Everyone loves the Guardian—well, everyone except Rupert Murdoch, the British intelligence apparatus, the American intelligence apparatus, and bullies, sneaks, and abusers of authority everywhere.

But everyone else surely does, and no one more than us here at The Audit, where we judge Alan Rusbridger the premiere editor of his generation.

Exactly how much everybody loves the Guardian is going to be tested in the next few years, because the newspaper’s finances are not—repeat, not —good. It is on an ominous track and pursuing a strategy that is high-minded but also high-risk.

Alarmist? Let’s take a look.

The Guardian, by way of background, has a peculiar pedigree and is governed by unusual structure. Founded by a Manchester cotton trader in the early 19th century, it was bought by a longtime editor, C.P. Scott, who whose son in 1936 left it in a trust, the Scott Trust, run by his descendants [ADDING: for more, see Don Montague’s comment below]. The trust was converted to a “limited company” in 2008, but it basically serves the same function: “to sustain journalism that is free from commercial or political interference,” according to Guardian literature. The trust is the sole owner of a corporation named the Guardian Media Group (GMG), which in turn owns several units, including, famously, Guardian News Media (GNM), which is the “newspaper” in both its digital and print forms, along with an online dating service, and other small businesses.

The important point here is that unlike The New York Times and The Washington Post, the Guardian is not ultimately part of a commercial enterprise. It doesn’t need to grow financially. It just needs to not lose too much.

Trouble is, GNM, the news organization, is losing too much. Indeed, as many people know, it is a huge money loser.

How huge? Put it this way: The group doesn’t even talk about profits for GNM, only getting losses to “sustainable levels.” Right now, they are not. Here’s what they look like for the past five years (the figures are in millions GBP).

Fortunately for the Guardian, and the free world, the Trust owns other businesses that are part of the larger Group. The two main things are a big stake in Trader Media Group, which owns Auto Trader, a nicely profitable auto classified ad operation, and Top Right Group, which does event planning and the like.

In 2013, for instance, the two trade operations earned enough to push the whole group into a profit.

But, that has decidedly not always been the case. As we can see here, the entire Group—never mind the GNM—has posted losses in three of the past five years (the figures exclude the results from former businesses. If they had been included, the 2012 loss would have been much higher).

The Guardian’s ace-in-the-hole is the Trust and its investment fund, which exists to subsidize the paper and which, after taking some hits in the financial crisis, has stabilized. The important number is the blue line, the cash and investment fund:

Still, this is not a bottomless cookie jar.

As Ken Auletta noted in his recent takeout on the paper (with my emphasis):

Still, the Guardian lost more money this past year than it did in fiscal 2007-08. To run its print and online operations, the Guardian employs sixteen hundred people worldwide, including five hundred and eighty-three journalists and a hundred and fifty digital developers, designers, and engineers. “The toughest critique of Alan is that he has not faced up to the Guardian’s costs,” a longtime executive at the paper said. The newsroom “is too big for a digital newspaper.”


[GMG CEO] Andrew Miller admits that he does not foresee the newspaper earning a profit anytime soon. Rusbridger said, “The aim is to have sustainable losses.” Miller defines that as getting “our losses down to the low teens in three to five years.” But at some point, if the Guardian does not begin to make money, the trust’s liquid assets, currently two hundred and fifty-four million pounds, would be depleted.


Now, we’re big advocates of paywalls around here, in general, for legacy news organizations, especially when nothing else is working. The paywall debate has been cast in quasi-religious terms, and Ryan Chittum and I are supposed to be paywall haredi or something, but as we’ve said like a million times, they’re a tool that can, if used correctly, add an income stream to news organizations while costing next to nothing in traffic, digital ads, and reader engagement. The breakthrough, the innovation—to steal back a phrase favored by free-content proponents—was the NYT’s metered model introduced in 2011 and copied around the world.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.