This column does not normally take much interest in motoring magazines, which may be a weakness. Nevertheless, I was struck by last week's news that Trader Media Group has written off £463m of the value of its once fantastically successful Auto Trader magazine. The reason for my interest was that Trader Media Group is 50.1 per cent owned by Guardian Media Group (GMG), publisher of The Guardian and The Observer.
The write-off, which is not exactly good news for GMG, reflects the declining circulation of the magazine. By contrast, its digital operations have been growing at a cracking pace. However, there are doubts as to whether they will produce the fabulous profits Auto Trader once did.
Carolyn McCall, chief executive of GMG until she recently departed for easyJet, declared that "our financial position is secure". Is it? It is certainly not parlous, though the company lost £171m in the year to March. It has some £250m available to it in the shape of an investment fund and cash. Apart from its share in Trader Media Group, far from worthless despite the write-down, it also has a 29.54 per cent stake in Emap, a publisher of trade magazines, though GMG also recently wrote this down by £96m, a third of its original investment.
Guardian Media Group's investments have plainly not been going entirely swimmingly. As recently as 2007, it owned all of Trader Media Group, then valued at around £1bn. With the benefit of hindsight, GMG should have sold its entire stake in the company instead of keeping half and making investments elsewhere that have not always been inspired. Rather amusingly, given the high-minded character of The Guardian, GMG's partner in Trader Media and Emap has been Apax, a red-in-tooth-and-claw private equity group.
Though GMG is very far from the edge, it may not have sufficient resources to prop up its heavily loss-making national newspaper operation ad infinitum. The Guardian, Observer and guardian.co.uk are probably still losing around £30m a year, and it is difficult to see how even with the slight uplift in advertising revenue (up 13 per cent in the last three months year-on-year at the Mail titles) these losses can be much reduced without further cutbacks.
Some 200 posts were got rid of in the year to last March. But the newspapers still employ more than 600 journalists, roughly the same as The Times (heavily loss-making) and the Daily Telegraph (nicely profitable), both of which have significantly bigger circulations. With the outlook for the newspaper publishing industry remaining bleak, it would be foolhardy to continue to behave as though GMG's resources can absorb losses on this scale for ever.
Yet I sense that senior executives on The Guardian – and members of the Scott Trust, which owns GMG – are in a sort of denial. The newspapers occupy fancy new offices in King's Cross which are far too grand for their station in life. The Guardian reportedly fielded 19 journalists at the Labour Party conference in Manchester. Some of the paper's executives appear to believe that The Guardian is a sort of British version of The Washington Post in its heyday, whereas, like all newspapers, it has been steadily shedding sales without making money out of its large digital investment.
Maybe GMG will be able to bankroll its national papers for ever. Personally, I wouldn't count on it, especially if more of its investments go wrong. The trouble is that there seems to be no one in the Scott Trust or Guardian Media Group or on the papers themselves able or prepared to stand up and say what is blindingly obvious to everyone else in Fleet Street – that these newspapers are continuing to live dangerously beyond their means.
Good on the Beeb's strike-busting presenters
When BBC staff including journalists went on strike over job cuts in 2005, several well-known presenters declined to cross the picket line. Times have changed. A strike planned for tomorrow and Wednesday, which would have blacked out much of the Tory Party conference, has been called off after 36 presenters, including Jeremy Paxman, Nick Robinson and Emily Maitlis, wrote a letter in which they claimed that a strike would look "unduly partisan".
Of course, it may be that an improved offer on pensions from the BBC's management, rather than the letter, persuaded unions to call off their strike. Nonetheless, the presenters should be congratulated for taking a stand. It would have looked partisan for BBC staff to have picked on the Tory conference rather than the Labour or Lib Dem ones. Unions are still threatening a strike on 19 and 20 October which would disrupt coverage of George Osborne's spending review. If there is no deal before then, the presenters may have to take a stand again.
More injunctions to shield the famous and wealthy
Two more secret injunctions have been handed down. The first involves a fabulously wealthy married man who is a well-known public figure. He has won a gagging order to prevent details of an affair being made public because he says it would distress his family. A second case concerns a television star, who has obtained an order preventing his ex-wife publishing an account of their relationship, which includes an allegation that they had an affair after he remarried.
I know the names of the two gentlemen, but am not allowed to tell you. Would it be in the public interest for their names to be known? That is a judgement you cannot make without knowing the facts. Judges have decided for you. In the second case I would have thought that the television star's new wife might like to be put in the picture.