Flight of McCall unsettles future for Rusbridger and the 'Guardian'

Matthew Bell takes soundings in exclusive interviews with the paper's editor and outgoing chief exec

Sunday 28 March 2010 02:00 BST

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Louise Thomas

Louise Thomas


It was the week The Independent secured a new owner, The Times revealed its pay-wall strategy and The Daily Telegraph went back into the black. But the most surprising news came from The Guardian, when the long-serving chief executive, Carolyn McCall, announced her departure after 24 years on the paper, to become chief executive of easyJet.

The news, broken by Sky News on Tuesday evening, dominated that evening's British Press Awards and has raised questions over the future of a company that has yet to stem losses running at £36m per year, or £100,000 per day. Whoever replaces McCall will have to address unresolved problems such as the uncertainty of revenue streams following the company's sale of its share in the profit-making Trader Media Group, and the current ambitious but consistently loss-making digital strategy.

It will be of particular concern to Alan Rusbridger, Guardian News and Media's editor-in-chief, who in his 15 years at the helm has developed a close working relationship with McCall. Despite this, McCall informed Rusbridger she was leaving the company a mere 24 hours before the news went public. Speaking to this newspaper, Rusbridger downplayed any significance in this: "Carolyn is extremely talented and sought-after," he said, "I always thought a day would come when she would be poached."

Her departure was followed by a series of staff changes and it was announced late on Friday that the integration strategy implemented nearly two years ago – which merged separate sections on The Guardian, Observer and Guardian.co.uk – is to be partially rejigged, as part of an ongoing drive to reduce staff numbers.

For more than a decade McCall and Rusbridger have overseen a programme of change and expenditure. In 1999 The Guardian was a black-and-white broadsheet produced by a staff of 532. Its website was launched that year, and the newspaper sold just under 400,000 per day. By 2009, the company had moved offices, changed format, gone full colour, poured tens of millions into a loss-making digital strategy and, like many newspapers, seen a fall in circulation, to a little over 300,000. Despite this, the editorial headcount had shot to 927, with an annual bill of £102m, more than double the 1999 staffing cost of £42m.

"I am proud that we have always invested in our journalism," says Rusbridger. "If you go back over the past 15 years of my editorship, 13 years of it was in profit. This is not a sinking ship, it is a highly successful ship."

To some The Guardian's programme of expenditure, even before the recession, seemed extravagant: why invest £100m in new printing presses while circulation dwindles? Why sell the freehold to an office in central London and take on a lease of a new building only a mile away?

"We had to work in three different buildings," explains Rusbridger. "We had to get out – it was falling down around our ears. We sold Farringdon Road at the top of the market and have banked £30m-odd from that sale. We are now anchor tenants in Kings Place, which we are currently occupying at an extremely reasonable rent."

According to Professor George Brock, head of journalism at City University, Rusbridger has made expensive mistakes: "Spending a staggering amount on presses that have made no difference to the print circulation was a huge mistake." But Rusbridger disagrees: "Our previous printing contract was coming to an end and, like all papers, we had to go to full colour. We had to replace our presses at some stage, and Berliner presses cost exactly the same as tabloid or broadsheet presses. We looked at all the options and agreed the Berliner format was best for us. We remain very pleased with it."

Asked about the staff bill doubling in 10 years, Rusbridger points out that the headcount has been cut by more than 300 in the past two years, with no compulsory redundancies in editorial. Until now The Guardian's losses have been covered by profits generated by Auto Trader, the small-ads magazine owned by the paper's parent company, Guardian Media Group. But with the migration of classified advertising to the internet, Trader Media Group's future became less secure, and GMG has sought to reduce its dependence on it by selling half its stake and investing the money into Emap, which produces predominantly trade journals.

In a separate interview with this paper, Carolyn McCall rejected the suggestion she had overseen a period of extravagant expenditure, pointing out that £50m has been taken out the paper's operational costs by recent cuts. "We have a solid portfolio. We have minimised risk by reducing our dependence on Trader, and will be in a secure position once the recession is over."

Perhaps the most controversial aspect of Rusbridger's editorship has been his resolute belief in free online journalism, which has informed the company's digital strategy not to charge for content. An incoming chief executive may not share his views, especially in the light of News International's return to charging. "At the moment, we have said we are not going to have a pay-wall for general content, but for specialist content there is a model to charge," says McCall. "We're not as polarised as you might think. This is our strategy at the moment, but, of course, we will watch what happens. Alan is a visionary, but he is not entrenched. He is open-minded about these things."

GMG must now decide whether to replace McCall with an external candidate or to recruit from within: one name being tipped last week was Tim Brooks, managing director of Guard-ian News and Media, the newspaper division of GMG.

McCall insists there is nothing to be read into the timing of her departure, as she had not been looking to move. But as she takes to the skies, The Guardian is left looking for a successor equipped to steer it through a few dark clouds and, perhaps, not a little turbulence ahead.

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