Media

Alan Rusbridger's Guardian is on a suicide mission

Alan Rusbridger's disciples consider him a visionary, but the former Guardian editor oversaw enormous losses, a huge fall in circulation and a ruinous faith in free content. Now, as the Guardian announces Alan Rusbridger will not take up the chairmanship of the Scott Trust, Michael Wolff looks at how his dream of making the Guardian a major digital player in the US has drained its finite resources
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Andre Carrilho

One of Alan Rusbridger's last acts as the Guardian's editor and leader was to leave it with a yearly loss of £45 million - the largest loss for any newspaper anywhere in the world last year. This comes on the heels of many years of consecutive losses such that Rusbridger may have lost more money in the newspaper business than anyone in history - save only for Rupert Murdoch who has quixotically supported several favourite newspaper money pits.

Curiously, Murdoch represents for Rusbridger a kind of evil incarnate for the agendas his papers have pursued. But, in fact, both men have run their papers in similar ways. Murdoch has used the proceeds from his myriad other businesses to fund deep losses, particularly at the Times and at the New York Post. Rusbridger has used the proceeds from a trust set up by the Guardian's owners in the Thirties, the Scott family, to finance the dire deficits at the Guardian. Arguably, Rusbridger and Murdoch have similar sorts of motivations: both men have used money-losing papers in pursuit of political beliefs - and in so doing, as each would argue about the other, placed politics above journalism.

Rupert MurdochPA Photos

But even Murdoch's losses have their limit. His newspapers, and their costs, were sequestered from the rest of his holdings in a spin-off in 2013, which has brought greater accountability and austerity to his papers. Quite the opposite has happened at the Guardian, where, under Rusbridger, the Scott Trust - administering the Guardian Media Group with discipline and savviness in contrast to the paper itself - has been largely liquidated in the past few years, so that its assets, rather than just its income, could become available to fund the paper's operational costs.

The justification for what otherwise might seem like fiduciary footlooseness, if not irresponsibility, was that, in a time of radical transformation in the news business, the paper needed this flexibility. It needed to spend for an unknown future. It needed to be able to gamble on this future. It needed to accept that there might not be a future. But most of all it needed to depend on the sagacity of Alan Rusbridger, who suggested he had a special and all-knowing relationship with the future.

For almost 15 years, I've had a seat at the sidelines of Rusbridger's ambitions, as "friend of the paper", as American confidant without portfolio, as, at times, favourite American and favourite media writer, as a journalist covering the Guardian (and being leaked to by it), as a contributor to it, and, ultimately, in the kind of falling out that often happens with Guardian friends, a dumbfounded observer of it.

It is possible that its recent outsized loss, announced earlier this year as an even steeper £50m, will mark a coda to the Rusbridger years - beginning a retreat to a new sort of responsibility under Kath Viner, who took over the editorship last summer. But Rusbridger, who retired after 20 years as editor, has now risen to the chairmanship of the Scott Trust itself, putting the fox truly in the hen house. From Rusbridger's view, the Trust is rich enough to support his grand experiment in remaking both the news business and supporting a progressive news organisation. For Rusbridger, this transformation, together with the Scott Trust's deep pockets, creates an opportunity to put the Guardian and the Guardian's views in a dominant position however the future of the industry turns out.

But now the sheer size and starkness of the loss, which, on its present course could exhaust the Trust in as little as five years, perhaps frames the question more clearly than business issues are usually presented in the Guardian's always very fluid discussions of profits versus identity, truth, virtue and principle: does the paper's desperate financial performance represent a) a necessary, aggressive investment to meet the demands of a transforming industry that will shortly begin to pay off? b) a righteous existential leap, in which a bet on unknown future developments overrides a stricter view of business consequences? c) an ego trip and spectacular folly?

Almost everybody in the Guardian "family" has, at various times, while publicly subscribing to A, privately worried that it was B or, worse, C. Indeed, an ability to mediate among these separate realities with some nimbleness and Orwellian speak has rather become part of the Guardian's essential character.

