OXFORDSHIRE, United Kingdom — The rise of technology platforms and the decline of advertising revenue have put tremendous pressure on the news media business, but momentum at both the Financial Times and the Guardian newspaper groups prove that readers value quality journalism even more in a world of fake news and political polarisation.

So said Financial Times Group chief executive John Ridding and Guardian Media Group chief executive David Pemsel as they took the stage at VOICES, BoF's annual gathering for big thinkers in partnership with QIC Global Real Estate, for a conversation with BoF's chief correspondent Lauren Sherman.

Ridding identified three key trends — the decline of advertising revenue; the rise of societal discord and political polarisation; and the growing demand for trusted news sources — creating both challenges and opportunities for publishers. “You can’t imagine the contradictions of those three spheres all happening at the same time,” he said, adding that Facebook and Google, which dominate the digital advertising market, benefit from the rise of fake news.

“Our business model is trying to find the monetisation of quality and Facebook’s business model is very successfully driving revenue from virality," he said. "You could not have two more opposing business models.”

Competing is expensive and partnership is cheap.

Both the Financial Times and the Guardian have found success by convincing readers to pay for their content, a strategy many media brands are trying to adopt in the face of declining ad sales. The Financial Times was one of the first major publications to set up a digital paywall in 2002, and the bet paid off. In 2015, Japan’s Nikkei acquired the business for $1.3 billion.

But success has come with internal challenges: earlier this week, journalists at the Financial Times passed a vote of no confidence in Ridding after his multimillion-pound salary was revealed this summer. Ridding said he had since returned the large pay hike he received in 2017 to reinvest in the paper’s initiatives for developing women journalists. “We challenge people every day in our pages, and we should be able to challenge ourselves,” said Ridding.

He said the Financial Times, which brought in £5.2m in profit in 2017, is attracting readers who value quality journalism, adding that publications should focus on what makes them different and special to convert readers into paid subscribers. “It’s just having a very informed deep engaged interest, it could be around a brand, it could be around a columnist,” he said.

The Guardian makes its content freely accessible. But three years ago, the paper began soliciting donations to support its journalism. “In 2015, the relationship between reach and advertising contribution snapped, and we were left with a bloody great hole,” recalled Pemsel. He was advised to cut cost and set up a paywall but determined it wasn’t the right approach for the Guardian, which has published bombshell reports from whistleblowers such as Christopher Wylie and Edward Snowden. “There must be a symbiotic relationship between the quality of what we produce and our amazing audience making a contribution,” he said.

Frankly for us, fashion and luxury have become hugely important parts of the business

What role will consolidation play as media companies react to the challenging environment? Just this week, Condé Nast announced a merger of its American and international arms and the New York-based digital publisher Bustle acquired millennial-friendly news site Mic in a fire sale. “Competing is expensive and partnership is cheap,” said Pemsel. “Consolidation is inevitable when you have this much change.” He added that lifestyle titles like those in Condé Nast’s portfolio could innovate faster and take more risks. For newspapers like the Guardian, it’s different. “We worry about failing fast because if you lose your trust, it's all over,” he said.

Pemsel also cautioned that a roll-up of digital media brands, as floated last month by Buzzfeed’s Jonah Peretti in the New York Times, could likely end up in “a bloody disaster,” much like many similar deals. Ridding agreed, adding that companies navigating consolidation often “start looking inward and lose focus on the needs of the audience.”

As for fashion, Pemsel said the Guardian is holding the industry to account, just like any other sector, especially when it comes to sustainability and ethical issues in the supply chain. Ridding added that the Financial Times had closely covered the “storm of disruption” that fashion is facing as it adapts to a digital world, and that fashion and luxury advertisers were a highly successful growth centre for the Financial Times business. “Frankly for us, fashion and luxury have become hugely important parts of the business,” he said.

Looking ahead, both Ridding and Pemsel said audio was the next frontier and a powerful pathway for attracting a new generation of readers. “It’s more personal… and I think people appreciate that,” said Ridding. “People want time to reflect and not just be inundated with what’s breaking right now,” added Pemsel.

To learn more about VOICES, BoF's annual gathering for big thinkers, visit our VOICES website, where you can find all the details on our invitation-only global gathering, in partnership with QIC Global Real Estate.