McCall memo to staff: ‘GMG will be a smaller organisation’

Carolyn McCall, chief executive of Guardian Media Group, yesterday conceded the company was examining all aspects of its publishing strategy as a way to combat losses.

The news was jumped on by some who took it as a confirmation that closure of the Observer was being actively considered as a solution to its mounting losses.

The reports don’t have McCall saying explicity this is the case but refer to a staff memo in which McCall says all options were being considered at the company as it sought to off-set losses announced last week of almost £90m.

McCall said a three-year plan was underway ‘examining every aspect of GNM’s publishing strategy and titles: the Guardian, Observer and guardian.co.uk; print and digital”.

Guardian News and Media, which publishes GMG’s national titles, has already committed to reducing editorial headcount from 850 to 800 by the end of the year as GNM looks for £20m worth of savings.

Forecasts that advertising would not bounce back to previous levels, McCall said, meant GMG would inevitably ‘be a smaller organisation”.

McCall did not detail what changes could be expected across the group but said that GMG was ‘examining every aspect of strategy and titles’and that ‘a wide variety of different options, approaches and scenarios is being developed and will be considered”.

Over the weekend the Sunday Times business section led with a story claiming the Scott Trust, owners of GMG, had been mulling plans to scrap the Observer, the world’s oldest Sunday newspaper, and replace it with a weekly magazine.

GMG exists to safeguard the Guardian – but not The Observer – ‘in perpetuity”.

According to reports, McCall emphasised that thecore purpose of the organisation was “securing the long-term future of The Guardian”.

McCall added: “It is far too early to say what its outcome will be. I know this uncertainty is very difficult for staff, but the Trust, GMG and GNM are not about to do anything ill-considered or hasty.”

Results of “initial work” on the review are due in the autumn.

But would GMG really let the Observer go to the wall? Press Gazette editor Dominic Ponsford thinks it’s a terrible idea.

The Telegraph says the Observer is fighting not just the economic downturn but a more serious and losing battle with the Guardian over the allocation of resources while the Times estimates the Observer’s losses are running at £20 million out of a total operating loss of £61.2 million for both it and the Guardian.

Andrew Pierce and Amanda Andrews, writing in the Telegraph said it would be an “inglorious end” for a newspaper that has been published since 1791 should it be consigned to the scrap heap, adding that the leak to the Sunday Times showed “an organisation that has long been characterised by self-assurance now finds itself riven by doubt and fear”.

Pierce and Andrews add that the email memo was an attempt by McCall to “steady frayed nerves at the titles” but that it also fuelled speculation that the Observer might close by failing even to mention it, instead saying: “When the economy recovers, so – to a degree – will our advertising revenues.

“However, due to structural change, these revenues will not be at the levels they were in the past. GNM’s costs will need to reflect this if losses are to be kept within sustainable limits. This inevitably means we will be a smaller organisation.”