In June last year, senior executives of Guardian Media Group gathered at the Club at the Ivy in London’s Soho to bid farewell to Andrew Miller, its chief executive, after a bumpy five-year tenure that seemed to have ended on a positive note. If they expected a relaxed evening of celebration, they were in for a surprise.
In his speech, Mr Miller alluded to the recently broadcast fifth season finale of HBO’s drama Game of Thrones, in which the bastard nobleman Jon Snow appears to be killed by his followers. “I feel like Jon Snow, stabbed in the back,” he said. There was an embarrassed pause as guests shuffled their feet. “It was excruciating. I wanted the earth to open and swallow me up,” says one.
Mr Miller’s parting shot capped months of intrigue and upheaval at The Guardian, including the appointment of Katharine Viner as editor-in-chief to succeed Alan Rusbridger after 20 years in charge. Mr Rusbridger’s editorship culminated in The Guardian’s digital readership growing around the world and a 2014 Pulitzer Prize for its coverage of revelations by Edward Snowden, the former US intelligence contractor.
Mr Rusbridger, a soft-spoken figure with an intellectual mien that conceals an iron will, became the crusading leader of a publishing group that started as the Manchester Guardian, a regional daily newspaper with liberal opinions. He was unafraid to take on powerful targets, including the US government over the Snowden affair and Rupert Murdoch’s News of the World newspaper over phone hacking. When he stepped down a year ago, he was on a high, but his record is now in doubt.
His journalism is still admired but his evangelism for a business approach of being “open and free” — spurning any online paywall and instead relying on growth in the digital readership to gain advertising— is in question. The Guardian’s expensive expansion, with 480 of its 1,950 employees added in his last three years, has left it bleeding cash. Ms Viner and David Pemsel, Mr Miller’s successor, want to cut costs by 20 per cent and shed 310 jobs, but some doubt whether even that will be enough. “It’s so hard to get your mind around the fact that this business could be coming to an end,” says one former executive.
The Guardian has long suffered from over-optimism about revenues and an ingrained inability to control costs. Mr Miller warned after his arrival in 2010 that it had to cut losses to become sustainable, and made some progress before his departure. But operating losses rose to £52m in the year to March, and the cash reserve on which it depends fell to £743m from £838m. At this rate, it could be exhausted in less than a decade.
Many people put the primary blame for the profligacy — and the £418m accumulated losses of its publishing arm Guardian News and Media since 2007 — on Mr Rusbridger. “Alan took the lead all the way along on its digital transition, and made predictions with blithe insouciance and naivety,” says Claire Enders of Enders Analysis. “His revenue forecasting record is abysmal.”
The tensions are exacerbated by the fact that Mr Rusbridger has not really left. He is principal of Lady Margaret Hall, an Oxford college, but is also due to return to the Guardian in September as chair of the Scott Trust, the limited company that owns it. His assumption of an influential governance position is creating alarm among some GMG directors, as well as journalists who are electing a new representative to the trust’s board. Some fear that Mr Rusbridger could block changes that reflect badly on his editorship.
The combination of a business crisis with a showdown on corporate governance comes amid a wider loss of faith in the publishing model Mr Rusbridger embraced. Together with US start-ups such as The Huffington Post and BuzzFeed, it was a vociferous exponent of scale, reaching a record 160m monthly unique browsers in November. That approach is now being increasingly questioned.
BuzzFeed missed its revenue targets for 2015 and has recently slashed its revenue forecasts for 2016, as online advertising moves to Facebook and social networks that have far bigger audiences than news sites. Print advertising has also fallen away more rapidly than expected — the Financial Times, which unlike The Guardian has substantial digital subscription revenues, recently warned its journalists that it faced “daunting trading conditions” this year.
The Guardian’s unique form of corporate governance dates to the founding Scott family’s formation of an editorial-led trust in 1936 to safeguard the newspaper “in perpetuity”. This gives the editor wider authority in relation to its business than at other publications, one reason for Mr Rusbridger’s power. “Alan was the Sun King,” says one journalist. “But the sun’s not shining any more.”
Mr Rusbridger’s ability to get his wish is illustrated by the manner in which he was selected to succeed Dame Liz Forgan, a former women’s editor of The Guardian, as chair of the Scott Trust. It started looking for her successor in 2014, setting up a search committee chaired by Will Hutton, former editor of The Observer, its UK Sunday paper. Egon Zehnder, a headhunting group, could not find a candidate the committee agreed on and finally suggested that Mr Rusbridger be considered.
In September, Mr Rusbridger told the trust he planned to step down as editor and was willing to chair its board, but wanted the changes to be announced at the same time. Other members rejected this schedule because they thought it would be a conflict of interest for him to have too much influence over the choice of his successor. They decided to delay the appointment of a chair for a year, and told Mr Rusbridger that he would be welcome to apply then.
Two months later, Dame Liz unexpectedly told another meeting of the trust that Mr Rusbridger had received other job offers and they had to make a choice immediately if they were not to lose him. She thought it was vital to keep him given the turbulence in the industry and his Pulitzer Prize-winning status. She then recused herself and asked Mr Rusbridger to enter the room and make his case. When he did, he warned of the risk of the GMG board stepping into any leadership vacuum at the trust.
