The group has a very clear core purpose, unlike many other groups that have to have a mission statements and spend hours and hours in rooms working those out. Our purpose is very clear: we’re owned by the Scott Trust; its entire purpose is the financial and particularly the editorial independence of the Guardian in perpetuity. That’s what everything we do is about.
Being owned by a trust means that we can take a very long-term view of our business and our portfolio. We don’t have to panic; we don’t have to think about things in the very short-term.
So for instance, we can make judgements based on what is right for the business for the long-term rather than what may appear to be the right thing to do right now.
In many ways GMG has performed very well over the last year. The Guardian has gone from strength to strength; it has won awards for editorial excellence and commercial awards too; guardian.co.uk has increased the number of users – so actually that’s been very successful.
Trader Media and Emap are still increasing their profits year on year, so they have had very strong years. And, actually we saw the recession early enough and we have been taking costs out of all our businesses, and we’ve been restructuring in many of our businesses very early, so that’s put us in a good position.
But of course, it has been a deeply challenging year as well. So, although we have done some very good work, much of that has been masked by the fact that we have seen very, very steep revenue declines, particularly in our consumer-facing businesses.
In essence what GMG has done is sacrificed short-term profit for long-term security. So our loss for this year gives you only a partial view of what is really going on. We sold 49.9% of Trader Media Group because we wanted to diversify the portfolio and really reduce risk and as a result of that and the deteriorating economic conditions we will report a loss this year.
The reason we showed over £300 million of profit last year in our accounts is because the transaction of Trader Media, the sale of Trader Media, was included in our accounts. As I have just explained we have taken all of those proceeds and we have either invested them into the investment fund or into Emap or into investing in the Guardian and its long-term development.
Emap and Trader are very, very strong, solid, medium-growth businesses and they will return profit to us over the next term, the medium term.
So we have very deliberately chosen this strategy in order to reduce risk in our entire portfolio.
The Guardian has had an extremely good year in terms of its journalism – the journalism is actually flourishing. It has had some incredibly strong stories; it has done some very important investigative journalism; it has won awards.
Our journalistic content is what at the heart of what we do and it is about publishing 24/7 and being available on every platform. So it is about being a global news provider and a global content provider and really achieving that ambition of being the world’s leading liberal voice.
The entire media industry has been in a state of structural change, whether it’s known it or not actually, since the advent of the internet and we’re no exception to that. We’ve tried to take advantage of some of that structural change but what’s happening now is that the recession is exacerbating the structural challenges we’ve been facing for a long time.
All of the GMG businesses have approached this in two ways. There’s either a structural change going on, so they are transforming their businesses in order to meet the structural demands that are now facing them and there are certain levers they are all using in order to respond to the recession.
So I think all our businesses are seeing this in two distinct ways: the cyclical response to cost reduction, which is immediate and obvious; and then the longer-term change required which is deep structural response to the changes facing us – which are not going to go away after the recession.
Inevitably, as part of that, we have been consulting with staff, we’ve been talking to them about the structure of the organisations and, regrettably, we’ve also been having to talk about redundancies.
I think for all media companies, actually for all companies, including GMG, the next year is going to remain difficult and very challenging. The reason we should emerge from this in good shape, is because we have a real clarity about what we are doing and what we have to do, and we also have a real clarity of purpose.
We have cash – we have to manage it extremely carefully – but we haven’t got debt, so we are in a better position than most.
When you talk about opportunity, which is a very glib thing to say – people always say there’s opportunity in a recession – well there is, but actually we are in a position to invest in the things we believe are right, particularly for the Guardian, but also for our other businesses.
We have to back the right horses and if we do we will come out of this in good shape.