place, its HQ in London’s Kings Cross, to support various cultural events. Earlier this year it opened a tech-based London café called #guardiancoffee, which attracted some scorn but Mr Miller says it will live beyond its six-month trial, “probably for several years”.
This week the paper also opened the Guardian Green Room in the Rough Trade record store in New York to showcase its commitment to music. Mr Miller is very keen and more coffee shops may follow. “Physical manifestation of The Guardian is something we are actively exploring,” he says.