Tortoise Media has formally signed a deal to buy The Observer and appointed the newspaper’s next editor.
A heads of terms agreement has been signed (a formal intention to proceed) and change of ownership is expected to be completed in the spring.
Current Observer acting editor Lucy Rock, previously deputy to Paul Webster who stepped down in November, will be the title’s editor (print) under Tortoise.
Rock will work alongside a digital editor, yet to be named, who will establish The Observer as its own brand online away from The Guardian. Tortoise founder and editor James Harding will be editor-in-chief.
The first Observer under its new ownership is expected to be published in the spring following a transition period.
Observer staff who choose not to transfer to Tortoise Media will be able to apply for voluntary redundancy from today, with the scheme closing in mid-January.
During 2025, Tortoise said, it will “build the daily digital Observer in arts, ideas and news as well as The Observer’s own network of foreign reporters and contributing editors, a new business and economics team, expanded science, technology and health coverage and a dedicated sports desk”.
More details of the deal, first agreed on 10 December while staff were on strike against the plan, have now been confirmed. Tortoise Media is buying The Observer through a combination of cash and shares and Guardian Media Group owner The Scott Trust will take a 9% stake in Tortoise.
Tortoise Media has agreed a five-year commercial agreement with Guardian Media Group through which it will pay for print and distribution services as well as marketing through The Guardian.
Tortoise said its £25m investment over five years, including £5m from The Scott Trust, would be focused on establishing The Observer’s own digital identity, creating a dedicated commercial team and increasing its editorial resources.
The deal was opposed by staff at The Guardian and The Observer who held two 48-hour strikes asking for a pause to the sale process for other bidders to be considered.
Staff were told on Wednesday in a message signed from Scott Trust chair Ole Jacob Sunde, Guardian Media Group chair Charles Gurassa, editor-in-chief Katharine Viner and chief executive Anna Bateson that: “In the immediate term work will continue as usual. You will work from the Kings Place office and be paid by GMG.”
Observer staff who transfer to Tortoise Media will still be able to apply for internal Guardian roles for 18 months after their departure date. No external Guardian vacancies will be posted until the end of March unless they are for specialist or entry-level hires.
Tortoise said its investors have “signed up to the principle of editorial independence and a long-term commitment to The Observer”.
They include new “key shareholders” This Day, the charitable foundation founded by Labour donor and former Autoglass boss Gary Lubner to “create a fairer future for new generations”, and Standard Investments, which has previously backed Air Mail, Puck and Malcolm Gladwell’s Pushkin Industries podcast network.
The Scott Trust will have a seat on both Tortoise’s board, chaired by Matthew Barzun, and its independent editorial board, chaired by Sir Richard Lambert, the former editor of the Financial Times.
Barzun said: “This process revealed the enormous regard and passionate connection so many have to the world’s oldest Sunday newspaper. I am deeply appreciative of our investor partners, including the Scott Trust, all of whom expect the highest quality independent journalism. We are filled with an awesome sense of responsibility as we become a part of its long story and participants in sharing the stories it will long keep telling.”
Harding said: “The Observer has a historic place in the world of journalism and a special place in theheart of its readers. We’re excited to put all we have into making sure its values, interests and passions reach even more people in the many years to come.
“We respect the fact that people have had different views on the best way forward for The Observer. We all share a passionate belief in its future and the privilege of working for it. We can’t wait to bring the brilliant people in both our newsrooms together and get to work on the journalism we care about.”
Rock said: “It is a huge privilege to be entrusted with the editorship of The Observer newspaper and to lead its first-class team of reporters, commentators, critics and editors into a new era of its storied history.
“As the latest steward of the world’s oldest Sunday newspaper, I am committed to preserving and protecting its liberal, independent, internationalist values. I look forward to working with my colleagues as we continue to produce lively, provocative, award-winning pages week-after-week — and to joining the talented team at Tortoise to build a dynamic digital identity for The Observer.”
Deal values loss-making merged media business at £55m
The Scott Trust has invested £5m for a 9% stake in the newly merged Observer/Tortoise Media – with Tortoise Media saying it has raised a further £20m to invest in the business.
Tortoise previously said it planned to invest £25m in the Observer, of which £5m would come from future profits.
It is not known how much money Tortoise has paid to Guardian Media Group, but The Scott Trust investment values the combined company at £55m.
Press Gazette understands the deal involves an upfront amount of cash (which is more than a nominal amount) and guaranteed future payments for services that will support the Observer, including print and distribution management and marketing commitments. GMG will ultimately receive more back than the £5m it has invested from the deal.
Media analyst and investor Alex DeGroote has suggested this valuation is on the high side. He said he would value Tortoise at one-times revenue, or £6m (based on 2022 figures). He said the same was true of The Observer which, with revenue of £16.4m, would give it a valuation of around £16m.
Tortoise made a pre-tax loss of £4.6m in 2022. The Observer made a contribution to Guardian Media Group of £3m in the year to August 2024 (excluding shared costs).
GMG said The Observer is loss-making when shared costs are taken into account.
DeGroote said: “It looks to me that Tortoise has fallen short in its original business plan and is off course on its runway to profitability. Tortoise needs solutions.”
He added: “The Observer should clearly be the senior partner in this transaction. The Observer has more offline readers/subscribers than Tortoise, has substantially greater revenues and it brings the 233-year-old brand…
“It looks to me that the Scott Trust has been rail-roaded into taking a £5m minority equity stake in Tortoise Media, as part of the recapitalisation, at an inflated valuation without getting full value for The Observer itself…The transaction raises far more questions than answers to me.”
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