The Guardian has warned staff to expect further heavy losses, as the newspaper said it expects to burn through another £90m in cash this year.
It has recorded negative cash flow of £60m so far in the current financial year and is on track for another £30m by April, executives told a meeting at its King’s Cross headquarters.
The outflow so far is roughly equivalent to last year, when Guardian Media Group, the publisher of the Guardian and the Observer, went on to report a loss before tax and exceptional items of £68.7m. After tax and one-off charges, the company’s losses topped £200m.
The Guardian is seeking to sharply cut its costs by laying off staff, reducing the size of its office and scaling back its overseas ambitions. The cuts have not yet staunched the flow of red ink, however.
Staff were told, however, that the newspaper’s management, led by editor Katharine Viner and chief executive David Pemsel, remain confident they can deliver a turnaround in the next two years. The plan is ahead of schedule so far, the meeting heard.
Sources inside The Guardian said there was nevertheless widespread concern about the financial health of the publisher.
Its losses are funded by the Scott Trust, a charitable trust set up to secure the future of the Guardian. The cash reserve was depleted by £95m last year to leave a reserve of £743m. The further negative cash flow this year is likely to erode the endowment again.
Executives are considering increasingly radical options to cut costs, including potentially reducing the size of the newspaper and outsourcing printing to Rupert Murdoch’s newspaper publisher, News UK.
The move would mean The Guardian would shut down its own ‘Berliner’ printing presses, in which it invested around £80m in 2005.
Ms Viner and Mr Pemsel are seeking to boost revenues from readers by asking them for voluntary donations online, while so far maintaining free access to all articles. Executives have refused to rule out the introduction of compulsory charges for some material and are currently recruiting a head of subscriptions with a brief to consider “what are realistic targets for [subscriber] acquisition, retention and overall revenues; how should products be priced”.
The Guardian faces a particularly acute costs challenge in a tough print and online trading environment for all newspapers, following a period of aggressive expansion under its previous editor, Alan Rusbridger. He was due to return to the publisher last year as chairman of the Scott Trust but was ousted in a boardroom coup amid concerns about governance and strategic missteps.
Mr Rusbridger has pointed to the growing dominance of Google and Facebook in online advertising as a major factor in the Guardian’s failure to hit digital revenue growth targets.
The latest non-executive appointment to the Guardian Media Group board is Coram Williams, the chief financial officer of the struggling education publisher Pearson, which has given five profit warnings in four years.