After 10 years, GN can celebrate The Observer success

Guardian Newspapers held a lavish party this week to celebrate 10 years of ownership of The Observer. Members of the media elite such as David Liddiment, Dawn Airey and Steven Berkoff were to be found among the formaldehyde sheep at the Saatchi Gallery, writes Ian Darby.

It was good they had something to charge a glass to. Back in 1993, after months of negotiations and fighting off a bid from Newspaper Publishing, the owner of The Independent, GN bought The Observer for a reported £26m from "Tiny" Rowland's Lonrho conglomerate. The Observer was in trouble. While it had a superb heritage (it launched in 1791), it was running at a large loss (estimated at around £9m a year) and its circulation had dipped to 504,000 from 586,000 six months earlier.

GN seemed like a natural bedfellow because of the shared sensibilities of the titles. Peter Preston, the then Guardian editor, said at the time: "Our over-riding aim is clear: to help to publish an editorially independent and vibrant Observer."

Through product innovation and a general improvement of the product, GN has recently increased its circulation, which now lies at 473,294 (including bulks).

Carolyn McCall, the managing director of GN, says it has brought "clarity and vision" to the title. "Most importantly, we've brought stability," she says.

Taken in isolation, The Observer (like most Sundays) loses money, but McCall says it is close to reaching its "internal breakeven point" (taking into account its impact on The Guardian and shared resources).

Press buyers think The Observer has the right parent. Roy Jeans, Magna's managing director, says: "There's a natural cultural fit. It's had competition on circulation but it's a good product." They like that The Observer attracts young readers: the National Readership Survey shows 16% of its readers are 16- to 24-year-olds, compared with 11% in 1995-96. They also think the sales operation McCall helped create is one of the strongest around. Stuart Taylor, the ad director, and Chris Pelekanou, the head of display, are both respected and agencies say GN has no policy of conditional selling.

McCall admits GN made mistakes with The Observer, mainly on the editorial side. But she says: "The best thing we ever did was appoint a Guardian man [current editor Roger Alton]." He has certainly improved the features side of the title. GN hasn't been shy of lavishing money on new products, either -- Observer Sport Monthly (and its sister monthlies Food Monthly and Music Monthly).

Advertisers have some worries for The Observer, mainly about circulation if The Sunday Times becomes even more aggressive. On the whole, though, GN deserves congratulations for publishing a strong product in a tougher market than existed 10 years ago.

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