Andrew Miller, chief executive of the Guardian Media Group, has direct experience of managing the path from paper to digital-only publication.
When he ran AutoTrader, now a joint venture between GMG and Apax Partners, he set the publication on the way to print oblivion.
“I spent ten years sitting around Auto Trader boardrooms waiting for this mystical, mythical bottoming out of circulation declines and we all said the same for four or five years: it’s going to stop now, but it didn’t, so you have to have a plan,” explains Miller.
The last print copies of Auto Trader appeared in June and the experience finally convinced Miller, if any convincing was necessary, that above all else you have to follow the consumer wherever they are going.
Auto Trader was about classified rather than award-winning editorial so the parallels with The Guardian are far from exact. But the same underlying principle applies.
“We look at this sort of thing (the end of print) all the time. We have models coming out of our ears and you just have to judge it. We have ideas – formats – when circulations get to certain levels. Are we consciously going to drive to one thing? No. We are going to follow the market,” insists the quietly spoken Scot.
The Guardian editor Alan Rusbridger has said he can envisage a paperless Guardian in five to ten years, while printing on fewer days a week might be an intermediate option.
In fact, in recent months the company has been putting more resources behind the paper version with the On Fashion supplement for the daily, a technology supplement for The Observer and the return of the Own The Weekend advertising campaign.
As a result, Miller can report that rare thing - a 4 per cent increase in paper circulation in September, although that came from a low base, 189,646 in August, a year-on-year decline of just under 10 per cent.
“The paper is still the life blood. The position that digital first is digital only is rubbish. The paper is still making by far the strongest contribution to our numbers. I am a reader myself,” insists the accountant who emphasises his business decisions are pragmatic rather than dogmatic.
Focus on The Guardian
Miller took over from Caroline McCall three years ago and spent his first year reviewing the group’s assets before creating a strategy.
Before she left, McCall sold GMG’s regional newspaper division to Trinity Mirror as part of the process of protecting the core business – The Guardian.
Miller in turn sold the Guardian Radio Group, even though he loved the business, because he thought the music had stopped on radio consolidation and GRG was firmly stuck in third place, making around £2 million a year.
The £70 million achieved by the sale was part of “refocusing and repurposing” around The Guardian and moving away from earlier ambitions of being a multi-media group.
Instead, the aim was to forge ahead with digital while trying to pull off an even more ambitious trick – finding a business model to ensure that the financial and editorial independence of The Guardian and its liberal values survives in perpetuity, the task set by the Scott Trust. The Trust owns the only share in the business.
Two years ago, as part of his strategy for the future, Miller issued a dire warning about the finances of the paper – that it would run through its cash reserves in three to five years unless something was done.
Naturally rivals reported that The Guardian faced going bust in two years, although Miller had not included the group’s assets in the argument.
He confesses he deliberately created “a narrative” to impress on staff the need for change and convince them that the time for debate over digital was well and truly over.
Follow the consumer
“People somehow thought that by embracing digital we were accelerating its (The Guardian’s) problem. That was missing the point. The consumer was already there and we weren’t accelerating the problem. There is no alternative. It’s about following the consumer,” says Miller who once worked in FMCG (fast moving consumer goods) with Proctor & Gamble.
The drive into digital, with the hiring of no less than 120 digital engineers and job losses elsewhere, including 58 journalist redundancies (the equivalent of 50 full time positions), has been matched by the push into the US and Australia. The international opportunity posed by digital is just “bleeding obvious” and Miller believes that if you close yourself off and don’t make yourself known, you could kill your brand.
“Remember we were the second smallest newspaper in the UK when we started this journey. We are now the largest newspaper in the UK across multi-platforms on an NRS-PADD basis. Without the strategy we have been following, we would never have been there,” says Miller who likes to walk in the hills around the small town of Dollar in Clackmannanshire where he comes from. The walls of his office are decorated with pictures of the Scottish hills – and Andy Murray.
The digital Guardian is now getting 80 million unique browsers a month making it the third largest English language newspaper website in the world after the Daily Mail and the New York Times.
