The Strange Financialisation of The Guardian

It is surprising the extent to which The Guardian newspaper / media venue is subject to criticism from it's own readership and also the wider political and social community.  It is one of the few truly influential and substantive media outlets which is not owned and controlled either by a national government or by an individual or family group (albeit a family is very much involved in it via the eponymous Scott Trust).  Before I start criticizing it, I should explain the ownership and control structure of The Guardian group in order to contextualize how decisions are made there.

The Guardian is owned by Guardian Media Group, which has only one shareholder - the Scott Trust.

The Scott Trust, named after The Guardian's longest serving editor, CP Scott, exists to "secure the financial and editorial independence of the Guardian in perpetuity".

 CP Scott defined the Guardian's founding principles as:

"honesty; cleanness; courage; fairness; and a sense of duty to the reader and the community"

These are effectively (somehow) embedded in the operating principles of the Guardian Media Group.  The problematic aspect is that the Guardian Media Group (GMG) is a for profit UK company which "delivers the financial security that allows The Scott Trust to achieve its central objective", it's technically a holding company with operating companies underneath it.  The above-mentioned principles are subject to the whim of whomever controls the Guardian Media Group entity.  

Though the Scott Trust is the ultimate controller (via it's 100% ownership stake) in reality the executives of GMG are the people who take the decisions with respect to the immediate direction of the company.  The GMG executives are the managers of the Guardian Media Group.

The Scott Trust's Directors are:

Chairman Ole Jacob Sunde 

(2015, Chairman since 2021)

Somewhat bizarrely, in order to maintain it's independence, The Scott Trust has appointed a career Mckinsey consultant and serial board member who sits on a number of other boards in Scandinavia of non-independent media groups which are actually controlled by wealthy families. Works at Columbia University.

 

Emily Bell 

(Trustee since 2013) 

A former Guardian stalwart who launched the Guardian's original online presence (Guardian Unlimited) and later departed to take a professorship at Columbia University.  Given the plethora of digital interests within the group, her experience must be vital.  However, as a result of the governance review she will move to the GMG board.

 

Catherine Howarth

(Non-Exec since 2015)
A serial board member and corporate governance activist.  Has negotiated her way into many a board room through the use of the Share Action platform.  Unclear what is brought from a media perspective given her primary specialism is in lobbying companies and financial service firms to change their corporate practices and one feels that the Guardian is not the immediate priority for this kind of thing.

 

David Olusoga

(Non-Exec since 2018)

A writer, director and academic with impeccable credentials and a long track record on the creative side but precious little commercial experience.

 

 

 

Nils Pratley

(Journalist Director since 2016)

The Guardian's business and city correspondent and the person elected by the Guardian's journalistic staff to represent the interests of the Group's editorial staff on the Scott Trust.  Katherine Viner (effective GMG CEO) is his boss.

 

 

Stuart Proffitt

(Non-Exec since 2015)

 
Strange choice but one of the longest serving members of the trust board.  Has a long track record at Penguin and Harper Collins on the executive side but these are private sector commercial publishing organizations rather than freedom promoting journalistic institutions.  One of few board members who pre-dates Katherine Viner.

 

Matthew Ryder

(Trustee since 2020)

A campaigning barrister who has also worked for the Mayor of London under Sadiq Khan's administration, he brings a long career of specialist legal understanding on Human Rights issues and media law topics.  From his background and pedigree, one of the most qualified people to be sitting on the Scott Trust board given it's raison d'etre.

 

 

Vivian Schiller

(Trustee since 2015)

Vivian Schiller joined the Scott Trust in 2015. She is Executive Director of Aspen Digital, a program of the Aspen Institute. Previously she has held multiple high-profile media roles including head of news at Twitter, general manager of NYTimes.com and president and CEO of National Public Radio. Strong background given the priorities of the trust, especially her experience with NPR which has to survive the markedly more cut-throat and evil media landscape .

 

 

Mary Ann Sieghart

(Trustee since 2020)

A stalwart of the right-of-centre press with impeccable credentials when it comes to middle-of-the-road commentary.  She also sits on a number of investment trust boards which is one of the easiest gigs in the professional director career.  Recently "promoted"to the GMG board where the money is better.

 

Russell Scott

(SID since 2015)

Has the longest career description on the Scott Trust website which is ironic given his main qualification is in the name. Obviously trusts are a complex way of pretending assets are not part of a family but it must be said that the Scott family have generally only taken a minimal direct salary from the Scott Trust and have thus avoided riding on the coat tails of the group by focusing on such media-unrelated areas as "(a) consultancy business specialising in strategy and execution for digital audience growth and monetisation" and "...senior roles in consumer publishing, digital and broadcast sectors".

