Guardian loses 24m on investment hedge
NEWSPAPER publisher Guardian Media Group (GMG) has caused a storm by admitting it lost £24m on hedging against currency movements last year, as the future of its Observer Sunday newspaper continues to hang in the balance.
GMG hedged its £200m investment portfolio, which is heavily weighted towards funds denominated in other currencies, against an appreciation in the value of sterling, but took a hit after the pound grew steadily weaker against the dollar.
The group is adamant that the £24m is purely a “paper loss” and will not be realised, pointing out that it was sustained at the peak of the downturn over a period when investment funds all over the City were reporting huge losses. It also insists that the purpose of building up a long-term investment portfolio was to diversify risk away from the turbulent advertising market.
But the bungled call, which contributed to annual losses of almost £90m at the group, will infuriate those campaigning for the survival of the Observer, after it emerged last week that GMG is contemplating shutting down the paper to save costs in the recession.
Over 6,100 people have joined a campaign group to rescue the paper on social networking site Facebook, while almost 2,500 have signed up to follow “Save the Observer” on Twitter.
Options being considered by GMG include launching a Sunday version of the Guardian newspaper to replace the Observer, or rebranding the latter as a Thursday news magazine.
“A wide variety of different options, approaches and scenarios is being developed and will be considered,” GMG chief executive Carolyn McCall told staff last week as she outlined a three-year strategic plan to try and revive the group’s flagging revenues. She added: “It is far too early to say what its outcome will be”.
The Observer is the world’s oldest Sunday paper and was launched in 1791. It was bought in 1993 by GMG – itself owned by the Scott Trust, which was set up to ensure the long-term survival of the Guardian.