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Financial Times sold to Japanese media group Nikkei for £844m Financial Times sold to Japanese media group Nikkei for £844m
(about 2 hours later)
The Financial Times has been sold by Pearson to Japanese financial media group Nikkei in a deal worth £844m. The sale of the British newspaper was announced on Thursday hours after Pearson confirmed that it was in “advanced talks” to sell Britain’s best-known business newspaper, which it has owned for nearly 60 years. The 127-year-old Financial Times, whose pink pages are as much a symbol of the City as the pinstriped suit, is to be sold to a Japanese financial media company by its British owners for £844m.
The sale to Nikkei by Pearson, which comes after years of speculation over its long-term commitment to owning the FT, demonstrates the eagerness of cash-rich international investors looking to expand into a financial news landscape dominated by the English language.
Pearson, which bought the FT in 1957, said it had decided to sell in order to focus on its far larger educational publishing business in the US. John Fallon, Pearson’s chief executive, said: “Education and journalism are both great and noble callings but they are not the same thing and require different skills, capabilities and intensity of focus.
Related: FT's new owners Nikkei are cut from the same templateRelated: FT's new owners Nikkei are cut from the same template
Nikkei was confirmed as the buyer on Thursday. The sale does not include the 50% share in the Economist group or the FT’s headquarters by the River Thames in London. “Pearson has been a proud proprietor of the FT for nearly 60 years. But we’ve reached an inflection point in media, driven by the explosive growth of mobile and social. In this new environment, the best way to ensure the FT’s journalistic and commercial success is for it to be part of a global, digital news company.”
The Japanese company emerged as the new owner following speculation that the buyer could be German publishing group Axel Springer. Little known in the UK, Nikkei – founded in 1876 – is one of the largest media companies in Japan, spanning newspapers, broadcasting, magazines and digital media. The group includes a flagship newspaper of the same name, which has 3 million subscribers, TV Tokyo and finance and a business news channel, Nikkei CNBC.
Journalists within the FT were shocked at the unexpected deal. One insider said there was “chaos” ahead of an address to staff by editor Lionel Barber. There was also concern among journalists at where they would be based, with the sale not including the paper’s current HQ at 1, Southwark Bridge. The sale does not include Pearson’s frequently coveted 50% share in the Economist group or the FT’s headquarters building by the Thames in London. Under the terms of the deal Nikkei, which is the largest independent business media group in Asia, will pay a commercial rent for the FT’s building once the takeover is finalised at the end of the year.
A journalist on the paper said: “It is safe to say we are very concerned about this development. It’s been announced very quickly. There was talk of both potential buyers [Axel Springer and Nikkei] but there wasn’t time enough to form an opinion.” Staff were called to a briefing at 4pm. Nikkei’s surprise acquisition of the “Pink ’Un” was confirmed after hours of intense speculation that began after Pearson had first told the stock exchange that it was in “advanced discussions” over a sale of the newspaper yesterday morning. Initially, the German media group Axel Springer, the owner of the Bild tabloid, had been seen as the most likely acquirer.
Nikkei is one of the largest media companies in Japan, spanning newspapers, broadcasting, magazines and digital media. The group includes flagship newspaper Nikkei, which has 3 million subscribers, English language business title Nikkei Asian Review, TV Tokyo and finance and business news channel, Nikkei CNBC. Fallon hinted that there had been a bidding battle for a newspaper often described as a trophy asset and thought most likely to end up in the ownership of a US media mogul. “I am confident that we have achieved a fair value … and coupled that with finding a very good home for the FT,” the chief executive said.
Founded in 1876, it is 12 years older than the Financial Times and employs just over 3,000 people. The company has 54 domestic news bureaus and 36 overseas, including offices in the City of London. Asked what guarantees there were that the new owners would not interfere with the title’s traditional editorial independence, Fallon cited Nikkei’s “strong track record in terms of fairness and accuracy as well as the integrity and independence of its journalism”. But the Japanese group had not been asked to create an independent editorial board for the FT or make specific guarantees. Fallon said that the company’s “actions speak louder than words” in this respect.
John Fallon, Pearson’s chief executive, said: “Pearson has been a proud proprietor of the FT for nearly 60 years. But we’ve reached an inflection point in media, driven by the explosive growth of mobile and social. In this new environment, the best way to ensure the FT’s journalistic and commercial success is for it to be part of a global, digital news company. Long-serving editor Lionel Barber is expected to stay on. “In all the conversations I’ve had with Nikkei one of the things [they cited] again and again was the -quality of the leadership both editorial and commercial,” said Fallon.
“Pearson will now be 100% focused on our global education strategy. The world of education is changing profoundly and we see huge opportunity to grow our business through increasing access to high quality education globally. The FT sale price dwarfs the $250m that Jeff Bezos paid for the Washington Post in 2013. Rupert Murdoch paid $5bn for the group that owns the Wall Street Journal and the Dow Jones wire service in 2007.
