The owner of The Guardian has said it will retain a stake in the Observer as bosses try to quell a staff rebellion over plans to sell the Sunday newspaper to a loss-making media start-up.
In a note to staff on Thursday, Anna Bateson (below), chief executive of Guardian Media Group, said the Scott Trust would keep a “small” stake in the Observer if the deal goes ahead. She added: “This would be a sign of confidence in the future success of the title.”
The Guardian chief also dismissed concerns that the sale would contravene a house agreement with the National Union of Journalists (NUJ) that protects staff from compulsory redundancies. The company said the potential new owner is legally obliged to carry over the agreement as part of the transfer of staff.
The Guardian is facing an escalating backlash over the proposed deal, which would see the Observer pass from the £1.3bn Scott Trust endowment into the hands of Tortoise Media, a digital venture founded by former BBC News boss James Harding.
The NUJ has branded the plans a “betrayal” of the Scott Trust’s obligations to the Sunday paper, which was founded in 1791. It is now balloting journalists on a potential strike, and anger has reached boiling point.
In a bid to assuage these concerns, Harding last month gave a presentation to staff outlining his plans for the business. This included an ambition for the newspaper, which has been loss-making for decades, to break even in 2027. He has also set a target of 173,000 paying subscribers by 2029, up from its current circulation of 114,000.
Harding’s original pledge to invest £25m over five years has come under scrutiny, however. Under questioning he has now said he will in fact secure £20m of new capital, with a further £5m to come from future profits.
One Observer journalist brands the targets “magical thinking”, adding: “No one is convinced, literally no one.”
“It would be something that no one’s ever achieved before,” the source adds. “Sunday newspapers didn’t work as a standalone 30 years ago, let alone in the present day.”
Staff worry about the precarity of moving from the safety net of the Scott Trust to a start-up that has lost more than £16m since its launch in 2018. They have raised concerns about the possibility of disentangling the Observer from its sister paper given high levels of overlap between the titles, as well as the prospect of essentially turning the newspaper into a magazine.
Many at The Guardian express support for Harding (above), who is also a former editor of The Times, on a personal level. But this is not enough to release him from the scrutiny of his industry colleagues.
“The whole thing is being governed by this ‘good chap’ theory of British politics and society,” says one journalist. “It’s supposed to be enough that James Harding is a good chap and we should take his word for it.”
A spokesman for Tortoise said: “We have the required financing in place. We have been public about the new and existing investors who will fund our investment, who are committed for the long-term and are signed up to the principle of editorial independence. “We are confident that the investment that Tortoise brings, as well as the vision, shared values and digital experience, are in the best long-term interests of the Observer, its readers and its journalists.”
Ultimately, though, staff fury is not directed at Harding, but rather Guardian bosses.
Concerns have been raised about the links between Harding and Bateson. The pair have previously holidayed together on a £15m superyacht owned by TalkTalk tycoon Sir Charles Dunstone, as well as in the French ski resort of Val d’Isère.
Harding and Bateson have previously holidayed together on the £15m superyacht Shemara, owned by TalkTalk tycoon Sir Charles Dunstone.
The Guardian said Bateson declared her friendship with Harding, who has now hired Dan Roberts, a former Guardian journalist and colleague of Harding’s at The Financial Times, who now works for the communications adviser Brunswick, to handle his PR.
It has argued that the deal has required extensive due diligence by its boards, as well as by independent advisers.
Nevertheless, staff worry that Harding has been handed a “sweetheart” deal, particularly given the nominal price he appears to be paying for the Observer, and question why it wasn’t put out to competitive bids.
Meanwhile, they accuse bosses of taking a more aggressive approach.
“They’ve just given up on selling the deal to us,” says an editor. “Now they’re just trying to scare us and say that if the Observer stays there’s going to be pain.”
In her email this week, Bateson appeared to confirm this shift in strategy. “If the deal does not go ahead, the status quo is not an option,” she wrote, warning that there would be “difficult decisions”.
A source familiar with the deal defended it, saying: “Just because a decision is unpopular, it doesn’t mean it isn’t the right one for the future of journalism at both titles.”
For many at The Guardian, though, the proposed sale is the culmination of a wider drift in strategy for the Left-leaning newspaper.
Long-serving reporters fear the Scott Trust has moved away from its founding principles to a more commercial bent under chairman Ole Jacob Sunde, who does not have a journalistic background. Two board members with journalistic pedigree – Emily Bell and Mary Ann Sieghart – were transferred onto the junior Guardian News & Media board in 2021.
Katharine Viner, The Guardian’s editor-in-chief, sits on both boards. One insider describes her position as “completely impregnable”, adding: “Kath cannot tolerate any form of challenge to her authority”.
Some see the Observer sale as merely an attempt to get 70 employees off the company’s books to clean up the balance sheet after losing £37m last year. At the same time, The Guardian is emphasising its international reach, fuelling fears it is losing sight of its purpose.
“This is about moving away from a commitment to quality UK liberal journalism and is more about going and getting the low hanging fruit around the world, and that’s extremely concerning,” says one journalist. “I don’t think the commercial side of the business really understands the journalism anymore.”
Another senior journalist describes the Observer sale as the “last straw”, adding: “I think there’s a general feeling in the union that this is just the last in a long series of examples of how they completely undervalue their journalists and treat them with contempt.”
There could yet be a way back. Staff have drawn up a counter proposal, calling for a strategic review into the future of the Observer that would include investing in its digital presence. The NUJ has called a meeting on Friday to discuss the latest developments.
One source says: “My big concern is that this could be the opportunity to save the Observer and people are not engaging with how good it could be for the title and its journalists.
“Instead, they are fighting for something that isn’t real at The Guardian – that things stay as they are. The numbers are bad. There will be no more investment for the Observer at The Guardian, only decline and maybe even closure.”
But others have begun scrutinising their employer’s governance structure and are now calling for a more root-and-branch reform. “They’ve totally underestimated it,” says one member of staff. “It’s now not enough to stop the deal for the staff.”
So for Viner (above), who has made no public comment since the talks were first revealed, the decision to put the Observer up for sale could represent a test of courage. She has previously been criticised over a perceived failure to confront internal conflicts, such as over the reporting of trans controversies.
Viner is expected to attend a leaving party for Paul Webster, the outgoing Observer editor, at the London Welsh Centre next month. One insider suggests that if the deal is still live at that point the “acidity in the air will be enough to sour her prosecco”.
Another journalist claims the authority of Viner – a distant figure to most Guardian journalists rarely seen in the newsroom – is fatally undermined. “Regardless of whether the industrial action stops the sale, this is the end of the line for the editor.”
She previously prevailed in a power struggle with Bateson’s predecessor, Annette Thomas, who had sought greater control over spending but instead left after little over a year in the job.