Guardian owner sees higher losses as pace of change ramps up

LONDON - Britain's Guardian Media Group (GMG) expects its losses to increase in the next few years as it invests to keep up with the rapid pace of change ripping through the newspaper industry, its outgoing chief executive said.

The owner of the Guardian, known for breaking news of widespread surveillance by the US National Security Agency from the leaks of analyst Edward Snowden, said it expected to record a loss of around 30 million pounds (S$62 million) when it reports full-year results this summer.

Underlying losses at the publisher, excluding investments, are likely to remain flat at around 20 million pounds and the company said its losses will come down over time as its investments pay off.

The Guardian has broken some of its biggest stories in recent years, from Snowden to the phone hacking scandal which convulsed British politics and Wikileaks, and it has also expanded into the United States and Australia.

Full-year revenue to March 29 is set to rise for a third year running, up 3 per cent to 215 million pounds, helped by a more than 20 per cent jump in digital revenue, and its global audience has hit a record 121.7 million monthly unique browsers.

But the high investment levels, required to constantly develop its platforms and journalism, reflect the pace of change by readers and advertisers who have moved online. "We'll be investing in the next few years behind mobile, behind video," Andrew Miller told Reuters in an interview on the paper's central London newsroom floor. "That means our losses will increase for the next few years at least." Unlike many of its rivals, the Guardian has shunned creating a paywall and has instead adopted a similar approach to the Daily Mail newspaper, which draws millions of users to its site from around the world, funded by advertising.

The approach has been tested however by the fact big brands pay less to advertise online than they would in a newspaper, and pay even less again to advertise on mobile sites, where so many people now consume their news. Actual sales of the paper are also falling.

The privately-owned GMG, which also owns the Observer and Guardian.com, said it had seen strong growth in British and US advertising, and said it receives higher yields than most of its peers due to the high calibre and loyalty of its audience.

Around 25 per cent of its display advertising is now on mobile.

In order to guarantee the future of its journalism, GMG has built up a cash and investment fund of more than 800 million pounds, helped in large part by the sale of its stake in Trader Media Group last year.

Miller, who will step down at the end of June after five years in the job, said that some of that fund would be used to invest in the business, to build new revenue streams for the future. But he said the company knows the losses need to come down in time.

However, Miller believes the industry is only some 10-15 per cent of the way through its transformation, as British newspapers now have to compete with a range of new rivals - from international titles such as the New York Times, to social news and entertainment site Buzzfeed.

With newspapers producing so much video content he also anticipates a time when they will compete directly with international broadcasters such as CNN for eyeballs online. "There's a whole lot of change coming that still has to work its way through," he said.