Sorrell says governments could subsidise loss-making newspapers

Sir Martin Sorrell, chief executive of WPP Group, believes governments could have to decide whether to subsidise loss-making newspapers such as the Guardian.

In an interview with Arabian Business, Sorrell said that governments “probably have to decide” whether consolidation and media titles going out of business “is the right thing from an editorial point of view”.

He added: “The electorate is going to say whether they believe there should be more subsidies for traditional media.

“For example, the Guardian newspaper loses money. In the long-term it can’t go on losing money. So let us say, hypothetically, that the Guardian could not continue to lose money after a certain period, then you would have to think about whether the government should subsidise it, or whether you give tax advantages to people to subsidise it. There are plenty of ways to skin that particular cow.”

He also drew parallels with the state bail-out of banks, saying “it’s the same issue, whether the state should intervene in certain issues to help preserve a service. That is what every piece of welfare economics is based on”.

The Guardian‘s owner, Guardian Media group, reported a pre-tax loss of £89.8 million for the year to the end of March 2009, with turnover down by £96.7 million to £405.4 million.

GMG subsidiary Guardian News & Media, publisher of the Guardian, reported a £57 million pre-tax loss for the same period, although GNM said that the Guardian and sister paper the Observer “continued to perform well” during the year.

The latest ABC figures show the Guardian has a circulation of around 300,500 copies, following a year on year decline of 12.4%.