The publishing group that owns the Guardian and the Observer has suggested that the proposed switch to a tabloid format early next year is as much about protecting quality journalism as it is about reducing costs. But can this be true?
The loss-making Guardian Media Group is part way through a three-year transformation programme, which is aiming to balance the books by 2019. Clearly, cost reduction is a primary motivator for the changes. However, when announcing plans to change the format of its newspapers, the company’s editor-in-chief and editor of the Guardian, Katharine Viner, described how the decision had been motivated by a desire to prioritise quality independent journalism over aesthetics – this is what ‘our readers value most’ she said.
Adopted 12 years ago by the group, the mid-size Berliner format is popular on the continent but it is notoriously difficult and costly to print in the UK, due to the need to use specialist presses. By switching formats to one that is much easier and cheaper to print using standard technology, the publisher will be able to slash operating costs and deliver value to the bottom line, without damaging the integrity of its product.
Like many other newspapers that are struggling to deliver profits at a time when advertising revenues have plummeted, there is an urgent need to reduce operating costs whilst continuing to provide products that consumers want to buy. Despite the dip in print sales, many publishers are demonstrating that they are still willing to invest in their printed offerings because of the stronger advertising yields they generate by comparison with digital advertising. In the meantime, digital-only models continue to struggle to deliver sustainable returns.
There has been a swing to digital, but consumer demand for printed newspapers remains key. This will have motivated the publishing company’s decision to stick with printed versions of both papers, whilst finding novel ways to engineer value by adapting the organisational structure of the business - outsourcing print solutions. This will enable a renewed focus on core activities, including increasing income from digital advertising. It is noteworthy that when the Independent went digital-only in April last year, its sister paper, the ‘i’ was acquired by Johnston Press and continues to perform strongly in print.
In a rapidly consolidating marketplace, it makes good sense for the Guardian Media Group to outsource print services to Trinity Mirror and the decision to close its print facilities in Manchester and London will reduce its fixed cost base significantly. This type of industry collaboration, which is focused in an area of non-core activity, is likely to become more prevalent in the sector.
While reducing cost is evidently the primary driver for the Guardian Media Group’s latest announcement, it did have a choice to make. Instead of making wholescale changes to its content generation model, it has chosen to cut costs in other areas. From an investment perspective, this is indeed a vote for content over format.
Ben Bird, director and media sector specialist at supply chain firm, Vendigital.
Media buyers have also offered their viewpoints on the decision by the company to take the Guardian and the Observer to tabloid.