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The owner of the Guardian Media Group has agreed the sale of The Observer to digital start-up Tortoise despite two days of strikes from staff over the deal.
Members of the Scott Trust met on Thursday evening to discuss the deal, under which Tortoise will acquire the 233-year-old Sunday newspaper for a small sum but with the promise to invest £25mn in reviving and growing the title over the next five years.
The Scott Trust, a £1.3bn fund that has owned The Guardian since 1936 and The Observer since 1993, on Friday morning confirmed that it had agreed to allow the sale to go ahead. The board of the Guardian group had already given its approval to the deal.
The decision by the Scott Trust to sell to Tortoise is the latest sign of the sweeping changes in ownership hitting Britain’s Fleet Street as the value and influence of traditional print titles have been confronted by the rise of social media and digital alternatives.
The rival Telegraph newspaper is also being sold — with exclusive talks continuing with New York-based media executive Dovid Efune over a £550mn deal — while National World, which owns the Yorkshire Post and Scotsman newspapers, has moved closer to a takeover deal worth about £60mn from its largest shareholder.
On Friday, the regional newspaper group, which is run by former Mirror boss David Montgomery, said that it had received a final improved proposal from Media Concierge of 23p per share, up from a previous offer of 21p, and was “minded” to recommend the proposal.
The decision by the Scott Trust to approve the sale has come in the face of fierce opposition and two days of protests by staff, who are concerned about the financial future of the newspaper under Tortoise, a lossmaking media group founded by former Times editor James Harding.
Guardian staff walked out on strike on Wednesday morning, attracting support from celebrities and MPs, with a further two-day strike planned for later this month. On Friday, senior reporters described the decision over the sale as “like a slap in the face” after the industrial action. One said there was a “mixture of fury and incredulity” over the disregard for staff.
However, the Scott Trust says it has offered several concessions in an effort to meet staff concerns, which have boiled over into open criticism of Anna Bateson, chief executive of the media group, as well as Guardian editor Katharine Viner and members of the Scott Trust.
In an email to staff, trust chair Ole Jacob Sunde said that the Scott Trust would take a minority stake in Tortoise Media and a representative would join both the Tortoise company board, chaired by Matthew Barzun, who was US ambassador to the UK during Barack Obama’s presidency. The editorial board will be chaired by former Financial Times editor Sir Richard Lambert.
Viner, editor-in-chief of Guardian News & Media, said: “I recognise how unsettling this period has been for Observer staff, but we’re confident we have agreed the best possible way forward for the title’s journalists, its readers and the future of both The Observer and The Guardian.”
The investment will lead to the creation of at least a dozen new roles for staff reporters and a near doubling of the editorial budget. Tortoise said that it expected the deal to be completed and signed in the coming days.
Sunde said: “We knew we needed the right combination of resources and commitment to build a new platform for The Observer. It required an ally to be sufficiently funded, long-term in nature and respect editorial independence and liberal values.”
The Guardian is offering a voluntary redundancy scheme to Observer staff who do not want to join Tortoise, and the opportunity to apply for roles at the sister paper. Observer staff have been promised the same job titles, salaries and benefits if they move.
Several alternative approaches have been made for The Observer, although all but one have remained anonymous. Dale Vince, the green energy tycoon and Labour party donor, last week said he would be “interested in the idea of holding the title in a trust” should the Tortoise bid fail.
Guardian Media Group said it had “not received any bids containing any substantive detail from any party other than Tortoise Media”.
Harding has agreed funding for the newspaper from a range of investors, including Gary Lubner, a South African donor to Labour.
Harding said: “We promise its readers we will do all we can to live up to its history as a defender of human dignity and to give it a new lease of life as a powerful, progressive voice in the world.”
Media analyst Alex DeGroote said that with this deal, “Tortoise is recapitalised with a powerful new shareholder, eg Scott Trust, and the Observer IP”.
