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How can ‘The Guardian’ survive?

The Guardian is the 195-year-old liberal newspaper which – until 1959 – was known as the Manchester Guardian and was based in the UK’s industrial north-west. The big breakthrough came after its longest-serving editor Charles (C.P.) Scott bought the newspaper which – over 57 years – he had built into a nationally recognised daily. He bequeathed the paper to a charitable trust pledged to maintain its independence and liberal politics and to reinvest whatever profit it made.

The way that this unique ownership structure has emboldened the flagship paper was highlighted by the 20-year-editorship of Alan Rusbridger who took over in 1995. It led the 2011 expose of phone hacking and criminality by News Corp journalists in the UK, which The Guardian broke wide open with the revelation that the News Of The World had hacked the phone of a child murder victim.

Despite the eventual acquittal of most of the accused executives, it has cost News Corp hundreds of millions of pounds (and counting) in legal costs and compensation. For Rusbridger, it was a Watergate moment and helped to define his newspaper for its new audiences outside the UK.

It came four years after the launch of Guardian America through which Rusbridge sought to capitalise on his already substantial online readership in the US. In 2010, The Guardian and other newspapers including The New York Times and Der Spiegel, produced reports on the war in Afghanistan based on a huge cache of classified documents from WikiLeaks.

In 2013, it won a Pullitzer Prize for its coverage of the US National Security Agency documents leaked by Edward Snowden. The revelations made the paper one of the world’s most visible news services, in much the same way as the once little-known CNN rocketed to global recognition as virtually the only US news organisation in Baghdad at the start of the 1990 Gulf War. But there was a difference.

Unlike CNN 20 years earlier, The Guardian’s economic prospects were not transformed by its scoops. The digital-savvy paper managed to build a big reputation but no revenue, and that’s how it has continued. But it has always had a legion of admirers. In 2012, The Economist described it as “the most stylish paper in the hyper-competitive British quality pack, the wittiest and best-designed, the strongest for features, the one most likely to reflect modern life.”

More than two-thirds of Guardian online readers are now outside the UK. In Britain, The Guardian  – which once thrived on recruitment classifieds in print – has struggled to reach even 20% of its 500,000 peak weekday copy sales. Like many another UK daily, its high-priced, magazine-led Saturday edition is its only profit-maker (twice the sales and at a 45% higher price than on weekdays).

This week, the embattled company told employees it expected to incur cash losses of about £90m in 2017, following a 2015 cash outflow of some £100m, and £200m last year. It is seeking to cut staff costs, reduce the size of its offices and scale back its overseas ambitions. It’s a familiar newspaper scenario but, arguably, The Guardian’s whole ownership structure – and windfall investments – have made it more complacent than most.

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