 

Katharine Viner

(Trustee since 2015 when she also became Editor-in-Chief of the Guardian News & Media) 

Katharine Viner is the Editor of the Guardian and effectively the most powerful person in the GMG and Scott Trust.  She makes editorial decisions and recently ousted the CEO of the GMG when they clashed over the commercial direction of the enterprise.  She led the fledgling Australian organization before transferring over to the perenially loss-making US side of affairs.  Ms Viner is the person who carries most responsibility for the future progress or otherwise of the GMG and Guardian News Media.

Guardian Media Group

For reasons which may become clearer, Guardian Media Group has a substantive board of non-executive directors and also a group of executive directors who are not directly involved in the underlying operating companies. Though this seems illogical, given the enterprise is effectively a subsidiary of another (trust) company and that it creates a duplication of oversight between an asset owner and it's underlying operating entities, the rationale for this becomes clearer when one examines who makes the day-to-day decisions.  GMG is becoming the effective senior management and also the effective governing organization of the Guardian and is, in effect, supplanting both the Scott Trust and the management of the underlying entities.  The Scott Trust is put nicely in a corner where it can get on with it's business of, well, being the Scott Trust.  At the same time, the operational management of the underlying organizations within the GMG (ie Guardian News & Media) become "focused" on their roles of being journalists and stay out of the "commercial and financial strategy and delivery" which will become the preserve of the GMG.

GMG tried to obfuscate this earlier in the year when a long-touted "governance review" determined that all was well but that "to support a business structure and model which has now been largely supplanted by a new model focused squarely on journalism" a "...clarif(ication of) our governance arrangements will give better support to the business and to our senior executive team in developing and implementing successful long-term strategies across editorial, commercial, product, data and other teams.". This is the kind of garbled management speak of which Mckinsey would be proud and is much loved in corporate world but perhaps something which the Guardian might wish to shy away from given it's focus on editorial and journalistic independence and integrity.  In effect what happened was that two of the Scott Trustees mentioned above (Ms Bell and Ms Sieghart) moved from the Trust to the GMG, where opportunities to influence and be paid commercial salaries will be enhanced and which, we assume, will lead to a dilution of power at the Scott Trust level.

GMG Ventures

At the same time, GMG has chosen to incoporate a hellish-sounding VC fund (GMG Ventures) which will be structured for tax efficiency purposes within the group, handily providing a sink (and means of tax structuring) for losses on speculative ventures as these can be hived off into a subsidiary (and offset against tax liabilities on investment gains from the broader GMG) as opposed to handled within GNM itself and inevitably, should any of these be successful, used as a spin-off vehicle to enrich the relevant GMG executives and generate investment returns for GMG (with a nice kicker for GMG Ventures LLP and it's five employees).  Effectively seeking to replicate the staggeringly successful Auto Trader transaction which was master-minded by former GMG CIO and head of GMG Ventures Alan Hudson.  As per the GMG website "GMG’s investments provide financial security and support for our journalism... GMG has built a cash and investment fund of over £800 million, which includes the proceeds from the 2014 disposal of its 50.1% holding in Trader Media Group (Auto Trader)." 

I guess the question you might ask yourself at this point would be why, when GMG's position is secure following the Auto Trader transaction has it decided to set-up it's own Venture Capital Fund? A VC fund is like a long term hedge fund where returns accrue more slowly (provided one avoids shitting the bed in a world of highly speculative investments) and where you can invest more readily in your friends businesses with less scrutiny.  It's not like the GMG is in need of the money and it's unlikely that managing a moderately sized VC fund wont distract the attention of the otherwise busy GMG executives.  Indeed it seems that the management of GMG should be more focused on "commercial and financial strategy and delivery" as opposed to structuring VC funds, but, thank goodness, Alan Hudson and his team of four are there to manage the fund and ensure that everything is OK.  

Obviously given GNM's unhappiness with tax havens, we hope that GMG Ventures wont engage in the kind of aggressive offshore tax planning which GNM has done so much to expose.  That kind of thing might call into question the editorial independence of Guardian News & Media.

Sleaze and Incompetence will only get you so far...

The commentary around the recent travails of the Conservative party seem to revolve around the point that Boris Johnson is incompetent alone and that it is his personal responsibility for the plight that the country and by extension the Conservative party, finds itself in.  He is providing a helpful scapegoat for a group of people who lack any form of self critical faculty and can only blame external factors for the terrible state of things, incapable of examining themselves or their own views.

 One of the most popular lines you can find in the Independent, The Guardian, The Financial Times or anywhere else you choose to search in the non-Murdoch / Mail / Barclay media complex, is that the sleaze and Christmas parties which the government has been mishandling over the entire time it has been in office is finally cutting through.  The parallels are drawn with the Conservative government of the mid-1990's, where David Mellor (sex), Jonathan Aitken (perjury) and Neil Hamilton (perjury and corruption) and more created a perception of decline and sleaze which led to the Labour victory under Tony Blair in 1997. These apparent one-off sleaze events destroyed the faith of the public in the political class and lead to a mass defection of voters to the Labour party.  There is a certain amount truth in this but I think it speaks to a certain logic within centrist commentary, that their way is the one and true way and that it is only personal failure which causes people to seek alternatives.

