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Guardian Media Group (GMG) agrees to sell The Observer

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Britain's Observer is world's oldest Sunday newspaper

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Tortoise says it has raised $32 mln to invest in title

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Sale of Observer prompted strike action by staff

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GMG owner the Scott Trust to take stake in Tortoise

(Adds quotes from Guardian editor-in-chief in paragraphs 8-9,

Tortoise in paragraphs 10-12)

By Paul Sandle

LONDON, Dec 6 (Reuters) - Britain's Guardian said on

Friday it had agreed to sell The Observer to startup Tortoise

Media, which sought to overcome staff opposition by pledging to

revive the world's oldest Sunday newspaper as a strong voice in

liberal journalism.

Tortoise, founded five years ago by ex-BBC News boss James

Harding to focus on "slower, wiser news", said it had raised 25

million pounds ($32 million) to invest in the newspaper.

The centre-left Observer, first published in 1791, is one of

Britain's best-known newspapers and once carried the journalism

of 1984 author George Orwell.

It was acquired by Guardian Media Group in 1993, when it

became a sister title to the Guardian daily. The Observer does

not have a distinct online identity, with all its content

published on the Guardian's popular site.

Journalists at the Guardian and Observer were opposed to the

sale and staged a 48-hour strike this week in protest.

The National Union of Journalists, which organised the

strike, said it was concerned about "the sustainability of the

Observer's journalism if it is sold to the non-profitable

startup Tortoise".

Under the deal, GMG's owner, the 1.3 billion pound Scott

Trust, will take a minority stake in Tortoise.

Katharine Viner, editor-in-chief of Guardian News & Media,

said she recognised how unsettling the sale was for Observer

staff, but she was confident that the deal was the best possible

way forward for its journalists and readers.

"It is a model that will see investment in journalism and

journalists, enshrines the Scott Trust's values in the

Observer's future, and protects the Observer and Guardian's

ability to continue to produce trusted, liberal journalism," she

said in a statement.

Tortoise said it would give the title its own digital

identity, with a focus on publishing less breaking news and more

narrative investigations, eyewitness reporting and data

journalism.

"We will put The Observer's online content behind a paywall,

following The Atlantic's highly successful revival by adapting

to today's media environment," it said.

"We believe in its future, both in digital and as a

multi-section newspaper published each and every Sunday."

A representative from The Scott Trust will join its company

and editorial boards, Tortoise said.

Company filings show that Tortoise counts Woodbridge

Investments Corporation, an investment vehicle for the Thomson

family who are majority owners of Thomson Reuters ( TRI ),

among its backers.

($1 = 0.7837 pounds)