Betrayed by its own guardian: What next for 'The Observer'?

The £90m loss-making parent group is considering closing the Sunday paper. Ex-editor Jonathan Fenby reveals its difficult relationship with 'The Guardian'

When they heard in June 1993, that their newspaper was being taken over by The Guardian, journalists at The Observer celebrated with champagne in the summer sun outside their stylish premises in Battersea, south-west London.

The last-minute intervention by the beacon of daily liberalism had saved it from a takeover by The Independent, which would have folded The Observer into its own Sunday. The marriage of two like-minded papers seemed to be a union made in heaven, assuring a continued existence of the title.

The mood soon soured as Peter Preston, editor of The Guardian and chairman of Guardian Newspapers, drove to Battersea to read editorial staff a lecture about how everybody would have to tighten their belts if they wanted to keep their jobs. He sought to underline his point by insisting that senior figures from The Guardian who accompanied him on the drive to Battersea pile into his wife's Renault 5, including myself – I had been his deputy for five years and had just been named as next editor of The Observer.

None of us was exactly small, and the journey from the Guardian building in Farringdon Road was a cramped one on a hot day, but, given the message Preston bore with him, it would not have done for us to sweep up in our company BMWs and Saabs. The only trouble was that nobody seemed to have noticed our arrival. Still, the jeremiads went down badly. It was, said one senior Observer editorial executive, like Fortnum & Mason being taken over by Tesco.

The imminent demise of the world's oldest Sunday newspaper had been foretold several times but there had always been a saviour ready to bankroll the stand-alone publication which had lectured governments during the early 20th-century editorship of J L Garvin, and acted as a liberal senior common room guided by its post-war mentor, David Astor. Under my predecessor, Donald Trelford, it was home to fine writers and to brave original reporting (particularly from Africa, Ireland and, during the Beijing Spring of 1989, from China).

But the influence of its owner Tiny Rowland's multi-tentacled Lonrho business group cast a pall, while the paper was unable to match the firepower and innovation of Andrew Neil's Sunday Times or to hold sales and attract sufficient advertising in an increasingly crowded Sunday market. From the late 1980s, there was a further difficulty as daily papers, starting with The Independent, launched big Saturday editions that lured readers and advertisers. Having coined the slogan "The weekend starts on Saturday so why wait till Sunday for your weekend paper?" while I was at The Independent, and having overseen the launch of the expanded Saturday Guardian, I found myself hoist with my own petard when I moved to The Observer.

Editorial was the only department of the paper which was not folded in to The Guardian, and I insisted to Hugo Young, the chairman of the Scott Trust, the group's ultimate owner, that I would only edit the Sunday if I could do so independently of Peter Preston and his executives. But causes for ill feeling between the daily and Sunday multiplied as the weeks and months went by. To meet the targets which the management of Guardian Group had presented to the trust, to justify the purchase, there were sharp editorial cuts, cushioned by Lonrho's generous redundancy terms.

I hacked away at perks and privileges, leading to a meeting at the conciliation service, Acas, after the journalists' union branch threatened to strike against a new contract which, among other things, removed the automatic right of their members to travel first class on the railways, however short the journey. My hiring of staff to give a sharper news edge, notably with deputy editor John Price and political editor Tony Bevins, both from The Independent, and my attempt to provide new voices in the commentary section with Andrew Rawnsley and Melanie Phillips, both from The Guardian, seemed to be accepted as part of the inevitable change, but of course some noses were put out of joint.

When they were moved to the Farringdon Road building of the paper's new sibling to save money, Observer journalists found themselves shoe-horned into half the promised space, with some departments put into separate rooms down the street. As for the editor, goodbye to my predecessor's private shower room at the Battersea palace. The Guardian foreign desk told joint stringers that their first loyalty was to the daily. Despite the impact made by Bevins and company for award-winning scoops such as the Irish peace talks, and despite the fresh impact of new writers, Hugo Young criticised our political coverage and commentary at our very occasional and invariably uncomfortable lunches, with Peter Preston taking the third chair.

