Guardian braced for job losses as online ad drought hits publishers

Staff at the Guardian newspaper are braced for cuts after bosses told them the publisher is on course to make a £39 million annual loss amid a slump in the wider digital advertising market.

The Guardian’s woes, revealed to staff at a meeting hosted by executives last week, come as several rivals also face what one analyst described as a “perfect storm”.

Newspaper publishing giant Reach and other news publishers cut hundreds of jobs last year, while broadcaster Channel 4 recently announced plans to axe 200 roles, citing ad market troubles.

Guardian staff were told last week the Scott Trust, the charitable organisation that owns the newspaper and its sister title the Observer, considers the current financial predicament as “beyond acceptable or sustainable”, according to one source. The publisher lost £36 million in the last nine months of 2023 and is projecting a loss of £39 million by the end of the financial year next month, staff heard. Editor-in-chief Katharine Viner is said to have told her troops they “should worry but not panic”.

In recent years, as digital advertising sales have become less reliable, the Guardian has sought to bulk up its “digital reader revenues”, which include voluntary contributions and app subscriptions. The news group’s website is free, but it also generates subscription revenues from certain products, including a crossword app. Staff were told last week that it soon plans to launch a recipe app, Feast, which will also charge for access.

A spokesperson for the Guardian said staff were informed as part of a quarterly update. At the meeting, executives highlighted issues afflicting the wider industry as a result of the digital advertising slowdown.

The spokesperson said: “Although these issues also affect our business, we talked about the fact that the Guardian already has a well-established and unique reader revenue model, a continuing focus on investment in world-class journalism, and plans for new revenue streams. While we currently have no plans for significant headcount reductions, we made it clear that we have an obligation to manage the organisation as efficiently as possible.”

Reach, publisher of the Mirror, Express and Star newspapers, as well as dozens of regional titles, has also been forced to experiment with subscription models because of the digital ad market crash which has hit free-to-read publications particularly hard.

It is understood that the Mirror, Reach’s flagship title, is to launch a new “premium” tier of its news app in the coming weeks. This will probably ape the “premium” version of the app of the Reach-owned Manchester Evening News, which costs £19.99 a year and offers readers puzzles, fewer adverts and the ability to listen to articles. Reach has also experimented with charging readers of the Express and other regional news apps.

Reach was previously a strong proponent of keeping its content free, with the goal of attracting large audiences and cashing in with advertising income. But that business model has fallen out of favour in the news sector in recent years.

Douglas McCabe, chief executive of Enders Analysis, a research service covering the media, entertainment and telecoms industries, said a large part of the problem had been that digital ad revenues have been soaked up by US giants such as Google, Meta and Amazon.

“Advertising is very much flowing to search [engines] but also retail,” he said. “All of that is just bad news if what you’re running is a newspaper business or a magazine business, because it’s taking away advertising spend.” He added that news websites were receiving lesser audiences from search engines and from social media sites such as Facebook. “That, ultimately, also has an affect on the amount of advertising being generated,” said McCabe. “So it’s a perfect storm of problems all happening at once.”

McCabe said the television industry was suffering from a wider advertising slowdown that has hit the UK economy in recent years. He added: “The news publisher market has become quite used to these challenges. The TV market is starting to feel some of that pain now.”

DMGT’s MailOnline also recently launched a new subscription business under which some of its stories have been put behind a paywall.

As well as launching subscription products, several British news outlets have in recent years expanded their operations in the United States, which offers a more lucrative digital advertising market. However, even there publishers are experiencing difficulties. The New York Times last week reported that its 2023 digital ad revenues had fallen by 8.5 per cent to $187 million.

Addressing the Scott Trust’s concerns about the sustainability of the Guardian, a spokesperson said: “Our financial sustainability was hard won in recent years. The role of the Scott Trust is to invest in our long-term growth, with the ultimate aim of ensuring that Guardian’s trusted, high-quality journalism continues in perpetuity.”