The Guardian and Observer lost £33m in cash terms last year, the chief executive of Guardian Media Group has said, as he committed the newspaper group to a "digital-first" strategy in which digital revenues would double to nearly £100m by 2016.
Andrew Miller, giving a series of presentations to staff at the titles, said that the aim was to achieve "a major transformation" at the newspapers – including lifting digital revenues from an expected £47m in the current financial year to £91m in 2015/16 – because "doing nothing was not an option".
He warned that parent company Guardian Media Group could run out of cash in three to five years if the business operations did not change – although the company is able sell assets to generate more reserves – and said that the newspapers would aim to save £25m over the next five years – releasing funds to be reinvested in other activities.
No plans for job losses were announced, and Miller indicated that the editorial budget for the Guardian, Observer and theguardian.com website network – which includes MediaGuardian.co.uk – would remain unchanged this year and next. However, any new initiatives – such as a planned move to create a US digital edition later this year – would have to be paid for from existing budgets. The Guardian, Observer and theguardian.com employ 1,500 staff across all departments and 630 journalists.
The Guardian editor-in-chief, Alan Rusbridger, said that the newspaper needed to embrace an "open" digital philosophy in which it embraced contributions from beyond the ranks of its own journalists, and posed the question whether the titles could spend 80% of their focus and attention on digital.
Rusbridger said: "Every newspaper is on a journey into some kind of digital future. That doesn't mean getting out of print, but it does require a greater focus of attention, imagination and resource on the various forms that digital future is likely to take."
He also indicated that there would be a redesign of the Guardian's Monday to Friday editions later this year. Based on research that showed that half of readers read the newspaper in the evening, the aim was to create a title that would be "as relevant at 9am as 9pm". It would focus less on breaking news and instead aim to emulate "Newsnight not News at Ten".
Unaudited results for the year ending 31 March showed that revenues at Guardian News & Media, the immediate parent of the newspapers and theguardian.com, fell to £198m last year compared with £221m the year before, a fall in revenues that reflected a sharp fall in classified advertising. Recruitment advertising has fallen by £41m in the past four years.
On an underlying basis, as measured by earnings before interest, tax, depreciation and amortisation, the Guardian and Observer lost £22m, but the cash loss, a more accurate measure of financial performance, was larger at £33m. That is similar to last year's level, when the newspapers made an operating loss of £34.4m.
Miller said that Guardian Media Group's financial portfolio "offers stability" and would help the newspapers navigate the transition to an increasingly digital marketplace without the need for significant overall reductions in costs. GMG had cash and investment fund reserves of £197.5m available, after a year in which the investment fund grew by £12m.
GMG may also be able to access funds from Auto Trader, which produced unspecified "record profits" last year. A refinancing raised £150m for the business, which is jointly owned by Guardian Media Group and Apax Partners, and if there are no immediate investment opportunities for Auto Trader, that cash could be shared between the owners as a dividend.
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