Pearson sale of FT could stick this time

July 20, 2015

By Jennifer Saba

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Speculation that Pearson might sell the Financial Times could come up trumps this time. The pink-hued newspaper looks increasingly out of place in a company with a core focus on U.S. education. A healthy M&A market might encourage potential buyers to bid a price acceptable to the $16 billion publisher.

It has become something of a parlor game to guess if, or when, Pearson might put the global financial newspaper on the block. Possible buyers include German publisher Axel Springer, according to a Bloomberg report on July 20. Bloomberg also says an auction might fetch as much as $1.6 billion – though toppy price expectations on the part of the current owner might have got in the way of previous potential deal-making.

It is easy to see why the rumors persist. Pearson has comprehensively restructured itself to the point that North America represented 61 percent of its $7.5 billion revenue last year. Educational publishing, as opposed to financial journalism, is its thing. Among the more recent moves Pearson hived off its Penguin books unit into a joint venture with Bertelsmann’s Random House in 2013. It sold Mergermarket, a financial news service, for $624 million in 2014.

Pearson doesn’t break out details of the FT’s financial performance but circulation increased 10 percent to 720,000 last year and digital subscriptions now represent 70 percent of the paying audience. Those numbers suggest the FT has done a good job of moving away from its dependence on paper. It could help spur buyers’ interest.

The fate of the privately held Economist, which is half owned by the FT, may add complications. Still, handsome media assets such as this are highly prized. Rupert Murdoch shelled out a 67 percent premium to pry the Wall Street Journal out of the hands of the Bancroft family in 2007.

The value of M&A deals worldwide almost set a record in the second quarter, according to Thomson Reuters data. Perhaps Pearson is reading about the activity as chronicled in the pages of the Pink ‘Un, and hopes to follow the money.

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