Before last week, you might have had to jog your memory to recall the last time when a sale of a newspaper brand didn’t seem a desperate measure on the part of the sellers who, at best, seemed completely overwhelmed with the idea of an increasingly digital future. Now, of course, it’s easy, with Pearson announcing late last week that it is selling the iconic Financial Times newspaper to Nikkei, the well-known Japanese publisher.
Sriram Srinivasan For an industry that has had a disproportionate share of bad news in recent years, especially in the Western world, this is a refreshing change.
But the transaction doesn’t change the narrative about the industry. The digital space has been merciless — it has not only felled many traditional newspapers but, of late, has also cut to size many new-age, digital-only sites. Just this year, Gigaom and Circa News, both of which have showed tremendous promise in recent years in targeting new types of audiences, downed their shutters, not able to keep pace with the demands of scaling up in a digital business.
Few may be able to emulate the FT , which seems to have all the ingredients in place to make a success in the digital world. Firstly, it’s a well-respected global newspaper, with a 127-year-old heritage. (Pearson reportedly paid £720,000 for a controlling stake in the business in 1957),
Secondly, its core competency is in finance and economics, news about which consumers are more likely to pay for. In the more advanced markets, even general newspapers have had some success with paywalls (readers having to pay to access editorial content). In contrast, in India, even financial newspapers shy away from charging anything at all for content. Instead, they expand coverage to all kinds of news, even at the risk of spreading themselves thin. To provide another contrast, The Guardian , the U.K.-headquartered general newspaper, has made huge strides to become one of the top digital newspapers in the world but then its strategy is based on an open, non-paywall model.
It mattered that FT uses these strengths well. And it has. You hardly get much of FT content for free. Its cheapest subscription package costs $6.45 a week. Still, in 2014, its total circulation grew 10 per cent year-on-year to 7.2 lakh. And 70 per cent of this was digital subscription, a channel that grew over a fifth. Mobiles and tablets drive half of FT ’s traffic. In an email to his team in January 2013, FT editor Lionel Barber wrote, “Our competitors are harnessing technology to revolutionise the news business through aggregation, personalisation and social media. Mobile alone, for example, now accounts for 25 per cent of all the FT ’s digital traffic. It would be reckless for us to stand still.”
Stand still, it doesn’t seem to have. The organisation has been unafraid to experiment. It recently pioneered the use of an advertising metric called cost per hour. Under this, how long an ad is viewed becomes a key measure. A large number of sites still get paid according to the number of clicks or views (rates under which are falling every year, thereby making advertising a weak source of digital revenues). Underlying this big shift by FT is an understanding of data and a huge vote of confidence in its platform.
So, why is it selling at all? Pearson wants to focus its attention on education, which is in the midst of a digital disruption of its own. It has a comparative advantage in education, drawing a bulk of its revenues and profits from it. Journalism might seem a weaker option. Also, as John Fallon, Pearson’s CEO, blogged after the deal, “The pace of disruptive change in new technology — in particular, the explosive growth of mobile and social media — poses a direct challenge to how the FT produces and sells its journalism.”
Interestingly, the buyer isn’t a rank outsider to the industry, as has been the case with recent high-profile newspaper acquisitions. Nikkei was founded 12 years before FT was born. Nikkei’s chief Tsueno Kita, the Wall Street Journal reported, has even been successful in introducing a paid website, which now has 4.3 lakh online subscribers. It believes the FT will help it in its global play. Would it?
sriram.srinivasan@thehindu.co.in
