Stephen Glover: Online gambling that could prove reckless

A couple of weeks ago I wrote about The Guardian's parlous financial predicament. It seems my analysis is largely shared by its board. In announcing annual losses of £33m, the chief executive of Guardian Media Group, Andrew Miller, stated last week that "doing nothing was not an option" as he laid out a radical five-year plan.

How radical can scarcely be exaggerated. The Guardian as we know it in print form is being put on the back burner. Eventually it might disappear altogether, though Mr Miller did not say as much in a series of presentations to staff. But Alan Rusbridger, the paper's editor-in-chief, did foresee a time when The Guardian and Observer might spend 80 per cent of their focus and attention on digital.

The old business model is well and truly smashed. The Guardian and Observer have lost an enormous number of sales, and in print form can never be other than heavily loss-making with their existing overheads. According to Mr Miller last week, Guardian Media Group could run out of cash in three to five years if its business operations do not change, though it would be able to sell assets to generate more reserves.

So management is taking what can only be described as a gamble, which is to try to make the online business profitable. The plan envisages increasing the 50 million-odd "unique users" who at present visit guardian.co.uk to 90 million by 2016. Given the phenomenal growth of its online audience over recent years to the point where guardian.co.uk is the world's fifth most popular website, this may be realistic. But will it ever be profitable? Because of low advertising yields and, in most cases, the absence of any subscription revenue, there isn't a newspaper group which has yet made serious money out of online. The hope is that guardian.co.uk's increased audience will lead to a near doubling of revenue from £47m in the current financial year to £91m in 2016.

But it is only a projection. These are uncharted waters for Guardian Media Group, as they are for all publishers. In view of the challenge the company has set itself, it may seem odd that as things stand The Guardian and Observer and guardian.co.uk have no plans to reduce their enormous overall headcount of 1,500, of whom 630 are journalists.

The Huffington Post, a barely profitable newspaper which only publishers online, supports a staff a fraction of the size. If the Guardian/Observer are effectively turning themselves into digital-only newspapers, they should start off by adapting to existing commercial realities online, rather than those which they hope may exist in five years' time.

In effect they are jumping into the unknown, daringly (or recklessly?) rejecting the old newsprint form while continuing to employ many more people than are likely to be affordable in an online world. Not for the first time, a powerful editorial tail represented by Mr Rusbridger is wagging an ailing commercial dog.

Did Gove do the ungentlemanly thing?

The Daily Telegraph recently revealed what we knew but could not actually prove: that Ed Balls and Gordon Brown plotted to remove Tony Blair as Prime Minister. The paper also showed that, as Chancellor, Mr Brown ignored warnings from civil servants about profligate public spending.

These and other stories were based on a "cache" of documents and letters belonging to Mr Balls which had miraculously fallen into the Telegraph's hands. But how? When he stood down as Education Secretary in May 2010 Mr Balls apparently forgot that he had stashed away some private papers in a cupboard. In due course they were unearthed by his successor, Michael Gove, or someone working on his behalf, and found their way to the Telegraph. The gentlemanly thing might have been to return the documents to their rightful owner, but politics is not a gentlemanly occupation.

The interesting question is why the cache did not end up with The Times, Mr Gove's old employer of many years, rather than the Telegraph. Possibly tracks were being covered. More likely, perhaps, Mr Gove, or someone working on his behalf, wanted to do the Telegraph a favour that would not be forgotten. I shall be keeping a close eye on how the paper writes about the Education Secretary over the coming months.

Heff's cannon has left a vacuum

A columnist is only as good as his last column, and when he stands down the waters quickly close over. So, at least, I have sometimes been told. And yet the recent departure of Simon Heffer from The Daily Telegraph leaves a painful hole. The paper is different without him. Every week, while he was there, he would shove a cannon ball down his cannon, point the contraption in the direction of David Cameron, and fire.

Sometimes the aim was accurate, at other times the projectile would fall wide of the mark, possibly killing or maiming innocent bystanders, but in either event readers were treated to a lively show.

With Mr Heffer's departure, all hostilities between the Telegraph and No 10 have ceased. Instead there is a general love-in. Last week we had Ben Brogan lauding Mr Cameron for increasing British overseas aid and Peter Oborne writing about the Prime Minister's "astonishing triumph" in establishing himself. Fair enough, but where are the Tory sceptics? Charles Moore or Boris Johnson? Probably not. Oh Heff, the Telegraph hath need of thee at this hour!

s.glover@independent.co.uk