The Times of London reports that the Guardian Media Group may close its venerable Observer newspaper. The cuts by the firm may have to go deeper than that based on its most recent financial statements.
In the media company’s last fiscal year, revenue fell to 409 million pounds from 502 million the year before when exceptional items are backed out. The firm lost almost 68 million pounds compared to 3.7 million the year before, on an operating basis.
Guardian Media Group is controlled by the Scott Trust which shields it from the concerns of public shareholders facing companies like The New York Times (NYT), but that advantage is only good for so long if the newspaper industry continues its multi-year decline. The Guardian claims nearly 30 million unique visitors at its flagship property website. Many US newspapers are actually seeing their online revenue decline compared to last year, and the Guardian may not have been able to avoid this.
The CEO of GMG indicated that the firm’s financial challenges will continue into this year and perhaps well beyond. That will probably mean more cuts at the company and perhaps the disposal of some of its non-core assets. GMG’s property services business may fall into the category.
It is probably a reasonable prediction to say that GMG will go through a very significant restructuring between now and the end of calendar 2009. The firm should do what it can to secure the future of its flagship operation while it still can.
Douglas A. McIntyre
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