The Observer was born into interesting times. Its first edition was published on 4 December 1791, when Mozart was still alive – he died the following day – and George Washington was preparing his first State of the Union speech for the newly United States. The French Revolution was under way. In one early scoop an Observer reporter, Vincent Dowling, not only witnessed the British prime minister, Spencer Perceval, being shot dead in the lobby of the House of Commons but helped tackle the culprit, grabbing a loaded pistol from the murderer’s pocket. A century later it would become the first national paper to have a female editor, Rachel Beer, whose skill as an interviewer helped solve the Dreyfus affair. More than most, it can claim to have been the first draft of history.
The future of the world’s first and longest-running Sunday newspaper is now in doubt, however. Tortoise Media has approached the Guardian Media Group with an offer to buy the Observer. In recent weeks, two of Britain’s oldest publications have been sold – or are being prepared for sale – to two of its newest media companies. On the 10th September Paul Marshall, who has put an estimated £34.5 million into GB News and who owns UnHerd – acquired The Spectator for £100m (rumoured to be £20m more than Rupert Murdoch was willing to pay). As has been happening elsewhere (namely the United States with Mark Benioff‘s purchase of Time and Jeff Bezos‘s purchase of the Washington Post), some of the world’s richest people are remaking themselves as press barons. Will the new media moguls save Britain’s oldest publications – or change them beyond recognition?
In July 1997, shortly after Labour returned to power for the first time in 23 years, the equities traders Paul Marshall and Ian Wace launched a hedge fund with £50m from friends, family and the billionaire investor George Soros. Just over six months later, in February 1998, Paul Ruddock and Steve Heinz launched their own fund, which they named after Lansdowne Road, the street in Holland Park (a small, prodigiously expensive area of West London).
These upstart hedge funds grew to manage tens of billions of pounds worth of assets. Marshall Wace has been particularly successful, using algorithmic trading strategies to become one of the largest hedge funds in the world.
Lansdowne and Marshall Wace could be said to represent two different speeds of moneymaking. Marshall Wace is disruptive and unconventional; Lansdowne takes longer positions and a cerebral approach. The Financial Times once compared the atmosphere inside Lansdowne’s offices to a library. This reflects the personalities of the men who founded them. Sir Paul Marshall is an evangelical Christian and a passionate Brexiteer who opposes “woke capitalism”; Sir Paul Ruddock, who retired as Lansdowne’s CEO in 2013 but remains a partner, is a former chair of the Victoria and Albert Museum and the Oxford University endowment fund, not only a knight of the realm but a chevalier of France’s order of arts and letters.
This may be reflected, too, in where their money is going. Marshall has a long-held interest in politics: he was for many years associated with the Liberal Democrats, helping to write and edit the influential Orange Book of policy essays and standing (unsuccessfully) in the 1987 general election. He split from the party over Europe, however, and donated £100,000 to the Leave campaign. More recently he has spent heavily in those parts of the British media that reflect his strongly held – and to some, controversial – values. As we know, he has invested into GB News, whose flagship presenter is Nigel Farage; he owns the political comment website Unherd; and in the Spectator he has acquired a weekly magazine of politics and culture, considered the right’s foil to the New Statesman.
Lansdowne Partners, meanwhile, was the biggest investor in the most recent funding round for the “slow news” organisation Tortoise Media, now in talks to buy the Observer. (Lansdowne is the third largest shareholder behind the Tortoise CEO, James Harding, and the Canadian media tycoon David Thompson). Tortoise’s editorial line is perhaps best described as progressive and analytical: it has been successful in delivering high-profile investigations but refrains from the spiky comment in which Unherd specialises. This approach has helped it to grow its podcasts and newsletters, at a steady pace.
Both buyers have come with the promise of investment. Marshall has said he will prioritise “investing in journalism, talent and the latest technology”, while Tortoise Media has committed to putting £25m into the Observer over the next five years, on top of the paper’s running costs. Neither acquisition has passed smoothly, however.
Last year, Redbird IMI, an investment vehicle backed by the vice-president of the United Arab Emirates, Mansour bin Zayed Al Nahyan, attempted to acquire The Telegraph Media Group, to which the Spectator belonged. Former chancellors George Osborne and Nadhim Zahawi both advised the Emiratis in their bid. But in March, following campaigning by the Telegraph and Spectator against the deal, the Conservatives brought a law banning foreign states from owning direct stakes in British newspapers. The United Arab Emirates were forced to abandon their bid. And now, the Spectator has been sold separately to the Daily Telegraph and the Telegraph on Sunday. Rumour has it that Marshall is still in the market for the Spectator’s sister titles.
An hour after the deal was completed, Andrew Neil, who had been the Spectator’s chairman since 2008, resigned in a letter in which he appeared to question the new owner’s “reverence for editorial independence”; Neil had been the chair of Marshall-backed GB News at launch but left after just eight months, having differed with managers and the board over the channel’s editorial direction.