But the problem with these analyses is that they feed off the self-referential nature of those analyzing a situation without sufficient distance from that situation; those involved in an event or situation inevitably attribute greater importance to those factors with which they were most involved and of which they were most aware at the time.  The news and print media are the most straightforward means for referencing things in an analysis (see this blog) and so when people write commentaries they inevitably refer to these things and when people are asked in focus groups or similar opinion gathering exercises, they will tend to refer to these aspects as key in their decision making.I would argue that there are others factors at work influencing people's attitudes to the Conservative politics which are playing out.  These are primarily around the fact that the Conservatives fundamentally don't provide people with the things they want, and that instead of returning to their default mode (VOTE CONSERVATIVE; BLUE GOOD), people are seeking alternatives.

Any political party has to deal with this inherent tribalism and it is why old school social democratic and socialist parties were much more than a set of policies and a party political organization but were more social organizations including clubs, social settings, culture, art and more.  The modern technocratic Labour party does not achieve this because it is more targeted and driven by politics technocrats who think in the narrow aims of what can be immediately influenced by press releases, policy positions and other dynamics within the gift of the political executive of the party.  

 The North Shropshire By-Election is an excellent example of the desire for an alternative to the Conservatives being sought by a frustrated electorate, battered by perceptions of sleaze but continually dealing in their daily lives with incompetence in government which is a function of desperately poor political decision-making and mismanagement.  The news media which the majority of this electorate will be consuming will be providing them with a host of reasons for these things, but their lack of frame of reference for how to address them means they grasp for the nearest alternative, which is either the Liberal Democrats or the Reform Party.  It's not so much about the sleaze, albeit this provides a handy frame of reference when asked, but more about a gradual slide in the standard of living which is influencing this decline.  However this is difficult to explain in a focus group.  Easier to say that you are "shocked and disappointed" with Christmas parties or trips to Barnard Castle or illicit lobbying or whatever the next thing is.

The true dynamic here is that The Conservatives managed to pull off the trick in 2019 of pretending that they hadn't been the ones in charge for the preceding 9 years and demonizing their opposition, with the help of an especially pliant media infrastructure.  This annulled the possibility of an alternative and positioned themselves as a fresh new alternative to themselves.  Brexit was a handy identity tool around which to rally their voters. They will not be able to pull this trick off again in 2023 or 2024 and in reality, they are tired, sick and incompetent.  The challenge for Labour is not going to be managing whatever nonsensical storm influences the weekends polling in the political-media technocracy but creating the percepction that they can do meaningfully better in government and admitting internally that they're probably going to have to do that in alliance with other parties.  

I don't know whether Keir Starmer can do this and to be honest, in an age of charisma politicians, he certainly fails to get the message across with alarming regularity.  He wont face Boris Johnson as Conservative leader at the next election, Johnson is done, but whoever emerges from the current bunch of incompetent crypto-Fascists, it's likely they wont be any better a campaigner than Boris Johnson and Dominic Cummings.  The path is clearer as the Conservatives self-immolate but the alternative needs to be there and at the moment, North Shropshire shows that Keir Starmer, now two years in charge, is making very little progress on this front.

One final thing; whither goes the elderly vote goes the power.  Having witnessed the Conservatives rallying around the anti-lockdown / anti-vaccine cause will terrify some members of their elderly coalition.  If Labour or the Liberal Democrats can nail this down, positioning the Conservatives as the party of health irresponsibility, the Conservatives are truly doomed.  This is a dynamic which is now playing out across a number of Western countries.  Play to the libertarian nut jobs if you want, but you'll get outflanked by Reform or whatever the equivalent is on the right and your elderly vote will desert you.  Good luck with that.  Goodbye "Lord" David Frost.

Offshore

One of the more insidious but ingenious moves of modern finance has been to transfer the domicile of capital pools of ownership into jurisdictions outside the direct control of meaningful governments (the governments of the Cayman Islands, British Virgin Islands or Guam) and to have neutered the only government with extra-territorial reach by jamming its legislative process to such an extent it will never have the political will to go after the capital pools which are concurrently destroying the fabric of the nation which spawned most of them.  

I don't include the countries which are sensible enough to avoid this insane structure in the list of countries subject to this effect; most African and Asian countries do not permit their nationals to transfer their nations wealth outside of their jurisdictions through capital controls and Russia and China exist in permanent conflict with their elites, preventing them from fleeing offshore and when they do, punishing them; but certainly in the Anglo-sphere, this problem is rife.

Instead of addressing the gradual leakage of capital from the grasp of the government, the federal government of the world's biggest democracy is instead set out on adventures to conquer new frontiers in order to feed the insatiable beasts which battle within and outside it for new markets.

What a bizarre outcome that the worlds most powerful country would knowingly allow itself to be destroyed thus by the promise of a few extra percentage points of returns for the investment portfolios of the rich and powerful.