Guardian to cut costs in bid to break even

LONDON (Reuters) - The publisher of Britain’s Guardian newspaper plans to cut running costs by 20 percent in a bid to break even within three years after its strategy of building one of the most popular websites in the world failed to make up for falling print sales.

Copies of the Guardian newspaper are displayed at a news agent in London August 21, 2013. REUTERS/Suzanne Plunkett

Guardian Media Group (GMG) said it needed to cut about 50 million pounds ($71 million) from its 268 million pound annual cost base to protect the future of the paper which is known for helping to break the Edward Snowden revelation of widespread surveillance by the U.S. National Security Agency.

It declined to say whether the plan would include job cuts.

“Against the backdrop of a volatile market, we are taking immediate action to boost revenues and reduce our cost-base in order to safeguard Guardian journalism in perpetuity,” said GMG Chief Executive David Pemsel.

The left-leaning Guardian has been involved in some of the biggest stories in recent years, from Snowden to the phone-hacking scandal at Rupert Murdoch’s tabloid, to Wikileaks.

Having opened offices in the United States and Australia, it has also built a hugely popular website read by more than 130 million monthly unique browsers that is free to access and supported by advertising.

However, big brands pay less to advertise online than they would in a newspaper, and pay even less again to advertise on mobile sites, where many people now access news.

Costs have risen 23 percent in five years at GMG, which employs 1,960 staff, while revenues have gone up by 10 percent. Operating losses are expected to be around 53 million pounds for the year to end March, up from 45.3 million the previous year.

To guarantee the future of its journalism, GMG has built up a cash and investment fund of around 740 million pounds.

GMG said it planned to generate greater revenue with a relaunched membership scheme which gives access to events and workshops, align its editorial and commercial operations and make greater use of data to spot market trends.

($1 = 0.7013 pounds)

Reporting by Kate Holton; Editing by Mark Potter