At the Observer, meanwhile, it is the paper’s workforce who are uncomfortable with new ownership. On Wednesday (18 Sep) a meeting of 250 Guardian and Observer journalists, convened by the group’s union chapel, voted unanimously to reject the putative sale to Tortoise.
Among the disputed elements is the fact that no-one can say exactly how many people count as Observer employees, because most, if not all, are on contracts with Guardian Media Group. It is thought that 70 journalists will be affected, and it is not hard to see why they are resistant to the idea of leaving a group backed by a £1.25bn asset pile, in which they are strongly unionised and receive some of the best worker protections and salaries in the industry. The Guardian does not, as a rule, make compulsory redundancies. A cynic might ask whether the plan to sell the Observer is at least partly a plan to off-roll – in the grim parlance of the HR department – a group of well-paid, longstanding employees.
The Observer has long been an awkward property for the Guardian Media Group, however. Every Saturday evening, one of the world’s leading news websites abruptly changes character as pieces commissioned by another editor, for another publication, are published. There is often duplication – the same film or book may be reviewed, or columnists may opine on the same news event.
This is not the first time the Guardian has attempted to decouple from the Observer, which it acquired in 1993 from the businessman “Tiny” Rowland Fuhrhop. In 2009, as global recession threatened print titles everywhere, the Guardian looked to close or sell the paper but was rebuffed by a campaign led by Press Gazette.
The Guardian’s finances show an organisation that is clearly moving away from the business of selling print newspapers in the UK. Its most recent accounts show a rise in digital reader revenue, which increased by £5.8m (or 7.6 per cent) from 2022 to 2023, while print reader revenue fell by £2.8m (or 3.9 per cent) and advertising declined by £2.4m (or 3.3 per cent) in the same year. Revenues from the UK are falling and revenues from the US and Australasia are rising. The company clearly sees its direction of travel as towards a reader-funded digital news organisation that has its origins in the UK but is not limited to this country.
The group’s accounts also show sharply rising staff costs, up 16.5 per cent from £131m in 2022 to £152.6m in 2023. We mustn’t ignore the small but juicy chunk of executive pay that contributed to this (Guardian editor Kath Viner’s pay rose almost 30 per cent, to a total of £562,000, in 2023) but the main cost is the group’s headcount of 1,241 permanent and fixed term employees (as of a 2023 report).
Tortoise Media’s finances are also worth a look: the company launched in 2019 and appears to have made losses of around £23m since then. The National Union of Journalists, in its statement opposing the sale, called Tortoise “a relatively small business with scant resources to withstand any headwinds”, but this isn’t entirely true. It is edited by James Harding, the former editor of the Times and director of BBC News, who owns just under a third of the shares, and backed, like Unherd, by deep pockets. David Thompson – chair of Thompson Reuters and with a net estimated by Bloomberg at $12.4 billion – could afford to underwrite Tortoise’s losses for decades.
The Observer could, in the right hands, flourish. Readers of print titles seem to prefer a weekly cadence, and the quality weekly market is one area of journalism that has flourished. The New Statesman, the Economist and other weeklies with strong digital operations have hit multi-decade highs in readership in recent years. A weekly publication creates space for in-depth reporting and analysis, without overwhelming the reader. The Financial Times Weekend sells more than twice as many copies as any of the paper’s weekday editions, and the Daily Mail‘s Saturday edition is the only newspaper in Britain that still sells over a million copies. Both papers also have much larger readerships online; the Observer has, as yet, no digital profile beyond the Guardian website.
Harding is not the first media startup founder to consider this opportunity. The journalist Joshi Herrmann wrote this week that he had sought investors to buy the Observer in 2020, but gave up and founded Mill Media – now another fast-growing media startup, which has been highly successful in reviving local journalism through email newsletters. It may well be that the paper’s future is brighter outside the Guardian, even if its journalists disagree.
The buying up of legacy media by new entrants is part of a pattern repeated elsewhere around the world. It has happened to a much greater extent in the US, where the Washington Post, the Los Angeles Times, the Atlantic and Time magazine are among the publications bought by wealthy owners from outside the news industry.
In some cases this has been highly successful. The media has long been a difficult business in which to make money, and its proprietors have often valued the political and cultural power of a publication over its revenues. This is doubtless the case for Paul Marshall, for whom the Spectator’s profits (about £10m over the past ten years) will be trivial; the 26 UK partners at Marshall Wace shared profits of £538m last year alone. Wealthy private owners are sometimes more capable of supporting long-term goals than shareholders in a public company. But these sales have come with their own teething problems too: at the Washington Post, for example, a row over publisher and CEO Will Lewis’s journalistic history plunged the title into a PR crisis.
As a new generation of media barons buys up some of the bastions of the legacy media, it is vital that we ask what these people really represent, and whether they will keep alive the industry of speaking truth to power. As we have seen from Elon Musk’s takeover of Twitter and Donald Trump’s attempts to grow his own echo chamber, the media is far from waning in power – to some, it has never been more valuable. It is also crying out for investment. Whether you buy a paper or not, the outcomes of these bidding wars will affect us all.