The Guardian's office in King's PlaceNicholas Bailey/REX/Shutterstock

At the same time, egomania or existential leap are not necessarily without their own logic. For more than a decade Rusbridger has held two key assumptions. Firstly, that the Guardian, that most British of British left-wing institutions, was finished in the UK - New Labour and Conservative dominance had altered the cultural equation on which the Guardian built its reliable 400,000-500,000 daily circulation, now south of 200,000. (What's more, it would lose its lucrative public sector jobs advertising business in the credit crunch.) Secondly, that the free internet could make the Guardian the dominant left-leaning English language news voice, with its primary growth in the United States.

In some sense, Rusbridger was merely articulating the situation faced by all newspapers, but in more immediate, more apocalyptic terms. In essence, the business that it was in would, within a few years, be gone. Therefore its future would lie in a new business, not only in which it had no real experience, but in which there were yet no success models. This would also mean catering to an audience in a place in which it had no prior relationship, Rusbridger and the Guardian being foreigners - and rather oddballs - in the US.

Certainly, without the Scott Trust it could not even have contemplated this radical overhaul. It would, more prosaically, have had to plan for a gradual adaptation to straitened circumstances, becoming a more efficient and focused enterprise. But by spending down the Scott Trust, it could, even in a collapsing industry, unleash extraordinary ambitions - in the past year alone it has hired almost 500 new employees.

This was a role Rusbridger seemed made for. To pursue such an untested and even hail-Mary strategy required an ability and authority to transcend more ordinary business worries. Not everyone is allowed to bet the farm. But Rusbridger, with his seemingly personal certainty, his Delphic bearing - quite a Chance-the-Gardener countenance in which he most often and in most circumstances seems content to say nothing at all - both inspired and intimidated, creating not just a cult-like following, but allowing him to take full advantage of an admiring board.

In this effort to wholly remake the enterprise, to turn the Guardian into a global media brand, Rusbridger brought two particular counterintuitive attributes: a complete lack of interest in revenue and relative contempt for its most important market, the US.

Rusbridger had risen at the Guardian through the years when it not only had the support and fail-safe mechanism of the Scott Trust, but guaranteed operating income from public-service advertising. Nobody had to sell anything. If selling had been part of his job description, Rusbridger, who never met a pound he had to earn that didn't disgust him in some visceral way, would have been disqualified long ago. Indeed, his early enthusiasm for the internet - and a continuing principle of faith for him - was that it was free. The corollary, that free had to be supported by advertising, was one of those cause and effects that it was Rusbridger's unique gift to be able to wholly ignore.

As for the US, Rusbridger was quite unlike most Brits who develop an enthusiasm for America in that he had no enthusiasm for Americans, all of whom he seemed to regard as either hopeless children or hapless vulgarians. His rare presence in the US represented a comical fish-out-of-water tale but also, a disengagement so profound that it was easy to find yourself at lunch yelling in his face. When it came to heavily investing in his American operation he staffed its management largely with Brits - mostly notably Janine Gibson, one of his factotums, who herself had rarely even visited the US.

Read more: As the newspaper industry shrinks by 8 per cent a year, how is the Guardian coping?

In short order, two structural problems emerged. In the first, having made a personal and moral commitment to free - both as a political principle and as a way to advance the scope of the Guardian's message - he was confronted, and confounded, by the reality that he had no way to monetise his business. Even if the Guardian had been enthusiastic about selling advertising, instead of resistant to it in almost every way, advertising as a digital media business model was, as prices tanked, a poor option. Digital advertising was a volume business, which largely depended on buying traffic for more than you could ever hope to make on it. Emboldened by the way, after so many years of marginal circulation, the Guardian was now spreading the left-wing message, Rusbridger seemed incapable of reversing himself and taking advantage of an actual, if still modest, subscription revenue business buoying other brand-name papers.

It was the Buzzfeed model of huge, if unprofitable, traffic growth, which the Guardian tried to emulate. (Gibson, having lost the race to replace Rusbridger as editor in one of the few instances where his wishes were ignored, now runs Buzzfeed's operation in the UK.) But while Buzzfeed financed its deficits through venture capital investors who hoped for a sale to a buyer who might continue to finance it until some future reckoning, the Guardian, financing itself from its own coffers, rather missed the point of escaping before the reckoning.

