Britain's Guardian Shows There's Life Beyond the News Paywall

(Bloomberg) -- Britain's Guardian has made its first operating profit in over a decade in a snub to critics who predicted the demise of any publication that gives its news away for free.

Readers have been crowding onto the liberal-leaning news organization's website to read scoops such as the Cambridge Analytica scandal and the Panama Papers tax data dump and many of them accepted to donate money to help fund further investigations, complementing ad revenue. The core business made 0.8 million pounds ($1 million) in earnings before tax, interest, tax, depreciation and amortization in 2018, preliminary figures showed.

The unusual two-pronged funding model has drawn mockery since it was introduced, condemned by some media observers as begging, naive or irresponsible. Swathes of news are still available for free online and many of the Guardian's competitors have put up digital paywalls to supplant evaporating print revenues, including Rupert Murdoch's The Times of London and global rivals like the New York Times and Washington Post.

The Financial Times recently topped 1 million paying readers a year ahead of schedule, the latest sign that larger, costlier news organizations have found a way to survive in the post-print age.

The Guardian's managers think they've found another way. The site now receives more than 655,000 monthly contributions. Editor Katharine Viner and Chief Executive Officer David Pemsel aim to get the total number of contributors to 2 million in the next three years. They have slashed costs by more than a fifth under a three-year restructuring plan and digital ad sales have grown, speeding the return to profitability, which was first reported by BBC News.

Readers are saying they want to give money to keep the Guardian open for everybody, said Viner.

“Even when everyone was making fun of us and saying it was a begging bowl or whatever, readers really got what we were talking about,” she said by phone. “Right from the beginning it showed it could have some success.”

The Guardian is owned by The Scott Trust, a 1 billion-pound endowment that ensures funding of the business to assure its independence “in perpetuity”. The Guardian's holding company still incurred a loss of 29 million pounds last year after costs such as capital expenditure, according to a statement Wednesday.

To contact the reporter on this story: Thomas Seal in London at tseal@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer

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