The Nikkei Financial Times Deal: Journalism and Quality

September 29, 2015

I read a Harry Quebert type article this morning called with typical big time journalism understatement “The Financial Times and the Future of Journalism.”

Yep, the future. Of journalism.

The set up is an interview which has been converted to a chatty, informed narrative with commentrary from the person asking the questions (a New Yorker “contributor”, which I think means contract worker) and statements from a full-time equivalent at the Financial Times, a salmon colored newspaper consumed by  750,000 quality-centric readers.

The quotes in this blog post come from the CEO of the Financial Times which sold to Nikkei, a Japanese outfit for 40 times the FT’s 2014 revenues. So $37 million netted Pearson, the former owner of the FT, about $1.4 billion. Like the HP purchase of Autonomy, I will be interested to see how the purchase plays out. Obviously Pearson was neither willing nor able to put the FT on a pedestal of cash. The former owner of Madame Tussaud’s wax museum sold the newspaper. Let Nikkei realize the long term benefits of FT ownership I assume.

The write up by the New Yorker magazine, which has pretty good cartoons, is a darned interesting journalistic artifact itself. But I want to focus on some of the statements in the write up, allegedly made by the FT CEO who played a big part in the deal with the Japanese buyer.

I noted this statement:

Nikkei wanted to prepare for the transition to digital, which has been slow in its home market.

My recollection may be fuzzy, but I thought that the Japanese were exploring the digital world, databases, and all sorts of software based activities in Japan’s Fifth Generation Project in the early 1990s. Hey, that was like yesterday in traditional print publishing.

The FT executive allegedly said to the reporter:

I think if you were to summarize the vision that we both share, it would be about growth. We both think there is a very good growth opportunity for the F.T. That requires a long-term perspective. It requires investment. They have committed to that. And for a news organization like the F.T. right now, that’s music to one’s ears, frankly.”

I like the long term growth perspective. Apparently Pearson was not on board with this concept about investment without significant payoff. As a result, Pearson shopped the FT and netted a nine figure payout.

Why did Pearson opt to sell and not pump cash into the FT? Here’s the explanation from the FT executive:

What is lacking is some fuel in the tank and the ability to spread our wings a bit.”

Pearson apparently lacked “fuel”. I wonder if the “fuel” is patience, money, financial resources, or wisdom. The billion dollar deal looked pretty snappy to me. Imagine. More than one billion for a newspaper. That’s the color of money.

Apparently the FT boss perceives those from the Far East—that is, beyond Dover—as adopting Adam Carolla’s “In 50 Years We’ll All Be Chicks” approach. None of this City and Wall Street aggressiveness toward revenues and profits. Here’s a passage I highlighted in green, the color of money:

But Japanese newspapers, including the ones owned by Nikkei, are also known for taking a less aggressive stance toward news than many of their Western counterparts.

Will the FT remain independent as other newspapers and real journalistic endeavors do the inclusion, sponsored content, advertising thing? According to the FT executive:

“Editorial independence is absolutely fundamental to the way we operate,” he replied.

He allegedly added:

But I think the most important thing is they understand our values and editorial independence. I’m not going to tell them how to run Nikkei, and they are not going to tell us how to do editorial independence at the F.T. They are very clear about that.

I like that understanding. The owner will not assert control over something the person owns. Shared values among the quality journalists effervesce from this factoid.

The most important passage concerns the FT business model. Here’s the explanation of the FT’s “vindicated”, super-charged approach to generating at some time in the future oodles of dough from a global market of discerning news consumers:

The replacement was cheap trial subscriptions. If you go to the F.T.’s Web site today and try to read a story, you will be prompted to take out a month-long subscription for a dollar….“We are now able to measure, optimize, and track all of these readers and changes with real insight that we could never do before. It sounds dry, but it’s not. It’s really understanding readers, what matters to them. We are never going to edit by numbers, but we are going to inform all of our decisions around data.”

Not only that, the FT is going back to the model for the newspapers which have become pedestal mounted historical artifacts. Newspapers are back as the “trusted” folks in the information business. I know that I trusted newspapers until I read about US diplomacy and yellow journalist in the period from 1895 to 1898.

“Precisely because of digital disruption, precisely because there is so much information and news and information out there, the value of a trusted guide, the value of a trusted brand” has gone up, he said.

Yep, those families losing sons in the dust up among the US, Spain, and Cuba understand that trust stuff.

Then there is a statement which seems to bring the future payday for the new owner of the FT tantalizingly near:

But we fundamentally believed that if it’s quality journalism, people will pay for it. That’s been vindicated.”

From my point of view, what’s been vindicated is that there was a buyer willing to pony up more than $1 billion for a brand, several hundred thousand readers, and a Web site offering a  $1.00 trial subscription. I assume that is the definition of vindication from Pearson’s point of view. I am not sure about Nikkei’s point of view. If the FT’s senior management had an agreement with Pearson designed to keep the FT’s senior management on board, was some of the money shared with the FT leadership? Good question.

I also highlighted in red ink red, not money green, this statement attributed to the FT executive:

But he also said insisted that things are changing in journalism and that the business climate is improving. “There is a belief in journalism,” he said.

Stepping back I thought about the New Yorker’s analysis of the FT deal. Much of the verbiage could be used to describe how the New Yorker feels about its approach to news and information.

I asked myself, “Is this article about the FT or is it about the New Yorker’s perception of quality journalism?” Another good question.

And what about search. Does anyone recall the Endeca FT Newssift project? I do. Moving on.

Stephen E Arnold, September 29, 2015


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