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The Guardian Media Group is in talks to sell the Observer, the world’s oldest Sunday newspaper, to online start-up Tortoise Media.
In a memo to staff on Tuesday, the GMG said it was in negotiations after being approached by Tortoise with an offer for the 233-year-old title.
The terms were not disclosed although those close to the deal said it would not involve a “large” transfer of cash, with instead a commitment for a significant investment that would safeguard the paper’s future, which is the sister title to the Guardian.
In a statement, Tortoise said it would invest more than £25mn over the next five years, and committed to continuing to publish the Observer on a Sunday. About 70 staff work directly for the Observer, who will now be in consultations over their future.
Anna Bateson, GMG chief executive, said a sale would “provide a chance to build the Observer’s future position with a significant investment and allow the Guardian to focus on its growth strategy to be more global, more digital and more reader-funded”.
Tortoise was launched in 2019 by James Harding, former BBC news director and editor of The Times newspaper, and Matthew Barzun, former US ambassador to the UK.
Tortoise is raising new funds to help support the deal, according to people familiar with the situation. The digital media group has so far raised £20mn in two capital raises, including from investors such as Thomson Reuters chair David Thomson and Lansdowne Partners, since it was founded.
The deal would mark the latest in a generational shake-up of the UK’s traditional Fleet Street print titles, with the future ownership of the Telegraph also in question given the final rounds of a sales process expected this month.
People close to the Guardian’s thinking said that the Observer — a print-only UK Sunday title — was no longer a material part of a business that was increasingly focused both digitally and internationally.
“The economics of print are challenging”, one added. Even so, they said that the approach was a surprise and that there were never plans to close the title.
Media executives also said it was significant that the deal marked the first move by Tortoise into print journalism, which follows the agreement earlier this month by digital media group UnHerd, backed by Paul Marshall, to acquire the Spectator magazine for £100mn.
People close to the Tortoise plans said it would combine the newsrooms, investing in a digital Observer product and expanding its audiences internationally. The Observer title will be kept distinct, with Tortoise remaining as a site for podcasts and events.
Harding told the FT that he wanted to create a “new new media business that would become a powerful voice in the world as well as a profitable company”. He pointed to the turnaround of The Atlantic, the once-struggling 167-year-old magazine that has become a growing and profitable business as a digital and print title, as an example.
The GMG is fully owned by the Scott Trust, which allows its titles to have editorial independence.
The Observer was bought by GMG in 1993, which beat rival interest from the Independent and the Financial Times at the time for a struggling title that had failed to match the growth of rivals such as the Sunday Times under the ownership of Lonrho, the international conglomerate led by British corporate raider Tiny Rowland.
The Guardian will retain a seven-day-a-week digital operation. However, there are no plans for a Guardian print edition on a Sunday.
Harding, the editor of Tortoise, said it would “honour the values and standards set under the Guardian’s great stewardship and uphold the Observer’s uncompromising commitment to editorial independence, evidence-based reporting and journalistic integrity”.
GMG accounts published on Tuesday showed a 2.5 per cent drop in revenue to £257.8mn for the 12 months to the end of March, which it blamed on a slowdown in advertising revenues and its print business. It reported a net operating cash outflow of £36.5mn owing to investment in Guardian US and a new Guardian Europe edition.
