Guardian Media Group plc

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Guardian Media Group plc

75 Farringdon Road
London EC1M 3JY
United Kingdom
Telephone: +44 20 7278-2332
Fax: +44 20 7242-0679
Web site: http://www.gmgplc.co.uk

Private Company
Incorporated: 1821
Employees: 3,102
Sales: £440 million ($627.6 million) (2001)
NAIC: 511110 Newspaper Publishers; 511120 Periodical Publishers

Guardian Media Group plc (GMG) is an anomaly in the British media market. Wholly-owned by a private foundation, the Scott Trust, GMG remains protected from the pressures of commercial—and political—interests of its publicly listed rivals. GMG’s not-for-profit basis enables the company to plow profits back into the company, which has in turn allowed the company to extend beyond its core newspaper publishing operations to embrace a variety of media, including radio, Internet, and television. GMG’s National Newspaper Division publishes its flagship daily, the Guardian, as well the Observer —the world’s oldest Sunday newspaper. The company also publishes a European edition of the Guardian and the Money Observer. GMG’s Regional Newspaper Division publishes the Manchester Evening Post and is co-publisher for the Manchester edition of the free daily, Metro. GMG has stepped up its holdings in its Radio Division, which includes the Real Radio network of regional radio stations in South Wales, South and West Yorkshire, and Central Scotland; a 39.2 percent share of Radio Investments Ltd., which owns 24 local radio stations; and Jazz FM, which broadcasts in London and the northwest of England. GMG’s 48 percent stake in Trader Media Group gives it a portfolio of magazine titles, including Auto Trader, Top Marques, Bike Trader, and Truck Trader. The company has also extended itself to the Internet, notably with the brand name and web site Guardian Unlimited, as well as with an 89.6 percent holding in workthing.com, an employment recruitment and advertising site. Other holdings of GMG include an 86 percent share of M&G Media, which publishes the South African newspaper Mail & Guardian, and a 50 percent share in Trafford Park Printers, which prints the Guardian, the Manchester Evening News, and other newspapers. GMG posted sales of £456 million in 2001. The company is led by chief executive Bob Phillis.

Liberal Newspaper in the 1820s

GMG’s history dates back to the 1820s, when John Edward Taylor launched a weekly newspaper in Manchester, England. The paper was to remain in the Taylor family’s hands until the beginning of the 20th century. In 1855, after the repeal of the Stamp Duty, also known as the Tax on Knowledge, the newspaper became a daily, adopting a morning publishing schedule. In the 1870s, the Taylor family acquired an interest in another Manchester paper, the Manchester Evening News, which had been launched in the late 1860s.

The arrival of CP Scott as editor of the Manchester Guardian in 1872 marked a milestone in the company’s history. Just 26 years old at the time of his appointment, Scott was to remain the newspaper’s editor for 57 years. Over the course of Scott’s tenure, the Guardian gained national and even international prominence. In 1907, Scott purchased the Manchester Guardian from the Taylor family, pledging to maintain the newspaper independence.

CP Scott’s son, Edward Taylor Scott, took over as editor of the Manchester Guardian in 1929. Another son, John Russell, had purchased the Manchester Evening News in 1924, giving the Scott family control of both newspapers. In the 1930s, however, the Scott family’s newspaper holdings were faced with crippling death taxes, which threatened to fold the company. Instead, the family created the Scott Trust in 1936, which took over ownership of the newspapers. The terms of the trust also guaranteed the Guardian’s editorial, commercial, and political interests. All profits made by the newspaper were plowed back into the company, buffering the group against potential downturns in its fortunes.

In the 1940s and 1950s, the Manchester Guardian began its shift from regional newspaper to becoming on the United Kingdom’s most prominent national newspapers. As part of this drive, the newspaper began printing news on its first page, which had traditionally held classified advertising. In 1959, the newspaper’s name was changed to reflect its new national orientation, becoming known simply as the Guardian.

The Guardian gradually shifted its operations to London, which became the site of the paper’s printing press in 1961. Yet the company maintained its ties with Manchester, and in 1961 it bought up rival evening newspaper The Evening Chronicle. This paper was merged into the Manchester Evening News, which added “Chronicle” to its name and claimed the number one spot among the United Kingdom’s provincial newspapers.

Media Expansion in the 1970s

While the company remained committed to Manchester, the Guardian newspaper operations increasingly focused on London; when the paper’s editorial staff moved to London, that city became the daily’s headquarters. In 1967, the company, then called the Manchester Guardian and Evening News Ltd., reorganized its operations to reflect its dual focus. In that year the company created two subsidiaries, Guardian Newspapers Ltd. and Manchester Evening News Ltd.

