The next challenge for the Guardian: managing expectations

The UK’s newspaper industry has hit a major milestone – but it’s not a particularly positive one. For the fourth consecutive month in a row every single one of the UK’s leading print titles has seen print declines, with the majority of those titles seeing double-digital YOY falls in circulation. Even The Sun, with a circulation that is somewhat bolstered by bulk copies, saw a 7.6 percent drop in its circulation to 1.45 million copies, meaning that not a single paid-for newspaper in the UK now has a circulation over 1.5 million.

It’s the latest piece of bad news for the industry, though an expected one: Nobody expects print circulations to suddenly leap back up to pre-internet levels, or even to remain static. The danger, however, is that print revenue from advertising won’t have the slow tail-off that circulations are having. The analyst Clay Shirky has predicted a second cliff for print revenue once circulations pass a psychologically important milestone and advertisers stop seeing print as a valuable medium in terms of ROI. Given how important print revenue is for those titles – making up the lion’s share of even the titles with huge digital audiences like the Daily Mail – that would be disastrous. Consequently, time might be running out for some of those papers who haven’t made enough of a transition to new revenue strands. 

One paper that is having more success than most in that respect is the Guardian – though with the caveat that it is still loss-making. According to its latest update, published in April of this year, it reported that its loss for the year was the “smaller than expected” figure of £19m, which to its credit is less than half of the loss it accrued in the previous year. That smaller loss can be attributed variously to the scaling back of some of its endeavours abroad, the change to a tabloid format, and other cuts that amount to total cost-cutting for year of 7 percent.

The Guardian has had a rocky few years, but has stayed the course with reader revenue

Critically, though, it associates that performance with “better-than-expected revenue growth”, with revenue up 1 percent year on year – and the most notable area in which it’s grown its revenue out is in its membership proposition. Reader revenue has contributed $130 million  at the Guardian, when regular subscriptions and one-off payments are combined. That success, and the Guardian’s commitment to open journalism, is notable at a time when the prevailing wisdom is that paywalls and locked-down subscriptions are the way to fund journalism.

In an interview with NBC News, Guardian Media Group chief executive David Pemsel makes the paper’s opposition to a paywall clear:

“When I started this role, the advice to me and our editor-in-chief Katharine Viner was simple – cut costs and put up a pay wall. We wanted to explore a different model, recognizing the huge reach and impact the Guardian has achieved., but also finding a way of asking readers to give us greater financial support.”

The issue for the Guardian now, then, is one of expectation management. As the tone of many write-ups of the Guardian’s financial situations make clear, there is still considerable scepticism about its future, given its relatively small print base and cash burn over the past few years. Given that it attributes some of its success in beginning to turn around the business model to reader revenue, and then in turn partly attributes that to time-limited events like its Brexit coverage and the ‘Trump bump’, neither of which seem very sustainable, some of that scepticism is undoubtedly justified. These are uncharted waters, and there’s no telling when a reef might suddenly tear a hole in the Guardian’s hull. Any backsliding in the amount of growth it can generate from reader revenue will see further questions asked about the sustainability of the model – and increase the pressure on the company to implement further cuts or reappraise a paywall model.

One thing that is absolutely certain, and that should be applauded, is the Guardian’s commitment to a course that is in keeping with its mission of open journalism even as it was derided. It was easy to mock the Guardian’s ‘begging bowl’ approach to journalism, but as the saying goes: “it’s not stupid if it works”.


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Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work in the TMT (technology, media, and telecoms) space, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.