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Excellent jokes accompany the surprising sale of the Financial Times

Financial-times-rotated
The FT.
Photo
By Heidi Moore

Pearson, the owner of salmon-colored Financial Times, has ended years of speculation about the fate of the daily capitalist bible.

The buyer is Japan's Nikkei, which is paying £844 million, according to an official announcement from Pearson at 10:15 A.M. EDT. Previous reports suggested the value of the FT at around £1 billion, but many analysts found that improbably high.

The price appears to be very, very generous compared to the FT's revenues and assets. "In 2014, FT Group contributed £334m of sales and £24m of adjusted operating income to Pearson," Pearson said in a statement. "At 30 June 2015, FT Group had gross assets of approximately £250m."

Journalists at the Financial Times basked in the rich price.

The sale does not include the FT Group's 50% stake in The Economist, nor the FT's headquarters in London, which has led to speculation that the staff may be forced to move.

FT employees gathered to hear details of the sale.




Financial Times CEO John Fallon suggested Pearson needed to focus on its education business and couldn't lead the paper into a digital future.

Fallon's comments and the sale drew some dry humor as well as irritated responses from FT journalists, many of whom quipped about the language barrier with their new owner and responded waspishly to Pearson's abandonment.

The tweets included winningly geeky hat tips to the financial jargon that bathes FT journalists. Some made references to the controversies around the effectiveness of Abenomics, the financial policy of the Japanese prime minister Shinzo Abe; Japan's Nikkei financial index (which is roughly, the Japanese version of the Dow Jones Industrial Average in the U.S.); and the paper's popular and nerdy finance blog, Alphaville, which was born as as a quip on "alpha," the finance patois for profits from investing, and shares a name with unrelated movies and albums.

Speculation and mistaken identity

The Financial Times was founded in 1888, and Pearson has owned it since 1957. The FT Group, the corporate entity that shelters the FT within Pearson, also includes 50% ownership of The Economist.

“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," CEO Fallon said in a statement.

He elaborated on that point to employees.

Rumors have abounded for years that Pearson, an education company, would jettison the FT, but former Pearson CEO Dame Marjorie Scardino always denied that the prestigious paper would leave, even going so far as to say the FT would be sold "over my dead body." Scardino stepped down from her perch at Pearson in 2013, and her successor John Fallon reiterated that the FT was "valued and valuable" to the company.

The advantages enjoyed by the FT include its prestige and its committed business readership, which opens the door to luxury ads and lavish coverage of private planes and expensive watches in supplements such as "How to Spend It," which advises capitalists of how to elegantly dispose of their income.

In its statement, Pearson was subtly responding to a report by Bloomberg News staff earlier this week that the company was seriously pursuing a sale of the FT.

The Financial Times, however, has struggled, as a lot of legacy media companies have, with embracing digital distribution and the sometimes obscure ways of Internet readers. The publication has not won a reputation for digital savvy, with a difficult and buggy paywall and clunky internal computer systems.

Digital turnarounds tend to be long and expensive, as the revenues of the New York Times show, and many doubted that Pearson, despite its stated love for the FT, had the money or inclination to invest in its modernization. FT reporters have long felt that expense cuts at the paper — including staff buyouts — were in preparation for a sale.

Making money on Internet readers proves elusive

In a larger sense, advertising revenue is normally far lower per ad for most digital news than it is for big, splashy newsprint and magazine pages. That has forced media executives to reconsider all the ways in which they had been used to doing business, which are no longer adaptable to a digital world.

Two years ago, Pearson sold off the financial trade publications that had been part of the FT Group, including Mergermarket.

Pearson will announce its latest earnings on Friday. They will be closely watched for details.

The announcement ends a baffling few hours in which speculation ran wild with press reports incorrectly identifying a variety of buyers, at least one of which was forced to deny the rampant guessing. The circus started early Thursday with Pearson's confirmation that was in "advanced discussions" to sell the newspaper.

A passel of press reports immediately tried to pin down the name of the buyer. Reuters coyly suggested it was a "global digital news company," which ruled out dead-tree rivals like the New York Times, Wall Street Journal and others. In the past, Reuters was also considered a candidate to buy the FT, due to their common interest in financial news. Other rumored potential buyers included Bloomberg — which has long been rumored to be interested in the FT and has frequently denied interest— as well as Axel Springer.

Several reports earlier had confidently named German media conglomerate Axel Springer as the buyer, starting with German daily Der Spiegel , which was the first to report Axel Springer as the frontrunner.

forcing Axel Springer to eventually issue an official denial of the reports. The Financial Times itself reported Axel Springer as the buyer.

Screen Shot 2015-07-23 at 10.13.20 AM

The Financial Times initially reported Axel Springer as its buyer.

Some on Twitter even joked that the FT would have had no trouble confirming the news by walking over to the desk of their editor in chief, Lionel Barber.

That added a frisson of humor as Barber later tweeted the deal announcement.

Pearson had warned that "there is no certainty that the discussions will lead to a transaction."

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