Summary:

If the question “What is Guardian Media Group?” could be answered by a look at its profits sheet, the reply would be “a business publisher”,…

Andrew Miller

If the question “What is Guardian Media Group?” could be answered by a look at its profits sheet, the reply would be “a business publisher”, “a car ads directory” and “an investment fund” before it was “a consumer news organisation”…

On the day that MediaGuardian became the latest print supplement to be folded in to The Guardian, GMG’s 2010/11 annual report says the group swung out of heavy losses, to a profit of £9 million in 2010/11.

That’s mainly because its B2B assets Trader Media Group and Emap, of which GMG owns half of both, hit operating profit of £120.1 million and £76.3 million respectively (with Trader coming 85 percent from digital).

GMG reckons the value of its stakes in the pair has increased to £592 million. But they are earmarked for sale at some point in the next few years, to reap proceeds to support the core Guardian News & Media, which every other part of GMG is mandated to support. GNM has reduced its annual losses by a quarter, but its sales have also slimmed by a tenth.

GMG CEO Andrew Miller says in the report: “The report covers a year of great journalistic success but also serious financial challenges at GNM. What it underlines is the need for GNM to transform itself into a financially sustainable, digital-first organisation

This need is pressing, and many aspects of the strategy are well underway, but the transformation isn’t going to happen overnight. As I said in June our aim is to reduce GNM’s losses to a sustainable level within five years. Indeed, in the short term those losses are likely to increase, as we invest to support digital growth.”

“While display advertising revenues were resilient, the Guardian saw a sharp decline in recruitment advertising as a result of the difficult economic environment and unprecedented cuts to public sector spending.

“Digital revenues continued to grow, though not at a sufficient rate to offset the decline in print revenues – reflecting the challenge facing our industry as a whole.”

GNM has now embarked, more determinedly than many of its peers, on rightsizing its print business – with all its associated costs – for the realities of modern media consumption and production. That will involve shedding pages, re-orienting The Guardian with more analysis and less “news”, switching £25 million investment toward digital and trying to drive up U.S. traffic in order to achieve the kind of advertising scale at which it can remain free to readers. It is attempting the latter by leveraging paidContent’s publisher ContentNext, which GNM owns.

“The Guardian is sustained by the overall strength of GMG and our portfolio of investments,” Miller says. But he acknowledges: “Nevertheless, GNM will continue to work hard to ensure that its costs and structure properly reflect projected revenues.”

Scott Trust chair Dame Liz Forgan echoes editor-in-chief Alan Rusbridger’s salvos about “open” publishing: “Open is in our DNA, in our liberalism, in our journalism and in our relationship with readers. Our model therefore conforms in a profound sense with our values and our culture. But the challenge to find new sources of revenue in new markets across the world is a tough one to which the whole Company is dedicated.”

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