Ugrás a tartalomhoz Lépj a menübe

FT Owner Eyes Web Site for Future Growth


FT hopes to be in the pink for the new year

Facing a challenge from Murdoch's Wall Street Journal and concerns about the economy, Pearson, the paper's owner, is nonetheless bullish, finds Juliette Garside

In the week that Rupert Murdoch finalised his $5bn acquisition of Dow Jones and prepared to pump considerable funds into transforming the Wall Street Journal, FT Group chief executive Rona Fairhead was busy completing her own deal.

As Murdoch took his biggest plunge yet into the world of print, Fairhead was busy selling ink on paper assets. She is finalising a deal to sell the French business daily Les Echos, the disposal of a 50 per cent stake in FT Deutschland is expected to be next and a question-mark also hangs over Vedomosti, the Russian business paper jointly founded by FT parent company Pearson, Finnish group Sanoma and Dow Jones.

We like the business news market," says Fairhead. "But we want to have brands that are digital and can be built globally. Our concern was that if we continued to own businesses like Les Echos, we wouldn't invest and ultimately that wouldn't be the right thing for Les Echos or the FT Group." Diversifying into new digital publishing assets is one way Fairhead is trying to secure the FT Group's future. But the threats she faces are substantial. On one side looms a re-energised Wall Street Journal and its website under Murdoch's ownership. On the other is the downturn in financial markets which directly threatens advertising revenues at her main Financial Times newspaper title.

Fairhead readily admits the FT's recent run of good fortune may not last amid the credit market turmoil and redundancies at City banks. "The year ahead looks uncertain, you are not going to expect a bullish print advertising business."

Usman Ghazi, an analyst at Dresdner Kleinwort bank, commends Fairhead's efforts to diversify away from print advertising. But he points out that all divisions of the FT Group are susceptible to a downturn in the financial markets. "The problem is, as we head into a downturn and the FT faces more competition from the Wall Street Journal, there could be a double whammy," says Ghazi.

Murdoch's investment in the paper product will be of concern not just to the FT. The New York Times, whose status as the newspaper of choice for America's political elite News Corp wants to challenge, will also be worried about the new Murdoch threat. But the battle between Murdoch and the FT Group won't just be fought in the US. Closer to home the Wall Street Journal is likely to be combined with business coverage in the Times, threatening the FT's UK circulation even more.

But the plans for are those which will most worry Fairhead. Murdoch looks likely to make the website's content free - there are now 930,000 subscribers generating some $75m a year in revenues. Analysts estimate that it would take two years to replace those funds with advertising revenues, albeit from a vastly more visited site.

While the FT recently made it free for casual surfers to read up to 30 of its news stories a month on, subscriber numbers stand at 100,000. Surprisingly, the number prepared to pay £100 a year or more is growing slightly faster since the free content was expanded, according to Fairhead.

All that could come to an end once goes free. Says Ghazi: "Murdoch might be more willing to accept the loss in profit short-term to gain benefit long-term. If there is a requirement to invest considerably in the FT, that will make [Pearson] shareholders nervous."

Which begs the recurring question of whether Pearson is the right custodian for the Financial Times. "Pearson is a global business using digital technology based on high-quality content," says Fairhead.

This is a logic which investors accept for the time being. But when push comes to shove, they may prefer to see money ploughed into the much bigger and more reassuring Pearson business of schools testing and textbooks, rather than into a battle with the world's most "restless" newspaper publisher.

While Murdoch's profile has dominated the media landscape for decades, Fairhead is still a relatively unknown quantity outside the FT Group and its Pearson parent. Fairhead, 46, was promoted last year to run the FT Group from her previous position as finance director at Pearson., which specialises in educational publishing. Tipped as a potential successor to Pearson's Texan chief executive Dame Marjorie Scardino, her arrival was expected to lead to a sale of the FT.

That is not on the cards at the moment, but Fairhead may not have the same attachment to newspaper business as her boss.

Scardino ran the Economist, in which Pearson has a 50 per cent stake. With her husband she founded a Pulitzer Prize-winning newspaper, The Georgia Gazette. Fairhead joined Pearson from ICI and her experience is in chemicals and aerospace.

Nevertheless, the FT Group that Fairhead runs is changing rapidly. In 2000, two thirds of FT Group's revenues were from its print businesses. That has fallen to under a third today. The FT is still a large part of the business, generating £164m in sales in the first half of this year.

But the sale of Spanish business publisher Recoletos in 2004 and the disposal of Les Echos have shifted the balance. At the same time Interactive Data Corporation, which provides 3.5m daily prices, is booming. Pearson bought it 1995 for $200m and via a partial listing on the US Nasdaq exchange it is now valued at $1.3bn (£642m).

