Guardian loses £38m as recruitment ads recede
Guardian News & Media has reported "another challenging year" resulting in operating losses of £38.3m, despite cost savings and ongoing redundancies that included the departure of managing director Tim Brooks.
The Guardian: loses £38m as recruitment ads recede
GNM’s confirmed losses for the year to 3 April 2011 are in line with those anticipated in June, when the division announced its ‘digital first’ strategy. It follows operating losses of £37.8m the year before.
Once restructuring costs and the writing down of assets are taken into account, the GNM nationals division for The Guardian and The Observer made an operating loss of £41.6m in the year to April 2011.
The losses at the publisher come despite savings of £26.8m made from restructuring in the previous year. Revenue dropped from £221.0m to £198.2m.
Display advertising revenues were reported to be "resilient", but the Guardian saw a sharp decline in recruitment advertising, blamed on "the difficult economic environment" and "unprecedented cuts to public sector spending".
A GNM source confirmed the Guardian brand has been disproportionally impacted by the drastic spending cuts introduced by Prime Minister David Cameron's government due to its traditionally strong public sector spend.
"It's fair to say The Guardian has been hit harder than any other national newspaper by the government cuts and the loss of public sector recruitment ads," he said.
Today’s figures do not include costs associated with the new round of redundancies taking place across the group following its "digital first" focus.
Andrew Miller, chief executive officer of GMG, highlighted The Guardian’s editorial achievements, including the accolade of Newspaper of the Year at the British Press Awards, before adding: "The media sector continued to face major challenges in 2010/11, of which the greatest was the ongoing transition from traditional to digital media.
"The development of new business models to meet these challenges remained the key issue for the industry.
"Against this background, we have begun to implement a new strategy, including a restructuring of senior management, a new approach to managing our portfolio of investments and the transformation of our core business GNM, with the aim of ensuring the Guardian’s long-term economic sustainability.
" …From a financial perspective, GNM had another challenging year… 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."
Revenue across GNM parent GMG has almost halved over the past five years, from £593.9m in 2007 to £255.1m in 2011.
Miller warned that GMG is only at the beginning of its restructure and that it is expected to continue to have an impact in the short term, including on the current financial year.
However, the group did turn last year’s pre tax loss of £171m into a profit of £9m, largely reflecting the previous impact of two big one-off impairments – writing-down the value of Emap and GMG Radio.
Elsewhere, there were strong performances from assets within GMG’s portfolio. Trader Media Group (TMG) was said to have performed "extremely well", producing an operating profit before exceptional items of £120.1m (compared to £111.7m in 2010), of which 85% was generated by its digital operations (2010 75%).
TMG was celebrated by the group as "one the most successful and profitable examples of print-to-online transition in the world".
Despite economic uncertainty and a 90% reduction in spending by the Central Office of Information, GMG Radio increased its operating profit before exceptional items and amortisation from £600,000 to £900,000. The division’s revenue fell from £50.1m to £47.1m.
In its B2B publishing division, gains made across Emap’s two major divisions: Emap Insight, which delivers online intelligence; and Emap Connect, which focuses on exhibitions and festivals, were offset by reductions in public sector spend across its health and local government interests.
Amelia Fawcett, chair of GMG, said: "The forces of change continue to sweep through the industry, irrespective of short-term variations in the advertising market... In this context, the Board is very pleased that our new chief executive officer, Andrew Miller, has reshaped and streamlined the management structure to facilitate maximum focus on GNM.
"There is now a clear distinction, strategically and in terms of operational management, between GNM as the core business and the portfolio of assets and investments that are designed to provide for its future."
This article was first published on mediaweek.co.uk
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