There’s a new UK startup that’s been splashed across the headlines this week. Tortoise Media has seemingly come out of nowhere, and yet it has reportedly agreed to buy the world’s oldest Sunday newspaper, The Observer from Guardian Media Group plc (GMG).
Tortoise Media is a news site that was first registered as a business in 2017. It isn’t your typical new startup, however. Its CEO is the former BBC News director and The Times editor James Harding, and it boasts multiple billionaire backers.
For The Observer, first published in 1791, its acquisition by a plucky, seven-year old startup was always going to be disruptive. But for many other reasons, the sale is proving contentious. Last week, Guardian and Observer journalists went on strike over the proposal.
So what exactly is Tortoise Media, and how did it win the bid for a 230-year-old newspaper?
What is Tortoise Media?
Tortoise Media describes itself as “a different type of newsroom. For a slower, wiser news”. In practice, that means it looks more like a Substack blog than your typical news site. There are fewer images on the platform and an emphasis on world, rather than domestic, news.
Like many emerging media companies, Tortoise is digital-first. But it has lately embraced alternative mediums to produce non-news content such as podcasts, online conferences called ‘ThinkIns’ (which also feature a plethora of celebrity guests) and a newsletter.
It’s a similar approach as used by The Mill Media Co, another disruptive organisation that uses phrases such as “slow” and “deep reporting” to contrast with media overload.
Users sign up to Tortoise in three or five-year memberships; a smart subscription model that helped the company to fundraise £500,000 via a crowdfunding campaign in 2018.
As is the case for many startups, though, the past few years have not been all smooth sailing. Tortoise Media made a £4.6m loss before tax in 2022; a 45% increase on its losses in 2021. At the time, it said this was due to the cost of investing in the business.
Who owns Tortoise Media?
The mystery behind who Tortoise Media’s owners are is one of the key reasons that Guardian and Observer journalists have been so uncomfortable with the agreed purchase.
Press Gazette has published a breakdown of the startup’s 30 top shareholders. They include Woodbridge Investments Corporation which holds 16.1% of shares and is the investment vehicle for the Thomson family, who acquired Reuters in 2007.
However Harding, as cofounder, is the only person with significant control in Tortoise Media. He currently holds 32.5% of company shares.
According to Companies House, there are three other directors associated with Tortoise Media. Active officers include Nick Jones, who founded Soho House, former Sony Music Entertainment executive Ceci Kurzman, and former US ambassador Matthew Barzun.
Katie Vanneck-Smith, who left Tortoise in 2022 to become CEO of global media company Hearst UK, was also a co-founder. Venneck-Smith now holds 3.85% of the firm’s shares.
Why has Tortoise Media proved so controversial?
Having a long list of high-profile backers is not so unusual for fast-growth startups. Plenty of new companies rely on angel investors to get up and running.
Tortoise Media has also pledged to raise new investment for The Observer totalling £25 million as part of the acquisition, which it will use to return the site to growth. The Observer reported a £36.5m deficit for the last financial year due to a decline in advertising spend.
However, Guardian and Observer journalists have expressed concerns that Tortoise Media’s lack of profitability means it will not be able to cover The Observer’s operating costs, which could result in job losses among the 70-strong workforce.
Last Wednesday 4 December and Thursday 5 December, they held a 48-hour strike in protest at the sale, the first at The Guardian in more than 50 years.
There have also been accusations of a conflict of interest in the sale. Harding is friends with GMG CEO, Anna Bateson. They reportedly holidayed together aboard a £15m superyacht.
Still, startups can take years to report a positive profit margin. One of the UK’s biggest startups is Monzo, a challenger fintech that only made its first profit after almost a decade in operation. Monzo is now hiring 33 new roles in an effort to expand into the US.
Tortoise takes the reins
It is only natural for existing employees to feel nervous about an acquisition. Specifically for The Observer sale, questions remain about the relationship between GMG and Tortoise Media bosses, and there will likely still be teething issues once the purchase is completed.
But that Tortoise Media has yet to break-even is not necessarily a concern in the startup world. Its promise to invest £25m into The Observer signals it isn’t planning to start slashing, and its business model aligns with the direction that the media industry needs to travel in.
Journalists may be concerned about job losses, but success stories like Monzo show what could be achieved — a refresh for a struggling newspaper and more jobs created.
Arguably, Tortoise’s is a tale of digital media clashing with traditional broadsheets, and the need for younger startups to step in and push larger businesses to innovate. The Observer’s future remains unknown, but we must remember it is at a crossroads, not a cliff edge.
