Is the Guardian a Social Business?

Unabashed and pointedly unimpressed, my host said something like: “well by that yardstick so is the Guardian”. I had not considered this possibility before (nor had he, I expect), but the prospect of the Guardian as a social business intrigued me.

For those of you not so familiar with the case of the Guardian, it is one of Britain’s leading quality or “broadsheet” newspapers, with a left-of-centre political orientation. It is owned and controlled by the Scott Trust, which protects the paper’s independence. Investments in other assets (e.g Emap and Auto Trader) are meant to generate sufficient income to enable the core newspaper to operate at a loss without making journalistic or short term commercial concessions.

The Scott Trust operates in a similar way to the trust which owns John Lewis, of which we wrote in a recent blog post. However, whereas the John Lewis trust operates in the interest of the staff, the Scott Trust is focused on the protection of journalistic integrity and independence.

So is the Guardian a social business, and if so why? Also, is there something about how the model is applied which has relevance elsewhere?

Our definition at ClearlySo focuses, in broad terms, on two key tests. The first is easy: does it have a social, ethical or environmental objective, which is among the 29 social benefits listed on our website. The second is a greater challenge: is the social benefit or objective at least of equivalent importance to any financial objective the business may have?

In reference to the first. The Guardian’s main purpose is the pursuit of journalistic excellence, and of encouraging greater independence in the media environment. Looking through our list of 29 social benefits, it seems that it could perhaps fulfill the criteria for ‘education’ or perhaps ‘advocacy’. We might even consider introducing another, possibly entitled ‘fostering an independent media’ or ‘knowledge development’; but it is not on our list now – should it be?

This feels particularly apt these days, as the plurality of media outlets has come under increasing threat. We recently saw Rupert Murdoch gain even greater influence over British media when the Government gave the go ahead for his takeover of SKY.

Venerable and respected outlets such as the Guardian (and indeed others such as the Telegraph and Independent) are thus becoming more important than ever before. In maintaining a diversity of voices in the media environment they serve a vital role in the maintenance of a democratic process. It is famously said that The Sun controls the destiny of each election (although to what extent this is true is highly debatable). Can you imagine the situation with more power feeding into the hands of one organisation?

However, there is one caveat to throw in here and it relates to acknowledging one’s own political bias. As readers know, I have long been a supporter of the Lib Dems (as well as many other lost causes) and as such am more tuned into the Guardian’s left of centre bias. Would I be as keen to argue the case for a right leaning newspaper such as the Telegraph? Possibly not, but in terms of maintaining diversity of voice in the media an outlet such as the Telegraph is equally important. If I am to consider the Guardian as a social business, then I must also give thought to the Telegraph.

Now to the second – is social benefit of at least equivalent value to commercial? I would argue that given the importance of the Scott Trust, and its objectives, the social objective is of paramount importance. All the Guardian’s commercial operations are geared to provide sustainability in the running of a newspaper which – like most in this sector – is running at a loss.

Thanks to the success of commercial arms of the Guardian group, the organisation is able to run its news division without such pressure to succeed in commercial terms. This is vital for the provision of journalistic integrity. As such, therefore, it comfortably passes, in our opinion, our test of equivalence.

To sum up, then, it feels to me as if the Guardian could be a social business. In an intensely difficult commercial environment it has found a way to maintain the integrity of its journalism. In doing so it serves as a vital advocate for independence and plurality of voice in the media.

It also helps emphasise what will be the theme for our conference this year, scheduled for October 11th – ‘All shapes and sizes’. The intention is to highlight the diversity of the social business and enterprise sector. Firms such as John Lewis and the Guardian reinforce the sector’s scope as do each of the small and early stage enterprises among the 2,100 or more businesses on our directory from over 45 countries.

I expect that one of the key features of the social economy, and the Big Society programme, as the UK Coalition Government likes to describe this, is this diversity. A wide range of corporate forms, governance structures and funding models will need to be combined in different ways to bring various enterprises into existence or to sustain some already in existence.

In many ways the social business, enterprise and investment sector is similar to the investment banking world I once inhabited. And although the sums involved are much smaller, the degree of complexity is even greater, incorporating all the features of the conventional or mainstream finance sector as well as the more intangible world of social benefit/return.

But this added complexity can bring associated benefits. Here the Guardian is an excellent example. As many in the UK know, the Guardian, although not the leading newspaper by circulation (its ABC audited figures of 262,612 pale in comparison to the 445,962 enjoyed by the Times) performs very well in online media. According to ABC Guardian.co.uk receives an average 2,302,300 daily visitors compared with 1,215,446 for the Times and 1,716,359 for the Telegraph.

This could reflect its young, educated and more digital savvy readership or simply suggest its use of the web is superior to that of its competitors. I would argue it is also a result of its ownership structure. By virtue of the Trust, and the luxury of being able to focus on medium to long term trends (as opposed to quarterly earnings) the Guardian was able to make a long term bet on its online presence, which has paid off handsomely.

The question of whether it is or is not a social business is one we’ll leave open to discussion. We’re inclined to say it is, but others may have different opinions. Also, as we have just agreed to work with them commercially, some may suggest a bias on our part. As always we’d love to hear them, whatever they may be.