Observer warned of job cuts: Gloom among staff as Guardian editor explains price of takeover

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The Independent Online
PETER PRESTON, editor and managing director of the Guardian, warned staff at the Observer yesterday that there would be 'very painful' job losses following the acquisition of the Sunday paper by the Manchester Guardian and Evening News Group this month.

Mr Preston was addressing staff at the Observer's Battersea headquarters along with the paper's new editor, Jonathan Fenby, columnist Hugo Young - chairman of the Scott Trust that safeguards the Guardian's independence - and Ian Wright, the Guardian's managing editor.

Mr Preston gave no details of the proposed redundancies, but they are likely to include people at all levels, including some senior executives. Mr Fenby will make the final decisions and already has an office in the Observer building, although he will not formally take over from Donald Trelford until the sale of the paper has been approved by Michael Heseltine, President of the Board of Trade. Approval is expected within two weeks.

Observer journalists said the mood of the meeting was 'exceedingly gloomy'. Staff had initially welcomed the acceptance by Lonrho, the former owners, of the Guardian's pounds 27m offer in preference to a rival bid from the Independent, which planned to merge the paper with the Independent on Sunday. 'It's now obvious that all our champagne drinking was premature,' one staff member said yesterday.

Cuts have to be made because the Observer lost pounds 8.7m last year as its circulation sank to little over 500,000. MGEN would not be able to sustain such losses for long.

Asked what his own role would be on the Observer, Mr Preston said that he would exercise no editorial control: he would not be editor-in-chief. Mr Young said that the Observer's independent directors, appointed to safeguard the paper's editorial independence, would be disbanded and their role taken over by the Scott Trust.