Tortoise Media pledges £25m investment in The Observer

The Observer could become a profitable business within five years if the Guardian Media Group accepts a bid for the world’s oldest Sunday newspaper from Tortoise Media, according to the bidder’s founder.
James Harding, Tortoise boss and the former director of BBC News and former editor of The Times, briefed Observer staff this week about the ambition to increase the newspaper’s paying readership by 50 per cent to 173,000.
Harding, who is expected to become editorial director of The Observer, has lined up a number of wealthy backers to fund a pledged £25 million investment in the business in its first five years. Around half of the sum will be deployed in the first year.
Harding has forecast that the newspaper, which was founded in 1791 and bought by The Guardian in 1993, will start to break even in 2027 when it reaches a combined print and digital subscriber base of 134,000. Digital subscribers are expected to make up about two thirds of total readers by 2029.
Backers include Yellowwoods, the private investment firm owned by the Enthoven family, which owns the Nando’s restaurant chain.
This week it was reported that Gary Lubner, the Autoglass millionaire and Labour donor, was in talks to join the consortium as a new Tortoise investor. Lubner’s investment is not dependent on the deal going ahead.
At the centre of its turnaround plan, Tortoise would erect a paywall around The Observer’s website, with users paying a subscription fee to access the site. If readers pay £10 a month for access, similar to that charged by The Spectator, The Observer could generate more than £20 million a year in audience revenues if it hits its targets, which Tortoise believes are on the conservative side.
Harding said The Observer has the potential to match the success of premium weekly magazines such as The Economist and The Spectator.
The Observer’s income would be supplemented by revenue from live events and advertising, which Tortoise considers to be under-exploited by Guardian Media Group.
The Guardian is owned by the Scott Trust, a charity founded in 1936 that funds the newspaper “in perpetuity”, a pledge that does not extend to The Observer.
The sales figures generated by The Observer would also mark a step-change for Tortoise’s finances which generated revenue of £6.2 million in 2022, with pre-tax losses of £4.6 million.
Last month, The Spectator was sold for £100 million to Sir Paul Marshall having generated £20.8 million in revenue and profits of £4.8 million. It has about 93,000 subscribers.
So far the plans have been met with suspicion by staff at The Observer, with several of its former editors and a group of prominent cultural figures going public with their concerns. Harding’s meeting with staff this week was partly seen as an attempt to quell those fears.
A vote as to whether to strike over the deal is planned shortly following previous ballots to oppose the deal and a motion of no confidence in the Scott Trust.
Tortoise insiders point to a pledge to continue producing the newspaper, along with an agreement with Guardian News & Media not to publish rival editions on the same day.
A Scott Trust spokesperson said: “The Scott Trust believes it is right to engage with Tortoise Media over the potential sale of The Observer and negotiations are ongoing. We appreciate that it is a time of uncertainty for staff.”