“Nikkei has a long and distinguished track record of quality, impartiality and reliability in its journalism and global viewpoint. The board and I are confident that the FT will continue to flourish under Nikkei’s ownership”. Tsuneo Kita, chairman and Group chief executive of Nikkei, said: “Our motto of providing high-quality reporting on economic and other news, while maintaining fairness and impartiality, is very close to that of the FT. We share the same journalistic values. Together, we will strive to contribute to the development of the global economy.”
Tsuneo Kita, chairman and group CEO of Nikkei, said: “I am extremely proud of teaming up with the Financial Times, one of the most prestigious news organisations in the world. Our motto of providing high-quality reporting on economic and other news, while maintaining fairness and impartiality, is very close to that of the FT. We share the same journalistic values. Together, we will strive to contribute to the development of the global economy.”
The sale of the FT brings to an end Pearson’s 58-year ownership of the pink-paged financial newspaper. Following the deal, Pearson will make a £90m contribution to the Pearson pension fund.
Pearson dominates the market for publishing and marking school tests in the US, where it derives 60% of its revenues. Despite Pearson’s promise to focus on expansion in the area, that business has struggled to grow in recent years. A rival US company, Apollo Education, warned of lower than expected full-year revenues in June which it blamed on fewer students enrolling on its courses.
Nikkei, whose flagship financial newspaper sells 2.9m copies a day, faces stagnant digital growth in the provision of Japanese language news. It has made no secret of its ambitions to expand in English language markets. In 2013 it launched the Nikkei Asian Review, an English-language magazine and website...
Related: Lionel Barber: ‘It’s adapt or die frankly and that’s what we’re doing’Related: Lionel Barber: ‘It’s adapt or die frankly and that’s what we’re doing’
Reuters had first reported that the London-based FTSE 100 company had decided to sell FT Group to an unnamed global digital news company on Thursday morning. Fears over editorial interference are understood to have scuppered the chances of other potential buyers. John Ridding, chief executive of FT Group, the Pearson subsidiary that owned the newspaper, said: “The issue of editorial independence was a central consideration and condition of this whole project. It’s obviously something we take very seriously.”
A recent note valued the FT at between £750m and £1bn, with the FT worth £500m and the biggest unknown the worth of the 50% stake in the Economist. One media executive called it “the real prize”. A sale of the whole unit might not trigger a change of ownership clause at the Economist. The National Union of Journalists said it would be seeking guarantees from the new owners about working conditions and editorial independence, and expressed “concern at the speed at which the deal seems to have been made”.
Pearson has long been said to have been considering a sale of the title. Its former chief executive Marjorie Scardino once said the paper would be sold “over my dead body”. But she has since been succeeded by Fallon, who took up the post two years ago. NUJ national organiser Laura Davison said: “A normal day at work … turned into chaos and confusion. NUJ members will need rapid assurance and guarantees. If Nikkei wants to maintain the newspaper’s international reputation, it must invest in the journalism and the staff.”
After the last round of sale rumours in 2013, Fallon said the paper was “not for sale” and described the FT as a “valued and valuable part of Pearson”. Sir Howard Stringer, the Welshman who ran Japanese giant Sony for 15 years and is now on the BBC’s executive board, said his experience of Nikkei and Japanese companies generally was that the deal could be a good one for the FT and its journalists. “It’s not a bad thing when a Japanese company buys another. They tend not to be heavy-handed but more thoughtful and careful than most corporations when they go charging in.”
In recent years, Pearson has been thought to be considering a sale of the title, following the departure of the company’s previous chief executive Dame Marjorie Scardino two years ago. She once said the paper would be sold “over my dead body”. But when Fallon succeeded her two years ago he refused to reaffirm this position.
Pearson makes the bulk of its revenues from educational publishing. Its shares were up 3% in early trading on Thursday to 1,237p. Pearson is now expected to negotiate a separate sale of Pearson’s 50% stake in the Economist Group, the highly -profitable publisher that owns the Economist magazine and the Economist Intelligence Unit. One rival media executive called it “the real prize”.
The FT has a global print and digital circulation of 720,000, according to the company’s latest interim results in February this year, with digital readers accounting for 70% of the paper’s total paying audience.
Pearson said FT profits had tripled year on year, but the group does not break out the paper’s earnings from the wider FT Group.
The FT Group is part of Pearson Professional which recorded adjusted operating profit of £106m last year on turnover of £1.2bn.
In the last decade its print circulation has halved but its digital subscriber base has grown exponentially, up 21% year on year to 504,000 in the latest figures.
Sir Howard Stringer, the Welshman who ran Sony for 15 years and is now on the BBC’s executive board, said his experience of Nikkei and Japanese companies was that the deal could be a good one for the FT and its journalists.
“It’s not a bad thing when a Japanese company buys another. They tend not to be heavy handed but more thoughtful and careful than most corporations when they go charging in.”
Barber, an FT veteran of 30 years’ standing, has been the paper’s editor since 2005.
A digital pioneer since he introduced a metered paywall on the paper’s website, he has nevertheless said there is plenty of life in the print product, unveiling a new-look paper last year.
In an interview last September Barber said: “I’ve got probably one of the most privileged positions in journalism and I don’t plan to give that up any time soon.”