Radical plan to stem losses at the Guardian newspaper

The Guardian and the Observer newspapers could soon be printed by Trinity Mirror under a radical plan hatched by senior executives to help stem the losses on the Guardian papers.

Moving the Guardian newspaper Berliner presses from its current east London site will allow Guardian Media Group (GMG) to sell the lease on the Guardian Print Centre at Stratford raising desperately needed cash.

The proposal is at an early stage but the Bureau has established GMG is in exploratory talks with Trinity Mirror. Trinity has already conducted feasibility studies to accommodate the Guardian and Observer’s Berliner presses at its Watford plant.

Selling the Guardian Press Centre and moving its presses just six years after they opened at a cost of at least £80m will raise questions over the wisdom of the huge outlay. The plan also comes as GMG faces severe financial pressure.

Guardian News & Media made a loss before tax of £43.8m last year according to the company’s most recent annual report. But senior figures fear losses could increase  this year despite Guardian journalists breaking several of 2011’s most important stories.

Cutting costs
The newspaper group is seeking to make £25m worth of savings over the next five years. Though hundreds of journalists have accepted voluntary redundancy over the past five years with more set to leave in coming weeks, unions at the paper fear managers will be forced to issue compulsory job cuts in the New Year which even senior figures believe is likely to trigger industrial action at the papers.

Allowing the Guardian to be printed at Trinity’s Watford plant, which has two presses currently idle, would be a huge boost to the quoted newspaper group. As well as the Mirror and People, Trinity also prints the Independent.

Trinity insiders are especially keen to get the Guardian business because they  recently missed out on winning a long-term contract to print 700,000 copies of Alexander Lebedev’s London free newspaper, the Evening Standard to News International.

Trinity sources fear because the Standard will be printed by Rupert Murdoch’s newspaper group, this could mean the Independent, currently printed in Watford and also owned by the colourful Russian tycoon, may also eventually be printed by News International’s new Enfield plant. An Independent spokeswoman denied there was any prospect of changing the paper’s printer.

The Guardian invested over £80m in its Berliner presses and a purpose built print centre to house them in 2005.  The scale of the investment provoked criticism by journalists at both its titles which because of their unique format have never generated external income for the group. Selling the Statford site will result in a number of printer jobs being axed.

GMG has considered other dramatic ideas to cut costs in the recent past including closing the Observer and replacing it with a Sunday version of the Guardian. This was defeated by an alliance of outraged Observer staff and celebrities.

Declining revenues
The Guardian in particular has been hit hard by a steep decline in paying newspaper readers and recruitment advertising particularly from the public sector. The paper is pinning its hopes on increasing digital revenues as it embraces ‘digital first’ publishing and broadening its brand in America.

The media group continues to be underpinned by a 50% stake in Autotrader, the used-car advertising business, it jointly owns with Apax, the private equity firm. The joint owners earlier this year ruled out a flotation or sale of the business for at least another year and opted instead to split a £100m special dividend through a refinancing mechanism.

GMG insiders are acutely aware that the long-term financial security of the Guardian depends on how proceeds from an eventual sale or flotation of Autotrader are reinvested. Especially as the media firm made a less than successful investment in a portfolio of Emap magazine titles in 2008 as part of a £675m windfall from the 50% sale of Autotrader to Apax in 2007.

The Guardian declined to comment on the possible sale of its east London print plant and move to Trinity Mirror’s Watford facility as did Trinity Mirror.