MARKET UPDATE
| Wont rule out FT sale: Pearson CFO Fri, 16 Nov 2012 00:50:00 +0530 |
| Business standard Economy Policy News Pearson Plc wouldn’t rule out a sale of the Financial Times as Chief Financial Officer Robin Freestone told investors that the company may eventually re-examine its ownership of the newspaper. “We look at the ownership of that and say, ‘Are we the best owners for it?’” Freestone said yesterday at a conference in Barcelona organised by Morgan Stanley. “So far the answer is yes. That could change.” Pearson is emphasising its education business as new Chief Executive Officer John Fallon prepares to take the reins from Marjorie Scardino, who retires in January. The company has decided to consider offers for the iconic pink financial newspaper this year, people with knowledge of the situation told Bloomberg News this month. Pearson had denied that the Financial Times is for sale. The more than 120-year-old newspaper that was first printed on pink paper in 1893 and was bought by Pearson in 1957 employs more than 600 journalists and has combined paid print and digital circulation of about 600,000. Fallon last month called it a “highly valued and very valuable part of Pearson.” During her 16-year tenure, Scardino defended her company’s ownership of the Financial Times, Britain’s flagship financial daily, for which Pearson may seek as much as £1 billion ($1.6 billion), a person familiar with the matter has said. The paper is worth at least $1 billion, two other people have said. The company has been working to increase digital subscriptions to compensate for a decline in print sales. The FT Group reported sales that rose 6.4 per cent to £216 million in the first half. Adjusted operating profit grew 4.8 per cent to £22 million. It accounts for about 8 per cent of revenue and 12 per cent of profit. “It’s a very highly valued asset,” Freestone said yesterday. The newspaper is “certainly not making the losses of some of its compatriots in the UK.” Pearson shares slipped 0.3 per cent to 1,207 pence at 8:28 am in London trading. The company may also ultimately re-evaluate its minority holding in a venture being set up with Bertelsmann SE to combine the German media group’s Random House with London-based Pearson’s Penguin publisher, Freestone said. “We would hope to hold 47 per cent for a very long time,” Freestone said. “In the event that we decide it’s the right thing to do, we will explore other options.” No breakup fee is included in the Penguin-Random House agreement, and the partners are prohibited from selling their holdings for three years, the companies said last month when they announced the deal. After five years, either company can ask to carry out an initial public offering of the venture. Consumer titles are increasingly becoming digital and Pearson sees e-book distributors consolidating into a smaller market, Freestone said. That makes the partnership with Bertelsmann, which would create by far the largest book publisher in the UK and US, particularly attractive. The venture between 77-year-old Penguin and 87-year-old Random House will control about 25 per cent of the industry, according to Bertelsmann CEO Thomas Rabe. The two companies controlled a combined 29 per cent of US publishing sales and 26 per cent of the UK market, according to this year’s sales data through October 6 compiled by Nielsen BookScan. “Books are the horses and bayonets of the industry,” Freestone said. “We’re not trying to sell horses and bayonets. We’re trying to sell nuclear submarines and aircraft carriers.” Freestone said text books sold by its education business will evolve into software-as-a-service that can show teachers the most effective way to teach a subject. |
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