The Observer deal makes more sense the longer you look at it
Opinion
The sale of The Observer speaks volumes about the state of seller and buyer, old and new media, and the industry as a whole — and, indeed, how you find ways to fund reliable journalism.
By any standards, it is a tiny media deal. And why would anybody be interested in buying the world’s oldest Sunday newspaper, a loss-making publication that happens to earn most of its revenue from print in an age of digital media?
Does it matter either way why The Guardian would want to sell The Observer, which it has owned for the past 31 years, or why a loss-making startup, Tortoise Media, founded only in 2019, would want to pay good money — however modest — for such an ancient artefact?
Actually, it is a fascinating development that speaks volumes about the state of seller and buyer, old and new media and the industry as a whole — and, indeed, how you find ways to fund reliable journalism amid the oceans of dross, malice and misinformation.
Enders Analysis has an elegant description for the Guardian–Observer-Tortoise dance: “This tiny media tale has a zeitgeist and relevance all its own.”
A secondary brand
It is relatively easy to work out why The Guardian would want to sell The Observer.
The Guardian is losing money — with overall revenue falling by 2.5% to £257.8m and advertising revenue down 12.8% — at a time when costs are rising.
And while The Observer is a venerable brand with similar liberal values to its parent, it is The Guardian that is the primary brand and it has made a major transition to digital with more than 1m digital supporters, many of whom contributing voluntarily.
The Observer has made no such digital breakthrough and has almost been subsumed by the more powerful Guardian brand.
Guardian Media Group (GMG) will miss the newspaper revenue The Observer produces — but then again not that much.
GMG is wholly owned by The Scott Trust and its entire task is to ensure the values of The Guardian are not just respected but survive “in perpetuity”.
Obviously, there is no mention of The Observer, since the paper was brought under the wing of The Scott Trust when it was acquired from Tiny Rowland’s controversial Lonrho group in 1993.
As Roger Alton, a former editor of The Observer, noted this week, his old Guardian bosses viewed the paper “as being like that mad person in the attic in Jane Eyre”.
In those Alton days, The Observer had a circulation of around 400,000 a week. Now it needs a good wind behind it to keep its head above 100,000.
Different kind of beast
While it does seem to make at least crude sense for The Guardian to sell The Observer, it is much more difficult to see why a loss-making player in the digital news space would want to add to its losses, at least in the short term.
The likes of BuzzFeed, HuffPost and Vice all ran up against a brick wall in the digital news space, although Tortoise, founded by former Times editor and BBC head of news James Harding, is a very different kind of beast. The original desire to slow down the frenetic 24-hours-a-day news cycle with longer, more thoughtful reads has been augmented by the successful rise of the podcast.
The Observer has a roster of the sort of correspondents who would immediately enhance any Tortoise plan for growth.
But while you appreciate the thought and sense of purpose behind Tortoise, it is still a bloody daft name for a media outfit. The Observer would not just enhance the brand but could become the brand.
Print flagship?
But why print?
David Yelland, former Sun editor, PR man and co-star of When It Hits the Fan on BBC Radio 4, made an interesting observation in an interview for the next issue of InPublishing magazine.
No print newspapers have come into the Yelland home for years. He reads them all online. But copies of The Economist, The Spectator, The New Statesman and The New Yorker are all delivered.
Yelland didn’t mention Private Eye, but the satirical magazine is an even more dramatic example of continuing print success since it is exclusively in print.
After all, The Observer is also a weekly and it could easily become a print flagship for a growing Tortoise empire, with its geographical spread and income expanded by digital.
Backed by money
Evidence is growing that well-written weekly publications can not only protect the future of print but be profitable in their own perfectly formed niches.
The sale of The Spectator is an obvious case in point. There were more than 20 bidders for the historic title, with the auction winner, hedge fund operator Sir Paul Marshall, paying a whopping £100m.
But how can Tortoise, which could be coming close to the end of its initial £10m funding, not just afford to buy The Observer but commit to invest, according to Harding, £25m over the next five years?
The only possible explanation is that the shareholders of Tortoise are good for the money and, unlike the murky financial ownership of The Jewish Chronicle, Tortoise’s shareholders are publicly known.
They include David Thomson, who chairs legendary news and data organisation Thomson Reuters; hedge fund Lansdowne Partners; and venture capital group LocalGlobe. The company is chaired by Matthew Barzun, the US businessman who was a fundraiser for Barack Obama and ended up as US ambassador to the UK.
Nick Jones, founder of Soho House, is also a director.
Legacy media marketplace hots up
It looks as if The Observer, which began publication in 1791, may be about to receive a new lease of life in a deal that makes more sense the longer you look at it.
After that, the industry will move on to the Premier League (or at least the Championship) of media deals — as the auction for The Daily Telegraph and The Sunday Telegraph continues to hot up with news of another serious rival to Marshall for the Conservative title.
He is British-born businessman Dovid Efune, who bought The New York Sun, now a digital-only publication, after editing The Algemeiner, a paper originally published in Yiddish but now in English.
Could Efune turn out to be another case of a digital publisher looking for a print flagship?
Raymond Snoddy is a media consultant, national newspaper columnist and former presenter of NewsWatch on BBC News. He writes for The Media Leader on Wednesdays — read his column here.