UK Guardian mulls future as smaller organization

LONDON Tue Aug 4, 2009 7:58am EDT

LONDON (Reuters) - Britain's Guardian Media Group is considering options for its Guardian newspaper, Observer Sunday newspaper and online publications as it faces the fact it will emerge from recession as a smaller organization.

In a letter to staff written in response to media reports that the company was mulling closing the Observer, GMG's chief executive said Guardian News & Media was conducting a strategic review and it was too early to say what the outcome would be.

"When the economy recovers, so -- to a degree -- will our advertising revenues. However, due to structural change, these revenues will not be at the levels they were in the past," Carolyn McCall wrote in an email seen by Reuters on Tuesday.

"This inevitably means we will be a smaller organization," she added. "A wide variety of different options, approaches and scenarios is being developed and will be considered."

She said every aspect of GNM's publishing strategy and titles would be examined, including the Observer, the world's oldest Sunday newspaper, which was first published in 1791.

Guardian Media Group, which is owned by the Scott Trust, last Friday reported a pretax loss of 89.8 million pounds ($152.1 million) for its 2008/09 fiscal year, compared with a profit of 306.4 million pounds the previous year.

GMG's turnover increased slightly to 637.9 million pounds, including its share of two joint venture companies.

The Scott Trust was created in 1936 to safeguard the Guardian's journalistic freedom and liberal values.

Its stated core purpose is "to preserve the financial and editorial independence of the Guardian in perpetuity." It does not mention the Observer.

Rival Sunday newspaper the Sunday Times, owned by Rupert Murdoch's News Corp, plans to launch its own dedicated website separate from timesonline.co.uk, a spokeswoman for News Corp's UK subsidiary News International confirmed on Tuesday.

The Observer's circulation was 410,000 in June, slightly up from May, according to Britain's Audit Bureau of Circulation. The Sunday Times, Britain's best-selling quality Sunday, also slightly increased its circulation to 1.2 million.

($1=.5903 Pound)

(Reporting by Georgina Prodhan; Editing by Hans Peters)