Guardian ‘may charge online readers if heavy losses continue’

THE Guardian has developed plans to erect a paywall around its website and apps if its existing membership scheme and appeals for donations do not meet financial targets amid upheaval in the news market.

It is understood that the publisher has called in consultants to work on the details of compulsory subscription charges for some material, despite the growth of voluntary contributions. The proposals are “finished and ready to go”, a source said.

The Guardian is resisting the introduction of a paywall, however. It wants to maintain free access to its journalism online to preserve its reach and influence.

Nevertheless, plans have been developed as a contingency that could be triggered if its turnaround effort fails to end years of heavy losses on schedule. A source said there were no current plans to erect a paywall but added: “We will keep all options under consideration in order to achieve breakeven.” The publisher said yesterday that its strategy was on track and that by April it had attracted 230,000 paying members online, up from 50,000 at the start of the financial year.

The growth delivered a

15pc increase in digital revenues to £94.1m. As well as digital advertising and memberships, the figure includes subscriptions to the title’s online dating service and £3.8m in grants from foundations.

Digital revenues made up the same proportion of the total as in the prior year, at 39pc. Overall turnover was £214.5m, up 2.4pc. The print and events side of the business brought in £119.6m, down 5pc. The results cover the first year of a three-year turnaround plan led by David Pemsel, the chief executive, and Kath Viner, the title’s editor.

They have sought to curb spending after ambitious expansion in the US and heavy investment online caused costs and losses to accelerate.

Operating losses were £44.7m, down a third from £68.7m. At £67.3m, cash outflows proved more difficult to staunch and were down little more than £5m.

Some of the £19m cut from the publisher’s cost base came from 300 redundancies, mostly in commercial and support functions. Editorial staff numbers were reduced by 51 to 999 and ended the year higher than in 2015.

Payroll costs excluding severance payments were down less than 3pc at £126.6m. Most of the financial benefit is expected to be felt this year and next, a spokesman said.

The Guardian took a one-off charge of £26.8m to end hire-purchase agreements on its bespoke Berliner printing presses. The Telegraph revealed last month that the Guardian would switch to a tabloid format, with printing outsourced at lower cost to Trinity Mirror. The presses will be sold or scrapped.

It is understood that in the current financial year, the Guardian has budgeted for operating losses of £25m.