The keeper of The Observer flame on the Trust, Anthony Sampson, yearned for "the Astor days". Senior Guardian executives dismissed The Observer's arts critics as has-beens who should be replaced by thrusting young graduates of the Modern Review. Among Guardian journalists, there was a widespread belief that the purchase of the Sunday paper was the reason for their meagre wage settlement (not the case, given the way the accounts were done), and that the Sunday staff were a bunch of dilettantes who worked a half-week – I recall getting into the Farringdon Road lift after coming back with Bevins from a Westminster meeting one Wednesday afternoon, and being greeted by a Guardian former colleague with the words: "Ah, clocking in for the week!"

It was no surprise, and a considerable personal relief, when I was sacked as editor in January 1995. The occasion had its comic sides. Delivering the verdict, Young told me the trust had appointed Preston as editor-in-chief of both titles, which, he added, would mean I would wish to leave. Since I had insisted that my appointment letter included a guarantee that The Observer would be edited independently, and since I had not been consulted about the trust decision, I said this looked like constructive dismissal. No, Young replied, the trust cannot be seen to sack an editor, you will resign.

When I asked him the reasons, he mentioned circulation, but this was clearly rubbish since we had got sales back above half-a-million in October-November, above the forecast at the time of the acquisition. He then said that I had not taken his lunchtime staffing advice. After which he told me to leave the building immediately without returning to my office. Since it was a Thursday afternoon and an editorial planning conference was about to take place, this was a bit difficult. So he allowed me to go to get my deputy, take him outside, tell him what had happened and quit the scene.

That was all well over a decade ago, but first impressions stay and I do not believe that the fundamental tensions between the two papers diminished under my four successors as circulation fell and finances became more strained for both papers. There were striking efforts to rejuvenate the Sunday, notably under the third of the successors, Roger Alton, before he decided that he would not accept the shape of things to come planned by Alan Rusbridger, who has inherited Preston's ultimate responsibility for both newspapers as well as editing The Guardian.

But the "neutral platform" editorial system instituted recently by Rusbridger at the new headquarters of the two papers, behind King's Cross, has, from what I hear, further diminished The Observer's status. Decisions are made by the "platform controllers", who are largely from The Guardian or outside hires. This summer, The Observer's highly regarded management columnist Simon Caulkin (whom it took on in 1993) was dropped on a decision by the executive responsible for the provision of business coverage for both papers. There were 400 emails and 100 letters of protest but all the editor, John Mulholland, could say in response was: "I hope Simon can continue his relationship with the paper and that we can publish his writings from time to time."

Of course, as The Observer wrote in explaining its recent decision to stop its television guide and drop Caulkin, economic times are very tough for newspapers. On top of the competitive factors that date back to the 1990s, the internet has become a formidable rival for attention and advertising, and The Observer's presence on the net is very much subsumed into the mighty Guardian online machine.

Losses have mounted, accentuating the problems arising from the over-population of the weekend market. The growing problems of The Guardian with sales and advertising and its expensive online commitment have been apparent for some time, even if the daily's position in the media village means that they have remained somewhat concealed from general view.

But they are now out in the open with the announcement of a loss for Guardian Media Group of £90m in the past year. This can only concentrate the minds of management and the trust – its mission is to preserve The Guardian, not The Observer, whose editor is not among its members. Understandably in the current climate, neither body will give any commitment to the future of the Sunday.

What lies ahead? Conversion into a Thursday magazine? Sale to a rich man – are there still Russian billionaires around with money to spend? Or closure?

All are possible. An Observer that followed its own star and broke away from the froth and duplication of the mainstream might have a chance of carving out a place for itself. But that would take cash and a sustained readiness to be different, both of which are in extremely short supply these days.

Jonathan Fenby edited 'The Observer' from 1993 to 1995 before editing the 'South China Morning Post' (1995-1999). He now writes books about China and France

Rise and fall of the nation's first Sunday

1791 The Observer is launched by W S Bourne – the nation's first and now the world's oldest Sunday newspaper. Soon after Bourne faced debts of £1,600 and sold it.

Later proprietors Newspaper magnate Lord Northcliffe in 1908 and, from 1911-77, the Astor family.

Past editors include Conor Cruise O'Brien, David Astor, Donald Trelford, Will Hutton and The Independent's editor Roger Alton.

Current problems The Sunday Times revealed last week that Guardian Media Group (GMG) is considering closing The Observer, after the parent company recorded pre-tax losses of £90m for 2008-9.

Future options The Observer could be replaced by a magazine of the same name, to be published on Thursdays. A draft has already been shown to members of the Scott Trust, the charitable foundation that owns GMG.