The Guardian US' former office | Guardian U.S. Guardian CEO: 'Nothing strategic' about Guardian U.S. cuts

Guardian Media Group CEO David Pemsel stopped by the New York offices of Guardian U.S. — the British newspaper’s American digital operation — to discuss the company's finances on Monday, POLITICO has learned. His off-the-record meeting with Guardian U.S. staff came just hours before the noon deadline for Guardian U.S. employees to apply for voluntary buyouts.

Guardian U.S., which lost more than $15 million last year, announced last month that it would cut about 30 percent of its staff through voluntary buyouts and, if necessary, layoffs. Guardian U.S. executives have not yet determined how many people are taking buyouts, but the staff expects that layoffs will be necessary.

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On Monday, Pemsel said that the staff cuts were purely about cutting costs, not about a strategic restructuring of the business.

“There was nothing strategic about that,” he told the Guardian U.S. staff, two people familiar with his remarks told POLITICO.

Pemsel said that his job was to keep the GMG's total losses under $38 million for the fiscal year ending March 2016, which meant that Guardian U.S. costs had to be cut. He said that his earlier projections — which called for Guardian U.S. to break even by April 2017 — were "unrealistic," given the Guardian U.S.'s lower-than-expected revenue. The only way to keep Guardian U.S. on track to break even was to cut costs by at least 30 percent.

Even 30 percent cuts might not be enough to fully cover the revenue shortfall. One Guardian U.S. employee recalled being told in a private meeting that GMG had initially wanted Guardian U.S. to cut costs by closer to 50 percent but settled for 30 percent after pushback from Guardian U.S. management.

During the Monday meeting, Pemsel also told the Guardian U.S. staff he has faced “aggressive” questions from other GMG's executives about the company's continued spending on U.S. operations.

When a Guardian U.S. employee asked about the possibility of instituting a paywall, Pemsel was dismissive. While the possibility of a paywall technically remains “on the table,” he said, the company’s top leadership is ideologically opposed to the idea of a paywall. In particular, they are concerned that instituting a paywall would compromise “openness,” which is one of the Guardian’s core values. Instead of a paywall, Pemsel said, the Guardian is committed to its current membership strategy.