The company then began to look beyond newspaper publishing for entry into other media categories. One of its first moves in this direction was a purchase of a minority stake in Anglia Television in 1968. In 1969, the company added radio, acquiring 10 percent of Piccadilly Radio owners Greater Manchester Independent Radio Ltd. By then, GMG had a new name, having christened itself the Guardian and Manchester Evening News (GMEN) Ltd.

GMEN added a number of new newspaper titles to its range, including the Rochdale Observer and other local newspapers in 1974, and then the Stockport Advertiser group of local papers in 1977. Two years later, the company added another group of local newspapers, published under the Surrey Advertiser name. Then, in 1981, GMEN bundled its Stockport Advertiser titles into a 50-50 joint-venture with the Stock Express newspaper group, forming Lancashire and Cheshire County Newspapers (LCCN) Ltd. GMEN acquired full control of the LCCN joint-venture in 1985.

With stakes in radio and television bolstering its growing newspaper holdings, GMEN turned to the magazine segment, acquiring, in 1982, the automobile sales magazine Northwest Automart. That magazine format was expanded in 1985 into a new magazine, Northwest Jobs Mart. In 1987, the group acquired two more titles in the Automart series, in Bristol and the North East, and launched a third for the Scottish market. The company then changed the name of the Automart series to Auto Trader. By the end of the decade, GMEN controlled nine Auto Trader publications.

The launch of a new rival, the Independent, in the mid-1980s forced the Guardian to respond by revamping its format in 1988. GMEN also prepared a European edition of its flagship newspaper, printed in Europe and available as a day-of-issue daily. In that year, GMEN reorganized its operations again, restructuring into four new divisions: Guardian, Greater Manchester, Surrey, and Auto Trader.

Independent Media Group for the 21st Century

GMEN’s further media interests had remained relatively limited as it concentrated on building up its print operations in the 1980s. At the end of the decade, however, the group made a new stab at the television market, this time on the production side, acquiring a stake in Broadcast Communications in 1989. The following year, GMEN raised its position in Broadcast Communications to majority control. In that year, also, the company added a new newspaper title, the Accrington Observer, and bought into a 50-50 printing partnership, Trafford Park Printing, which printed the Daily Telegraph, and took over printing of the Guardian.

In 1991, GMEN stepped up its interests in television, joining the GMTV partnership and acquiring an independent television franchise. The company also stepped up its radio holdings, taking 20 percent of Trans World Communications plc.

A major purchase for the company came in 1993, when GMEN snapped up the Observer, the world’s oldest Sunday newspaper, for £27 million in 1993. First published in 1791, the Observer had fallen on hard times since the mid-1980s, when its circulation had topped 800,000. As part of the Lonrho empire, led by Tiny Rowland, since 1981 the Observer —and its reputation—had suffered greatly during Rowland’s efforts to gain control of the Harrod’s department store group. With its readership slipping to a low of 500,000, the Observer had been faced with closure before GMEN stepped in to rescue the venerable newspaper. Added to GMEN’s list of publications, the Observer nonetheless maintained its editorial independence.

Company Perspectives:

Guardian Media Group plc is a U.K. media business with interests in national newspapers, regional and local newspapers, magazines and radio. The company is wholly-owned by the Scott Trust. The Scott Trust was created in 1936 to secure the financial and editorial independence of the Guardian in perpetuity.

GMEN changed its name to Guardian Media Group (GMG) to reflect its broadening media interests. In 1994, GMG acquired a number of new regional newspapers, including the Reading Evening Post, through its purchase of Thames Valley Newspapers, formerly part of the Thomson Corporation. In that year, the company sold off its radio station stakes to growing media group EMAP. The company also spun-off its Auto Trader publications into a new subsidiary called Auto Trader National Magazines, sparking rumors that the company might attempt to float this and other interests as part of a new public company. The following year, GMG purchased a small stake in Golden Rose Communications, which owned radio station Jazz FM. The company also bought a controlling share of South African group, M&G Media, which published the Mail & Guardian daily newspaper.

In the mid-1990s, GMG took its first steps into the growing Internet media race, forming a new subsidiary, Guardian Unlimited, and launching web sites for both the Guardian and Auto Trader. These were joined the following year by a new site for the Manchester Evening News, Manchester Online. By 2000, Guardian Unlimited had launched more than ten web sites. By then, the company had launched a new daily, the free morning commuter paper MetroNews.

