A piece in the FT today sheds a little more light on the financials of Guardian News and Media as it seeks to stem losses running at over £33m a year.
The bad news is that chief executive Andrew Miller seems to think losses could increase unless drastic action is taken – he said GMG could exhaust its cash reserves of £200m in three to five years the way things are going.
But the good news is that, according to the FT, The Guardian’s 50.1 per cent stake in Autotrader publisher Trader Media Group is worth up to £1bn – so the company, whose sole remit under the Scott Trust is to support the journalism of The Guardian, is far from being on its uppers.
The FT reports that Trader’s net debt currently stands at £650m. So once that’s paid off GMG might clear £600m.
GMG’s 30 per cent stake in Emap, which was acquired with Apax Partners for £1bn in 2008, is more problematical. According to the FT, the debt from that deal still stands at £550m.
Press Gazette understands that the departure of chief executive David Gilbertston last month left Emap five years away from a sale. The fear must be that if it was sold now, GMG and Apax wouldn’t make anything from the deal after the money they borrowed was paid back. Who knows what it will be worth in five years time?
Insisting that The Guardian remains wedded to free website access, Miller told the FT: “By closing audiences down you close down digital opportunities.”
But the FT reports scepticism about whether GNM can fulfil its stated aim of increasing annual digital revenues to £91m over the next five years. It quotes one analyst saying: “I just don’t see where that level of growth can come from.”
Last year The Guardian made £37m of its £198m revenue total from digital.
The plan, announced last week as staff were told that digital – not print – is now their main priority, is to reduce annual running costs by £25m over the next five years. This will involve taking a huge axe to editorial budgets on the print side.
According to the FT report, this means editorial print pagination is going to be cut – with The Guardian Saturday edition and The Observer being looked at over the next few months.
And as Alan Rusbridger has said, editorial numbers are set to be cut from the current total of around 630 journalists.