What Nikkei’s ownership means for the future of the Financial Times
Japanese media business Nikkei has vowed to make the Financial Times (FT) “stronger” after agreeing to acquire the newspaper business for £844m, a pledge both will hope translates into firmer footing in a rapidly changing news landscape.
Words by Seb Joseph and Ronan Shields
It’s a deal that’s been a long time coming, as the chasm between the broadsheet’s digital aspirations and Pearson's focus on education widened. And while analysts have balked at what they deem an extortionate fee in comparison to other newspaper groups, the Japanese media conglomerate clearly feels there’s still untapped revenues from the FT’s premium subscribers and effective paywall strategy.
The FT made online subscriptions work when many were and are still struggling, successfully leveraging its unique content and expertise to carve out a superior editorial and commercial proposition. Circulation increased 10 per cent year-on-year in 2014 to almost 720,000 across print and digital, while digital subscriptions surged 21 per cent to almost 504,000 – 70 per cent of the title’s total paying audience.
Alex Wisch, media and telecoms analyst at Bloomberg Intelligence, said: “The FT Group, as a whole, only had £24m operating profit in 2014 so that the £844m price tag for the paper only looks hefty. This can only be understood in the context of what it could be considered a trophy asset. In fact, this valuation can only be compared to News Corp’s acquisition of The Wall Street Journal in 2007 for $5bn. There are not many trophy assets that can command such premium."
Despite this, the FT has so far been unable to match the scope of its digital counterparts like Bloomberg and Reuters, which have predicated their online offerings on a faster, more immediate form of journalism. These issues will likely be a thing of the past, with Nikkei’s chairman Tsuneo Kita promising to make the necessary investments needed to make the FT “much stronger”.
So where will future revenues flow from to make the FT stronger? Charlotte Tice, head of affinity at Mindshare UK thinks they will come from the publisher's data on its 750,000 high net worth subscribers. “Data is the currency of the future and the FT subscribers are pure gold,” she added.
“For advertisers, the change in ownership shouldn’t mean much from a prestige point of view – there was a certain cachet in British ownership from the global corporate and luxury advertisers who frequent the FT - but Nikkei is clearly a competent and reliable owner so I doubt there would be much change to finances there.”
Indeed, Kita told delegates at a news conference yesterday (24 July) that Nikkei would not interfere with the editorial compass of the paper, and added “the FT is going to be the FT - it remains unchanged". The public pledge will go some way to ease concerns from some media analysts that the Japanese firm’s inexperience in tackling in-depth financial issues would weigh down the FT.
From a commercial standpoint, Nikkei will own - should the deal be rubber-stamped – one of the more forward thinking publishers when it comes to monetising its media. From selling long-form display ads sold on time not impressions to being one of the leading partners behind the Pangea programmatic alliance, the FT's relationships with a smaller number of valuable readers in comparison to other newspapers has given it the scope to test and learn at speed.
Jo Blake, head of outdoor, newsbrands, and radio at Havas Media, said: “The move makes sense as there’s certainly more synergies with Nikkei – a like-minded media company – than with [the FT’s previous owner] Pearson [a more traditional academic publisher], which not a lot of people know about.”
“We use the FT [as a media resource], as it’s a trusted brand, and its audience is extremely valuable to our clients.”
In terms of potential changes the takeover may result in, Blake told The Drum, it was a “watch and see” situation, as these kind of moves usually result in changes, but for the moment, it was still likely to remain business as usual.
Buying the FT effectively makes Nikkei, Japan’s biggest financial news publisher, a global player and for the FT this means more focus on its digital efforts to in order to maximise that reach and influence.