PARIS — Nikkei, the Japanese media group, agreed on Thursday to buy the FT Group of London which includes The Financial Times, for about $1.3 billion, as Pearson, the British parent company of the pink broadsheet, moves to focus on its core educational publishing.
The Financial Times, one of the world’s most respected and distinctive newspapers, had been rumoured to be for sale for some time. In recent years, Pearson has reshaped its business and its new leadership toned down the company’s longtime devotion to print.
For Nikkei, the purchase of the Financial Times reflects the broader digital push in media.
Nikkei’s flagship publication Nihon Keizai Shimbun is Japan’s largest business newspaper, with a print circulation of around three million and a paid online readership of more than 400,000, according to its website. Japanese newspapers’ vast print circulations have helped cushion them against the technological and financial challenges of the Internet age.
Yet that advantage has had a negative side. Online offerings have lagged, leaving Japanese publications vulnerable to shifting reader preferences. Even in Tokyo, print readership is declining, especially among the young, and many editors and publishers fear their publications lack the digital skills and experience to respond.
The $1.3 billion price dwarfs other recent sales. The Washington Post sold for $250 million in 2013. The Boston Globe sold for $70 million the same year.
Claudio Aspesi, an analyst at Sanford C. Bernstein in London, said that from Pearson’s point of view, the price was a good one. “It was an offer they couldn’t refuse,” he said.
Nikkei and The Financial Times have similar pedigrees.
Founded in the late 19th century, they both dominate business coverage in the their home markets. Their countries’ main stock indexes, the Nikkei 225 and the FTSE 100, are named for them.
But The Financial Times has accomplished something Nikkei has not: It has turned itself into a truly global newspaper, with coverage ranging far beyond its base in midsize Britain. The Financial Times has combined paid print and digital circulation of 690,000.
Nikkei’s newspaper, limited by a less global Japanese language, is far more domestically focused and has made just small international inroads. In 2013, it started an English-language magazine and website, Nikkei Asian Review.
Nikkei may see the acquisition as a shortcut to attaining a broader reach at a time when news media is increasingly global.
The Guardian, the British newspaper and website, has long pursued a strategy built around robust global growth as domestic newspaper as sales have dwindled. The Huffington Post, which was recently said to have been valued at $1 billion, has also been aggressively expanding around the world. Axel Springer, the German media company that was considered a contender to buy The Financial Times, has been making investments and starting partnerships in global properties, including Politico.
With the deal, Pearson is intensifying its focus on the educational publishing business, which provided about three-quarters of its profit last year. Pearson is the leader in the United States market for standardized testing materials, a business that accounts for more than 60 percent of its revenue in North America.
But Pearson’s business in the United States has shown signs of faltering. College enrollment fell for a second year in 2014, and there has also been criticism of national Common Core educational standards.
“Pearson has been a proud proprietor of The FT for nearly 60 years,” John Fallon, Pearson’s chief executive, said in a statement. “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.”
Pearson itself, he added, “will now be 100 percent focused on our global education strategy.”
Shares of Pearson rose 2.4 percent in afternoon trading in London.
Nikkei, which is privately held, is perhaps best known in the West for publishing the Nikkei 225 stock average, the benchmark for shares on the Tokyo Stock Exchange. But its business extends beyond publishing, to broadcasting, events and data services.
Nikkei already has an editorial partnership with The Financial Times. Nikkei distributes its content and translated Financial Times articles appear in Nikkei.
Given the language differences with Nikkei, the scope of editorial integration is likely to be limited. That could engender doubts about the business logic behind the acquisition, yet it may also ward off possible clashes between the newspapers’ journalistic cultures.
Nikkei, for all its dominance in business reporting in Japan, is seen by many as reluctant to sharply challenge the companies it covers. Corporate wrongdoing – be it financial scandals or the sale of unsafe products – is often reported elsewhere first, for instance, in the less establishment-connected weekly tabloids or the foreign news media, then followed by Nikkei.
Mr. Aspesi, the analyst at Sanford C. Bernstein, said he was optimistic about The Financial Times’s future.
“If you’re a journalist at The FT, you’re going to be worried, but you would have been worried no matter who the buyer was,” he said. “And this is better than some oligarch.”
“I think Nikkei understands that there is a culture at The FT that needs to be treated with care,” he said. “I doubt they’ll be as intrusive as some people fear.” (NY Times)