Digital sales bolster Guardian's revenues

The Guardian is set for its biggest rise in annual revenues since the financial crisis, as digital revenues and a push into overseas markets offset the decline in printed newspapers.

Andrew Miller, the chief executive of Guardian Media Group, the newspaper's parent, said sales were expected to have risen at least 5 per cent in the last financial year.

The growth will reopen the debate about whether newspapers should follow the Guardian's model of a free, advertising-funded website - or instead introduce paid online subscriptions as did the Daily Telegraph.

Mr Miller said that advertisers were paying more per thousand views and there was a "bifurcation" between what rates high and low-quality content could attract.

"People are buying our digital display and paying a premium," he said. "The model that we're following is definitely working for us."

But Mike Darcey, the chief executive of News UK, whose newspapers the Sun and the Times are following a subscription model, has said that the Guardian provided "no lessons for others on strategy" because it was lossmaking.

There are signs that a hybrid model is emerging, with the Guardian considering the introduction of paid-for memberships and the Times opening up its homepage to non-subscribers.

Douglas McCabe, an analyst at Enders Analysis, said he suspected that the answer would be somewhere between the two approaches.

Operating losses at Guardian News and Media - GMG's news arm - were £30.9m in the year to March 2013, although they are expected to fall to about £20m this financial year.

Those losses have been absorbed by GMG's cash reserves and investment portfolio, which have swollen to about £860m after the sale of its stake in Trader Media Group, the parent of car website Auto Trader.

GMG would receive £619m in cash from the transaction, Mr Miller said. It is the first time he has given a precise figure. He insisted that the newspaper would seek to be "near profit".

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The forecast rise in sales is a boon for the Guardian, where revenues fell by a quarter between 2008 and 2012 to £194m.

"It was a double whammy effect," said Mr McCabe. "The financial crisis hit them badly, and the same time they lost so much of their classified business."

Sales rose marginally last year, after accounting for the disposal of the technology platform Kable.

Mr Miller said the Guardian would look to invest in businesses that could support its digital transition, although he conceded that high valuations could pose a difficulty.

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