But can it be commercially wise for The Guardian to give away all its journalism online for free, apart from charging for iPad and iPhone subscriptions?
Quality journalism
“We are a brand which is about quality journalism, investigative journalism and challenging the status quo. On my watch, there have been Wikileaks, phone-hacking and Snowden and a myriad of really big important stories and I feel really proud of that,” says Miller who has no say in editorial judgments and who explains he often doesn’t even know what stories journalists are working on.
Such headline journalism travels round the world and is picked up by Twitter, Facebook and reddit and the theory is that the money will follow – indeed already is following, according to Miller.
The leaks by NSA whistle blower Edward Snowden has meant that in recent weeks, the Guardian’s internet traffic has often been greater in the United States than in the UK and certainly the new high profile helps with getting commercial meetings.
“It has given us a presence that millions of marketing money could not have bought. Until this, we were known in some circles (in the US), now we are well known everywhere,” says Miller.
Financial goals
He gets frustrated to be accused of cost-cutting. A lot of people have been taken out of the group but it has been about “repurposing” the organisation so that The Guardian’s journalism is spread far and wide.
“The first thing is about the journalism. I really do mean it. It’s about building on the core and investing in it where appropriate,” says the GMG chief executive who has entered the third year of a five-year plan.
Revenue is growing in all areas and, last year, The Guardian’s losses were reduced from £44 million to £30 million and will fall still further in the first half of this financial year.
Could The Guardian move towards break-even and eventually make a profit?
“I don’t have to be as binary as that though of course we have to get to break even and find a way of making profit over time but the problem is we have to accommodate a marketplace that is changing ultra-rapidly,” Miller explains.
For example, Twitter was once seen as a nice, harmless phenomenon until it developed into one of the world’s key sources of breaking news.
As an executive, Miller has the obvious luxury of not being under pressure to make profits in any particular year, as commercial rivals are under pressure to do. The Scott Trust is able to take a longer-term view.
The company is constantly looking at new ways of earning money to supplement advertising revenue. Recent examples include a sponsorship deal worth several millions for Eye Witness, the citizen journalism website.
Though naturally the issue of paywalls is kept under review, Miller remains convinced that paywalls are not the answer for The Guardian.
“Paywalls are to me the worst loyalty scheme in the world – the more you consume the more you pay,” says Miller who is equally unimpressed by hybrid schemes such as those run by the Daily Telegraph which he dismisses as just a toe in the water.
Introduce paywalls and you have no chance of reaching 80 million people a month around the globe.
But in the last issue of InPublishing, Mike Darcey, chief executive of News UK, publishers of The Times was critical of The Guardian’s “free” digital business model.
“It’s hard to predict where that ends. I really don’t know but I don’t think it ends well,” Darcey argued.
In a reference to legendary Guardian editor C.P Scott’s dictum, Miller replies: “Comment is free. Facts are sacred. So let’s judge it on the facts at the time.”
Since the Darcey interview, News UK has revealed that its total number of digital subscribers to The Times and the Sunday Times has topped 150,000 and that digital subscribers to The Times now make up a quarter of the total.
The GMG chief executive insists that The Guardian newspaper is not suffering cannibalisation from its free online offerings because the decline rate of the paper edition is the same or even slightly better than those who have not gone down the free route.
As he surveys the future, Andrew Miller is a pragmatic optimist about newspapers – journalism and news has never been read by more people, and curation and trust will become more and more important.
“Brands like ours will win because of that as well,” he believes.
GMG will continue to look at its cost structure and there could be more “headcount changes” through reinvestment. But there are no plans for further redundancies in the editorial area.
“The Guardian, as a brand, is in a fantastic position, thanks to the journalism and thanks to the assets we have which are very strong financially,” says Andrew Miller.
“We have a strong handle on our cost base, growing journalism, growing revenues, reducing losses, strong asset performance; as a cocktail, I can’t ask for more as a chief executive,” he adds.
