Media: All About ... Guardian Newspapers

Will a restructure be enough in what is a volatile sector, Alasdair Reid asks.

It's turbulent times for all newspaper groups. With copy sales continuing to slide away, the upmarket dailies (three of the four, at any rate) have introduced radical design overhauls while trying to get the best out of the internet. The pace of change is expected to rise.

Now they're all revisiting the whole issue of costs and looking to maximise the efficiency of their internal structures. Last week, it was the turn of Guardian Newspapers to unveil a new "organogram" designed to extract the most value from its existing assets.

The Guardian, The Observer and Guardian Unlimited - including ad sales - will sit in a new division called Guardian Content. The existing Guardian Recruitment Solutions will continue to be headed by Helen Bird. There will be two further divisions: Enterprises will maximise revenues from Guardian Weekly, Guardian Films, Guardian Books and Money Observer while driving content syndication in general; Guardian Professional will look after Guardian Newspapers' business-to-business and educational interests. The rejig also has wider implications for Guardian Media Group.

1. Guardian Media Group will arrive at a crossroads when Sir Bob Phillis retires at the end of July.

GMG was set up in 1993 as a rebranding of Guardian & Manchester Evening News. It signalled the group's intention to accelerate its diversification strategy. That gained real momentum with the arrival of Phillis in December 1997. Phillis oversaw an expansion of the group's radio interests and in 2003, GMG consolidated its position in the magazine business, paying £600 million to take full control of Trader Media, the car listings business whose flagship is the Auto Trader brand.

2. GMG is organised into four divisions: national newspapers, regional newspapers (concentrated in the North-West of England but also including Surrey Advertiser Group and Aldershot News Group), radio (five regional licences) and Trader Media.

3. As the group looks for a successor to Phillis (headhunters have been appointed and Carolyn McCall, the chief executive of Guardian Newspapers, is regarded as a strong internal candidate), its strategic vision appears clouded. There have, of course, been distractions.

4. The Guardian was wrong-footed by the decisions of The Independent and The Times to go tabloid and reacted slowly. It eventually made a virtue of this by moving to the Berliner format rather than a "me too" tabloid.

Nevertheless, the £80 million relaunch in September 2005 was regarded by many as the biggest commercial gamble the paper had taken in its whole 150-year history as a daily. Phillis surprised many in December when he said that the timing of the initiative may have been a mistake.

As the newspaper division turned in a loss of £48.3 million for 2005, Phillis also questioned whether Guardian Newspapers' online strategy was sound.

5. There has been speculation about the direction being pursued by GMG's other divisions. Although Trader Media is profitable, GMG management has become increasingly worried that its classified advertising base is vulnerable to internet alternatives. The possibility of a sale is also said to have been mooted.

6. When the latest round of consolidation in radio began more than a year ago, analysts wondered whether GMG was likely to be a buyer or seller of assets - but no clear picture has emerged. Chrysalis is believed to have made an offer to buy GMG's radio division. Although this offer was declined, many believe GMG would sell if the price was right.

7. At the time of Daily Mail & General Trust's decision to sell its Northcliffe regional newspapers division, GMG was expected to signal its commitment to the sector and make a bid. However, the company balked at the £1.5 billion asking price.

8. The Guardian's editorial staff won the newspaper of the year prize at the recent British Press Awards. Circulation, however, has remained well below 400,000 despite the relaunch and it remains a concern. Two weeks ago, The Guardian announced it was reviewing its £5 million creative account, held by DDB London for the past five years.



- Less than charitable observers have argued that last week's moves merely represent a power play by Carolyn McCall in her campaign to take the top job. If you accept that analysis, you will certainly find yourself focusing on the superficial, public-relations aspects of the restructure.

- Many analysts believe that Guardian Newspapers was already astute at maximising revenues from its core editorial strengths and brand values. On the other hand, as a statement of intent, it comes as a welcome note of optimism and determination in a generally depressed newspaper market.

- Many would like to see McCall succeed Sir Bob Phillis when he steps down. It's hard to envisage a rival candidate more dynamic, forward-thinking or, importantly, advertiser-friendly.


- In the short term, this will not have much impact on the publisher's position in the display advertising market - and the status of the two titles as relatively niche demographic opportunities remains unaffected by the recent revamps.

- From an ad sales point of view, Guardian Newspapers' main assets are doing relatively well. The company's position has been robust enough for it to turn money away as it maintains its traditionally high page yields. Also, with the online market booming, years of investment in Guardian Unlimited may at last begin to bear fruit.

- Agencies welcome the increased focus the new structure will give GNL and hope that it might encourage The Observer to look at spinning off at least one of its sections or supplements as a standalone newsstand title.