Guardian Media Group records £76m operating loss
By Hannah Jordan Friday, 10 August 2012
Guardian Media Group's (GMG) accounts for the year ending 1 April 2012 reveal pre-tax losses of £75.6m, a stark contrast to the pre-tax profit of £9m recorded a year earlier.
GMG blamed the loss on a £54m write down of its radio business, GMG Radio, which was sold to Global Radio following the completion of the financial year as well as £10.5m of restructuring costs.
In addition, strong growth in the group’s digital revenue was insufficient to fully offset significant print losses recorded by GMG’s core business, Guardian News & Media (GNM).
GNM's annual report, published last month, showed a 16.3% year-on-year increase in digital revenue to £45.7m, including a 21.3% year-on-year increase in digital advertising revenue. However, the division announced it would cut 100 editorial jobs by March 2013 after it posted operating losses totalling £44m.
In a statement released last Friday (10 August), GMG chief executive Andrew Miller said that GNM’s digital revenues had "largely offset" the ongoing decline in print revenue.
GMG’s overall revenue remained flat at £254.4m in the year to 1 April 2012 compared to £255.1m in the previous financial period. Revenue including the share of joint venture companies Trader Media Group and Top Right Group (formerly Emap) also remained flat at £446m.
EBITDA (earnings before interest, taxes, depreciation and amortisation), including the share of GMG’s two joint venture firms, dropped slightly from £49.6m in 2011 to £48.4m.
Pre-tax profits from GMG’s investment fund fell from £17.8m in 2011 to £5.2m while the combined value of the group’s cash balance and investment fund increased from £197m to £226m.
Miller said it had been a "remarkable year for GMG", citing the phone hacking scandal and the launch of a "transformational new strategy" as "game-changers" that had impacted within and beyond GNM.
He said: "We will continue to see significant operating losses and cash consumption at GNM in the current year as we invest in future growth and long-term sustainability. The portfolio will provide the necessary financial support and stability during this period.
"If market conditions deteriorate, we will need to respond quickly and accelerate further our action on costs. However, at present the transformation programme is on track and the company is meeting its objectives both in terms of costs and revenues."
Miller said although there was limited short-term visibility in advertising markets, the group was confident that digital audiences and revenues would continue to grow, while print circulation and revenues will remain in long-term decline.
He added: "All media organisations can expect the pace of change to accelerate rather than relent. The challenge for GNM will be to balance both sides of its transformation: on the one hand investment, innovation and growth; and on the other tough decisions, difficult changes and large-scale savings."
In 2011 GMG announced a five-year cost cutting strategy that aims to save the group at least £25m. Miller said it would be a tough challenge going forward, but that the strong growth in online audiences, digital and sponsorship revenues were the first fruits of the strategy.
"It is only by achieving the necessary levels of cost savings that we can provide the headroom to fund our digital future," he said.
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