Fairhead has equally big ambitions for her latest investment, financial information service Mergermarket, which began life seven years ago with two staff in a windowless office in Brick Lane. It now employs 600 people - 200 in London, 155 in New York and 60 in Hong Kong. It was snapped up last year by Pearson for £100m, and its importance to the group is more significant than the modest price tag might suggest.

Mergermarket (see below) is a key plank in how the owner of the Financial Times intends to future-proof itself against the increasingly difficult business of publishing newspapers.

Mergermarket specialises in providing early information on which companies are likely to be bought and sold. Dismissed by some as a repackager of market rumours, it has proved addictive to its clients. Bankers and lawyers use the stories as leads to prospect for business, hedge funds use it to place bets, and private equity houses use it as an aid to trading companies that are often not reported on in the financial press because they are either too small or privately owned.

More significantly, not a single penny of its revenues come from advertisers. It is purely a subscription business. Fairhead says: "This is a business that can go global, it's digital, it's subscription-based and it's mission-critical information.

We asked investment banks what the information they could least do without was and I was astonished at the number of them that said Mergermarket."

Fairhead and Pearson have placed their bets for the FT Group and believe they can fend off Murdoch's Wall Street Journal onslaught. Pearson shareholders will be looking on, hoping that falling markets and increased competition don't conspire to derail Fairhead's ambitions.


Survivor of the dotcom bubble

Mergermarket is one of those rare businesses born in the dotcom bubble that manages to live past its second birthday. It is the brainchild of Caspar Hobbs, 38, a former army intelligence officer turned print advertising salesman, and Charlie Welsh, 42, a reporter he met while working for the banking trade title Financial News.

A mature student who had just turned his hand to journalism, Welsh was intent on finding a way to support his young family.

Financial News printed a list each week of the most recent M&A deals and the advisers who had worked on them. Welsh began collecting in the information, coming in early and working late to build up a database. Hobbs had the idea of putting the list on a CD-Rom and selling it to headhunters who were looking to poach bankers and lawyers.

“The other journalists said it was intellectual donkey-work,” recalls Welsh. “I didn’t know why I was doing it at first, but a hunch told me I would benefit.”

And he did. Within six months, the CD-Rom was bringing in £250,000. Hobbs and Welsh talked to their bosses about developing the idea, but the will to invest wasn’t there. They raised £900,000 from a tech venture capital house, New Media Spark, and moved into the Truman Brewery building in London’s Brick Lane, which was at the time a hub for dotcom start-ups.

The pair began building a news service, which became Mergermarket, and their clients became the bankers and lawyers they had originally gathered information on. As other start-ups began to falter, Mergermarket was growing by 80 per cent a year. When the online retailer and fellow Truman Brewery tenant Clickmango folded, Mergermarket took over their offices.

Last year, Hobbs and Welsh sold up to Pearson for £100m, pocketing an estimated £10m each. Their achievement was thrown into relief when Financial News and its recruitment business went under the hammer for £75m.

Hobbs says his experience gathering intelligence in Northern Ireland helped him create Mergermarket. “We had to process a huge amount of raw information and turn it into intelligence. When I met Charlie I thought there was room for a more disciplined approach to how information was collected and sorted and disseminated in the financial services market.”

He has also created a culture among Mergermarket’s reporters and analysts that has more in common with sales teams than traditional newswires. Bonuses of up to £250 are paid each month, with points allocated to each story filed. The prize goes to reporters who bring in the most stories and gather those nuggets of most use to Mergermarket’s customers.

But Hobbs says his success was also down to timing. “We arrived when digital distribution was becoming mainstream, we were in the right place as technology was emerging.



Journalists who became businessmen

Iain Jenkins, a Sunday Business correspondent, founded HedgeFund Intelligence in 1998 with his wife Suzie. A publisher of monthly newsletters and organiser of industry events, it was sold for £11m to the Daily Mail and General Trust.

Two writers from the Lex column on the Financial Times, Hugo Dixon and Jonathan Ford, founded in 1999. The site provides commentary on the big financial stories of the day, on the day they break, and has syndication deals with a range of newspapers from the Wall Street Journal to Mint, the Indian financial paper .

PR man turned radio producer Martin Lewis built a career as a personal finance expert on television and set up in 2003. The site now has 3m visitors a month and if one of those visitors clicks on a link to a recommended product, Lewis gets paid.

Riyad Emeran left Personal Computer World to set up TrustedReviews in September 2003. He and his team review consumer electronics such as cameras and PCs, and the money is raised through display advertising. Riyad and his business partner sold TrustedReviews to magazine publishing giant IPC in October for an undisclosed sum.



Hozzászólás megtekintése

Hozzászólások megtekintése

Nincs új bejegyzés.