The Guardian newspaper has heralded a fall in operating losses, but warned that its short-term financial performance may worsen due to increased investment in digital platforms.
Guardian News Media, which operates one of the world’s most visited newspaper websites, is seeking to expand online advertising to replace declining print revenues.
Its losses before taxes, interest and amortisation were £30.6m in the financial year ending in March, compared with a loss of £33.8m in the previous year.
Excluding depreciation and one-off items, such as staff restructuring, losses narrowed by £7.2m to £19.4m.
“Over two years, we’ve halved the operating losses,” said Andrew Miller, chief executive of the parent company Guardian Media Group, adding that the group was now focused on ways to monetise the newspaper’s audience on mobile devices.
Douglas McCabe, an analyst at Enders Analysis, said the declining losses were “encouraging”, but that it was “far from certain” that digital advertising growth would offset the decline in print advertising.
Pessimism about the British newspaper industry has lifted slightly in recent months, with print advertising revenues falling less sharply than industry observers had expected.
The Independent newspaper, owned by Alexander and Evgeny Lebedev, reported last week that pre-tax losses had fallen by nearly one-quarter to £14.5m in the year to September 2013, while The Times and The Sunday Times, which have lost more than £500m since 2002, were profitable before tax, interest, depreciation and amortisation last year, according to their owner, News UK.
Shares in Trinity Mirror have risen about 40 per cent over the past year.
GMG had £843m in cash and investments in March, following the sale of its stake in Trader Media Group to private equity firm Apax.
It is seeking a 5 per cent annual return on those funds, which would cover annual losses of about £40m.
Mr Miller said the Guardian “must focus relentlessly on reducing underlying operating losses”, but that in the short term performance would be affected by increased investment in areas such as mobile and video.
He said he was now “very comfortable” with the current costs of its operations, although the Guardian would “continue monitoring” the issue.
Overall revenues at Guardian News Media rose 7 per cent to £210.2m.
Digital revenues, which include online jobs and dating, rose 24 per cent to £69.5m, accounting for one-third of total sales. “The growing part has been digital display revenue and sponsorship,” said Mr Miller.
The Guardian – unlike The Times, The Daily Telegraph and the Financial Times – has opted against charging users for access to its website, but it is planning to unveil a paid-for membership programme this year that will include extra benefits such as events.
In the US, where the company’s operations have missed initial sales targets, the company is focusing on sponsorship deals with brands.
“The Guardian has an excellent reputation among agencies for reducing its reliance on print display and developing creative innovations for brands,” said Mr McCabe of Enders Analysis.
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