Guardian Media Group will this week reveal a higher than expected full-year operating loss of £69 million as the owner of the Guardian newspaper battles to bring its finances under control.
GMG’s total pre-tax loss will hit a record £173 million as the group belatedly writes down about £80 million in the value of its stake in Ascential, the publicly quoted magazine and events company, according to figures sent to senior executives. It will also take a £20 million restructuring charge for severance payments.
GMG has exceeded its target of cutting 250 jobs, with 70 journalists taking voluntary redundancy as it struggles to deal with the harsh advertising environment that is hurting print publications.
Controversy over responsibility for losses at GMG led to Alan Rusbridger, its former editor-in-chief, stepping down in May as incoming chair of the Scott Trust, which is GMG's sole shareholder. Mr Rusbridger and Andrew Miller, GMG's former chief executive, were accused of allowing costs to escalate as the Guardian expanded globally.
The Guardian's launch of free digital editions in the US and Australia relied on rising digital advertising demand. Although it recorded 167 million monthly unique browsers in June, it has faced intense competition for advertising from Facebook and Google.
The operating loss of £68.7 million for the year to March, to be unveiled on Wednesday, exceeds its earlier estimate of £58.6 million. GMG faces a sharper than anticipated fall in UK print advertising, along with other newspapers including the Financial Times.
DMGT, which owns the Daily Mail and Mail Online, last week disclosed a 10 per cent fall in print advertising revenue in the third quarter, partly offset by a 12 per cent rise in digital ad revenue.
Katharine Viner, editor of the Guardian, and David Pemsel, the new chief executive, are likely to emphasise that GMG's new leadership is taking tougher action than before to cut losses. This includes recording the writedown on Ascential, which floated this year.
GMG’s 22.4 per cent stake in Ascential is worth £219 million, and it has about £750 million in cash and investments following its earlier sale of its stake in Auto Trader, the online group. Apax, which co-owned Ascential with GMG before the flotation, is thought to have written down the value of its own stake several years ago, but GMG did not take the same action.
GMG declined to comment on the figures.
(c) 2016 The Financial Times Limited