Cost-cutting bears fruit for GMG

Hannah Jordan
Tuesday, July 25, 2017

After the first stage of its three-year cost-cutting programme the Guardian Media Group (GMG) has driven down losses by a third and seen revenue and membership gains.

In its financial results for the 12 months to 2 April 2017, GMG, publisher of The Guardian and The Observer newspapers and theguardian.com, recorded an EBITDA loss of £44.7m, down 35% from a loss of £68.7m in 2015/16.

Pre-tax losses for the year were £200,000 compared to the £173m pre-tax loss the previous year, which were caused by an £80m write-down in the value of its share of the now disposed-of events and content business Ascential and £20.6m in restructuring charges.

Group revenues for the year were up 2% to £214.5m boosted by paid-for memberships, which grew from 50,000 to more than 230,000, growth in its international division and one-off contributions. Paid digital and print subscriptions rmained stable at 185,000.

Including foundation grant contributions, digital revenues grew from £81.9m to £94.1m in 2017, while the print and events division continued to contract with sales down to £119.6m (2016: £126.3m).

Headcount at the group was reduced by around 300 over the year with staff costs down on the previous 12 months by more than £14m to £136.2m.

“Despite the challenging market conditions faced by all news organisations around the world, our three-year strategy is well on track to achieve its financial goals and to secure the future of The Guardian,” said GMG chief executive David Pemsel.

“We are reducing our costs, growing new reader revenue streams, and developing our businesses in the US and Australia.

“We have grown our digital revenues, and we are achieving strong growth in membership, subscriptions and contributions. More people are paying for Guardian journalism than ever before. This is helping to build a strong foundation from which we will continue to invest in some of the most trusted journalism in the world.”

The latest set of GMG results are the first since it implemented a three-year “transformation plan” that aims to deliver a 20% cost reduction and ultimately to push the group to break even in 2019.

As part of the strategy the group announced last month that it intended to move from a Berliner newspaper format to the smaller tabloid size by early 2018, with all printing to be outsourced to Trinity Mirror. 

The move will see the closure of its printing sites and the disposal of its three Manroland Colorman presses that were commissioned in 2005 as part of an £80m investment. According to the latest set of figures financing leases to the value of £37.3m, relating to its print machinery, were cleared during the year. 

Group chair Neil Berkett called the latest financial results “a testament to the hard work of the management team and of everyone at Guardian Media Group”.

He added: “There is much to do, but the strategy is on track. The successful disposal of our remaining shares in Ascential means that the business has a clearer focus and more secure financial base from which to complete our three-year strategy and ensure that we continue to create world-class Guardian journalism in perpetuity.”

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