Some members felt their hand had been forced and at least one wanted to stick with their original timetable. But they compromised by asking Dame Liz to delay her departure to this September and asking Mr Rusbridger to “take a break” from The Guardian’s head office in King’s Cross, London, for a few months after leaving the editor’s chair. Then they reversed their September decision, endorsing Mr Rusbridger as the next chair.
The chair of the Scott Trust is a deceptively powerful role in an organisation with an opaque structure. “If you ask who is in charge at any moment in time, it is never very clear,” says one veteran. “A variety of people might be.” Officially, the trust ensures the publications’ survival and guards editorial independence, leaving business oversight to GMG and day-to-day management to the GNM executive committee. In practice, it can choose to obstruct anything to which the editor objects.
The relationship between the trust chair and the editor is vital and Dame Liz and Mr Rusbridger had a close one. But his prospective elevation to the chair did not lead to his preferred successor as editor — Janine Gibson, The Guardian’s former US editor, now editor of BuzzFeed UK — getting the job. Instead it went to Ms Viner, who is said by a colleague to regard his return with “a combination of worry and alarm”.
A testing relationship is made much harder — some say untenable — by the difficulties ahead. Only 100 of the job losses will come from The Guardian’s 791 UK editorial staff but its National Union of Journalists branch opposes compulsory redundancies. The potential for lobbying of Mr Rusbridger to stop Ms Viner’s retrenchment is great.
“It’s going to be hard to destroy the ark of the covenant with Alan looking over your shoulder,” says one editor.
Mr Rusbridger retains many admirers at The Guardian, both among journalists and executives, who say that he would not cause trouble in his new role. “Alan is more sophisticated than that,” says one. He would not obstruct change, they say, but confine himself to probing GMG’s strategy and ensuring, for example, that “native content” paid for by companies does not blur the line between advertising and news.
His supporters also say The Guardian’s business executives are rewriting history if they place the sole blame on him for the growth in costs, including the addition of those 480 jobs. He did not sign any cheques himself — all of the plans were discussed with, and approved by, GMG’s board, chaired by Neil Berkett since 2013. Furthermore, about half the jobs were on the commercial side, and many were hired by Mr Pemsel when he was Mr Miller’s deputy and headed GNM’s business operations.
“David argued that we should invest heavily because if we did not make it in the US, we would not make it anywhere,” says one executive. “He said that nothing would happen if we only spent a little.” Encouraged by Mr Berkett, Mr Pemsel cited the need for a “big, hairy, audacious goal” — the term for a compelling long-term vision coined by James Collins and Jerry Porras in their book Built to Last. He oversaw a plan to convert an old railway goods shed in King’s Cross into an events space, which has now been shelved.
The argument over responsibility for past errors has inflamed tensions between the trust and GMG’s board, whose members are often frustrated at their lack of power to run the business conventionally. These surfaced in 2014 after Mr Miller disposed of GMG’s 50.1 per cent stake in Trader Media Group, publisher of Auto Trader, the car sales magazine and website, bringing in about £650m for the endowment fund. This raised questions about having three bodies — the trust, GMG and GNM — overseeing one medium-sized publisher.
The trust and the board set up a governance review headed by Sir Anthony Salz, a member of the trust. Mr Berkett suggested that the two bodies could merge, but this was rejected. Mr Miller pressed for GMG to gain a greater say over The Guardian’s editorial budget, arguing that it was hard to exert discipline if the editor controlled it. This idea was also rejected (“Alan was in a panic about it,” says one journalist), which along with Mr Pemsel’s rise helped to prompt Mr Miller’s departure.
As Mr Miller made his Game of Thrones joke last June, the financial position still seemed manageable. Mr Berkett told GMG staff in a video that it had been a “good year” for cutting losses and The Guardian was “at the forefront of trying to experiment with new revenue models”. But Ms Viner and Mr Pemsel had already asked a group of executives to review its finances and strategy.
They were shocked to find that it was heading for bigger losses and concluded that it had to retrench severely, cutting up to 450 jobs and perhaps halting coverage of topics such as film, food or travel unless they were supported by sponsorship deals. Only then might it cut its annual losses to £20m while it tried to raise revenues by offering readers paid “membership” with benefits including extra coverage.
Mr Pemsel and Ms Viner’s cutbacks are more limited but have turned Mr Rusbridger’s return into a flashpoint. Nils Pratley, The Guardian’s financial editor and a candidate to become a Scott trustee, said last week that “standard principles of good governance have not been followed”. Steve Bell, the cartoonist, put it more simply at the election hustings: Mr Rusbridger “can be criticised for the fact that the whole shebang is haemorrhaging money”.
“Alan has to be held responsible for the mess because he held most power and he was the only one in place for 20 years,” says one executive who thinks Mr Rusbridger should not chair the trust. “The way his appointment was made speaks to everything bad about the trust. It lacked transparency and it allowed Alan to use his political capital and intellectual force to seize power.”
At least one journalist believes that Mr Rusbridger is the only figure capable of overseeing the shock treatment The Guardian requires because, if he does so, everyone will realise there is no alternative. One of Mr Rusbridger’s favourite lines comes from Oscar Wilde’s The Ballad of Reading Gaol: “For each man kills the thing he loves.”
Mr Rusbridger loved The Guardian’s unfettered growth; now he must kill it.
Get alerts on Alan Rusbridger when a new story is published