GMG sold off its stake in GMTV in 2000, turning instead toward boosting its radio interests—the company acquired Scot FM in 2001, then took control of Jazz FM in 2002. GMG also placed its Auto Trader subsidiary into a new joint-venture with BC Partners, an investment group which controlled, through Hurst Publishing, its own range of Auto Trader titles. The new company, owned at 52 percent by BC Partners and called Trader Media Group, now controlled more than 70 titles in the United Kingdom and elsewhere in Europe. GMG continued to shuffle its other assets, including combining its Broadcast Communications television production subsidiary with the U.K. operations of fast-rising Endemol Productions to form GM Endemol in 1998. In 2000, however, Endemol paid GMG £26 million to acquire GM Endemol, as GMG decided to focus its spending on its radio, newspaper, and Internet holdings.

By then, GMG had a new radio success, with the launch of Real Radio in South Wales in 2000. The company acquired Scot FM in 2001, paying the Wireless Group more than £ 25 million, with the intention of renaming that station and placing it under the Real Radio banner. These moves fit in with GMG’s strategy to build a nationwide network of regionally operating radio stations. In keeping with that ambition, GMG restructured its holdings again, forming the National Newspaper, Regional Newspaper, and Radio Divisions, in addition to the Trader Media divisions. The company was then awarded a new regional license, in Yorkshire, in 2001.

GMG launched a bid for a full takeover of Jazz FM in 2002. Although the bid initially met with resistance, Jazz FM’s shareholders eventually agreed to a purchase price of £ 41 million. The move was seen as strong defensive ploy by GMG in the face of coming legislation that proposed to deregulate the U.K. media scene—enabling larger media groups and foreign media groups to gain ownership control of large parts of the U.K. media landscapes. While some observers cautioned that deregulation might lead to the U.K. media market falling into the hands of just a small number of large groups, GMG itself guaranteed its independence by the Scott Trust ownership foundation, was able to look forward to expanding its own media empire in the early years of the new century.

Principal Subsidiaries

Channel M Television Ltd.; GMG Radio Holdings Ltd.; Greater Manchester Newspapers Ltd.; M & G Media Ltd.; Guardian Newspapers Ltd.; Guardian Press Centre Ltd.; Real Radio Ltd.; Star Newspapers (Camberley) Ltd.; Surrey and Berkshire Newspapers Ltd.; Workthing Ltd. (89.6%); Trafford Park Printers (50%).

Principal Divisions

GMG Radio Holdings; Regional Newspaper Division; National Newspaper Division; Workthing.

Principal Competitors

Daily Mail and General Trust plc; Trinity Mirror plc; Associated Newspapers Ltd.; News International plc; Guardian Media Group plc; Independent News and Media UK Ltd.; Times Newspapers Ltd.; Telegraph Group Ltd.; Harmsworth Quays Ltd.; Johnston Press plc; SMG plc; Economist Newspaper Ltd.; Financial Times Ltd.; Express Newspapers PLC; Smurfit UK Ltd.; D C Thomson and Co Ltd.; West Ferry Printers Ltd.; Harcourt Publishers Ltd.; Greater Manchester Newspapers Ltd.; Guiton Group Ltd.

Key Dates:

1821:: John Edward Taylor begins publishing the Manchester Guardian as a weekly newspaper.
1855:: Manchester Guardian becomes a daily paper after repeal of the Stamp tax.
1872:: CP Scott is named editor of Manchester Guardian, a position he holds for 57 years.
1907:: Scott buys Manchester Guardian.
1924:: Scott family acquires the Manchester Evening News, founded in 1868.
1936:: Creation of the Scott Trust, which takes full ownership control of the Manchester Guardian and Evening News.
1959:: Manchester Guardian’s name is shortened to the Guardian to reflect the newspaper’s national scope.
1961:: Printing of the Guardian is moved to London, followed by the editorial headquarters in 1964; company acquires the Evening Chronicle and combines it with the Manchester Evening News.
1968:: Company acquires stake in Anglia Television as a first step into becoming a broader media group.
1972:: Company changes its name to Guardian and Manchester Evening News Limited (GMEN).
1974:: GMEN begins acquisitions of local and regional newspapers, beginning with purchase of the Rochdale Observer.
1982:: GMEN acquires Northwest Automart, later renamed Auto Trader.
1989:: GMEN acquires stake in Broadcast Communications, then majority control the following year.
1993:: GMEN acquires the Observer, the oldest Sunday newspaper in the world; changes name to Guardian Media Group (GMG).
2000:: GMG spins off Auto Trader division into Trader Media Group and sells its share in GMG Endemol to focus on radio station holdings.
2001:: GMG acquires Scot FM and a regional radio license in Yorkshire.