The second problem was its failure to create an American product - actually its seeming determination not to create one. The US Guardian with its large and ever-growing staff produced the thinnest skin over the British Guardian. Much of what a US audience sees is quite remote from if not incomprehensible to it - skirmishing between Boris Johnson and Theresa May, various NHS crises, Liverpool football scores. In part this was stubbornness of a high order - the US should bend its interest to the Guardian and not the other way around. And in part it highlights the fundamental conflicts of the effort: a left point of view does not, in the end, unite profound differences in cultural outlook.

It was this effort to find a unifying point of interest that led to the third leg, along with the free internet and the American launch, of the Guardian's expensive expansion and future dreams: Edward Snowden.

In this, Rusbridger and the Guardian arguably had invented a new news model: a kind of ultimate advance of free and cooperative journalism and exceptionally effective brand building - which, alas, does not make very much money. Several years into its investigation of allegations of voicemail hacking at News Of The World - which had achieved little traction - Rusbridger in 2009 invited the New York Times, which could circumvent the more stringent UK libel and privacy laws, to pursue the hacking charges using the Guardian's research. Not only did this revive the story, but it provided the framework of a model that the Guardian would use for both the Wikileaks and Snowden revelations.

It was a curious solution to both the Guardian's still limited footprint and its own brand issues as a strictly British left-wing newspaper. On its own, its bias was clear - and discreditable. (Indeed, its Murdoch investigation would rest on a singular piece of bad reporting, the untrue allegation that Murdoch reporters had deleted voicemails on murder victim Milly Dowler's phone. As for Wikileaks and Julian Assange, even the Guardian would soon distance itself from its disreputable source.) But partnered with the Washington Post and New York Times, the Guardian recast its own bona fides and credibility.

The Snowden story, which won the Guardiana Pulitzer Prize, became the realisation of Rusbridger's dream of a brand-building, left-wing-uniting, global and viral story. Indeed, Rusbridger's Guardian in many ways went into the Snowden business, and they became complementary brands. On this basis, arguably, they broke into US consciousness and the US market.

The problem was that Snowden couldn't be monetised. This was partly because, given its free principles, the Guardian could not use Snowden to capitalise on a subscription opportunity. And partly because Snowden did not particularly help build presence and traffic for the non-political lifestyle aspects - food, travel, children, culture, all of which generate much of a news site's premium advertising revenue - at the Guardian. Still, just as Murdoch might argue about his expensive political campaigns, to Rusbridger it was worth it. Snowden was proof of the power of a free global digital news brand.

Rusbridger is said to be unwavering in his belief that his assumptions are correct: the Guardian's UK business is dying, the free internet is among the most extraordinary opportunities ever presented to the news business, and that becoming the outlet for ever-greater access to government secrets and a partner with other leading news organisations will help build the dominant left news brand. The fact that this business plan, or non-business plan, produces no real revenue, and demands vast investment, is just part of current digital economics - in which, with its lack of present accountability, Rusbridger has become a true believer.

The problem, to Rusbridger's mind, is quite a technical one. The conversion of most of the Scott Trust's assets into cash - around £800m - was supposed to provide enough interest income every year to allow the Guardian to lose a considerable amount of money without much harming the Trust. The problem is not just that building a global digital news brand has cost much more money than anyone anticipated, but that, at zero interest rates, the Trust can hardly support itself, much less Rusbridger's dreams.

There is perhaps a way to streamline and refocus the Guardian's business, cutting deep into its 1,900 strong staff [the Guardian has since announced 250 job cuts], and - with sheepish rationale - instituting a pay wall to raise some revenue (the Guardian is now calling this a membership option). But that's a different proposition and a different Guardian.

As for Rusbridger's Guardian, in an age of low interest rates and costly internet economics, that Guardian is either a thing of the past or on a suicide mission.