Guardian on track to report strong revenue growth

Guardian News & Media, publisher of The Guardian and The Observer newsbrands, is on track to reveal strong revenue growth for its full year to the end of March, fuelled by its expanding digital operations.

Sources at the publisher are notably bullish about the outlook for the group’s performance, and are confident annual losses will fall significantly from the £30.9 million posted the previous year to nearer to £20 million.

Annual digital revenues at GNM are expected to exceed £60 million in the year, including subscriptions, recruitment and display, and more than offset falls in print sales.

The robust performance comes on the back of GNM cutting annual losses by 30% the previous year, from £44.2m in 2011/2012 to £30.9m to the end of March 2013.

The Guardian’s Australian operation, launched last year, is said to be performing well ahead of expectations, while its US office is enjoyed a coming-of-age after leading coverage of NSA whistleblower, Edward Snowden

It comes as Andrew Miller, chief executive of parent Guardian Media Group, completes his third year of a five-year transformation plan.

It is likely to provide food for thought for News UK chief executive Mike Darcey, who launched a direct attack on the Guardian's free, mass reach business model yesterday, when speaking at an Enders event.

Darcey said: "Ultimately I believe the industry faces a choice between two different models for the future of professional journalism. On the one hand, a free-to-digital model, which ultimately becomes a free, digital-only model. This is probably sustainable, but the amount of revenue available is modest, and so I believe the scale of the operation will also be modest.

"The alternative is a model based on deep engagement with customers – providing them with a quality, distinctive content bundle, centred on news, delivered in a range of flexible formats, and is rooted in a paid-for proposition."

Earlier today, DMG Media reported that digital ad revenues for MailOnline increased by £5 million (48%) to £14 million in the last quarter, more than offsetting the £1 million drop in print ads at the Daily Mail and Mail on Sunday.

However, Darcey, leader of The Times and The Sun brands, which both now sit behind a paywall online, remains unconvinced: "I am often asked 'what about the success of the Guardian?' To which I answer, what success? The problem of course is that The Guardian is systematically loss making, to the tune of about £40m a year.

"There are vague hopes, it seems, that a global online presence might lead eventually to vast digital revenues, but this idea suffers from the same problem as MailOnline, with prices falling faster than volumes grow, and from cost-creep. All the while, the free offering undermines demand for the paid-for print product, now at risk of a deadly spiral of falling circulation and rising price."

Total paid sales (print and digital) of all News UK titles, which includes The Times, The Sunday Times and The Sun, now averages 2.75 million a day, with a growing number having an ongoing relationship with one of the titles as regular subscribers.

Miller's advice: stop whingeing

Last month, Guardian Media Group agreed the sale of its 50.1 per cent stake in Trader Media Group, in a deal speculated to be in the region of £600m.

Miller, who was the chief financial officer of Trader Media Group for six years before joining GMG, refused to be drawn on the financial details of the deal, but said: "It’s a great foundation from which GMG can keep building and keep going on the momentum we’ve got. It secures our future very clearly for many years to come.

"We have an amazing investment because of this transaction that allows us to keep accelerating the fantastic stuff we’ve been doing the last three years. We are absolutely all about securing The Guardian’s journalism in perpetuity… there is no specific thing we are going to invest in or use this on."

Talking to Media Week last week, Miller's message to media owners old and new was clear: "stop whingeing" and enjoy the opportunities in digital transformation.

The CEO went on to cite Buzzfeed and Vice as examples of experimentation in content and journalism that are triggering industry innovation.

Watch the video above for more comment from Andrew Miller.

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