Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Analysis: The Nikkei Financial Times — Scale Matters

Posted by Tom Foremski - July 23, 2015

The Financial Times (FT) newspaper business has been sold by Pearson to Nikkei, the Japanese media group for $1.32 billion. The deal values the FT at nearly three-times the market valuation of other publicly traded newspaper groups.

Industry sources report that Bloomberg, Thomson Reuters and Axel Springer had placed bids but late entrant Nikkei won it 15 minutes before the announcement from front-runner Axel Springer, which had been in negotiations for about a year. 

The FT has about 737,000 mostly digital subscribers. Nikkei is Asia’s largest independent media business group. It publishes newspapers, magazines, books, database services and broadcasting. The Nikkei newspaper, its flagship publication has 3.12m subscribers.

Foremski’s Take: The sale of the Financial Times was expected as Pearson, its owner has been shedding non-educational assets, and also as its core educational business has slid further into trouble.

Pearson was a loyal if disinterested owner of the FT, which is both good and bad. Nikkei will provide the FT with what it needs the most — the ability to scale its stories across a much larger platform. 

Scale matters and it matters even more in the digital world where advertising revenues continue to plunge for most media organizations and they need to grow just to stand still. The FT is profitable but it is hard to grow fast enough on its own means and merits. A large media company as an owner will provide the FT with the means to accelerate growth and potentially scale FT’s news content across many outlets.

There will be a cultural difference between London and Tokyo, however both sides understand the language of news reporting and what’s important in delivering a highly trusted, high quality news service. It will be interesting to see Nikkei’s plans for the 127 year old FT and what investments it will make in the business.

However, the high valuation of the FT could backfire if Nikkei is unable to monetize its new business group sufficiently — a formidable challenge amid continuing tough times for all media businesses worldwide.

But at least for now, the FT is in the pink and so are its 500 journalists and 50 news bureaus.

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[Silicon Valley Watcher was featured on the front cover of Nikkei’s business magazine in 2007 and in 2008 Japanese TV reporters for Nikkei produced a segment on Silicon Valley Watcher’s articles about how Silicon Valley was being transformed into a media valley.]

 


The FT has about 737,000 mostly digital subscribers. Nikkei is Asia’s largest independent media business group. It publishes newspapers, magazines, books, database services and broadcasting. The Nikkei newspaper, its flagship publication has 3.12m subscribers.

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