London’s Financial Times (FT) is on its way out of a 15-year relationship with the Indian financial newspaper, the Business Standard (BS), ending a landmark partnership that had, in recent times, become a source of frustration for the British newspaper’s parent, the Pearson group, which had high hopes of the booming Indian newspaper market.
While details of the complex separation deal were not fully clear, BS will retain the right to use the FT brand as well as content through at least 2008.
In the interim, FT is closing an online content deal with Network 18 Media and Investments Ltd, the diversified media conglomerate, which, through its TV18 India Ltd, runs CNBC TV18 as well as Moneycontrol.com financial news portal in India.
While a content relationship between FT and Network 18 is believed to be already in place, it is yet unclear as to what stake Pearson will have in this new online venture as that process is still being finalized and would need to be eventually cleared by the government, though foreign holdings in Indian Web ventures are not highly regulated, unlike investments into the Indian print media.
People familiar with the matter say that the FT relationship with Network 18 is likely to lead up to a business newspaper relationship as well, once FT and BS formally part ways. Network 18’s primary owner and managing director Raghav Bahl has long wanted a financial daily to complement his market-leading business news channel as well as to complete a growing portfolio of news and related offerings.
“We intend to enter this space (financial newspaper) because of its immense strategic fit with us. However, no plans have been firmed up,” said Bahl, while declining to specifically comment about any potential partnership with FT. A London-based spokesperson for Pearson, after reviewing detailed questions from Mint, simply said: “We have no comment to make at this time.”
Business Standard Ltd is majority owned by Mumbai-based financial services conglomerate Kotak Group. Uday Kotak, vice-chairman and managing director of Kotak Mahindra Bank Ltd, and the group jointly own a 55% stake, while promoters of Great Eastern Shipping Co. Ltd own 28%, according to a senior board member of the newspaper company, who didn’t want to be named.
BS editor is the well-regarded T.N. Ninan, who also has an ownership stake in the venture. Kotak Mahindra Bank and BS declined to comment. Questions sent to the bank remained unanswered.
The Financial Times Group still holds approximately 14% stake in BS, which it picked up in 2003. It is unclear how the stake will be valued or disposed of, as overall media valuations in India have soared since then.
But Pearson itself is believed to have written off the value of the stake in its books, given the difficulties the company has faced in terms of expanding in India or extricating itself from the relationship, though the company wouldn’t respond to questions about this accounting change.
Prior to 2003, the two newspapers had a syndication relationship that allowed BS to carry articles that appeared in FT.
BS, which notes the FT relationship on its front page, mostly runs one inside page of FT content, though FT articles do appear on other pages.
“FT was more of an investor (in BS) than a strategic partner,” claims a senior BSL executive who didn’t want to be named. “They sat on our board but were never an active stakeholder. They didn’t play any role in our growth or expansion strategy. So, their exiting the partnership is not likely to hurt us in any way.”
Despite their significant stake, FT’s India-based executives were allowed little role in the paper culminating in them being asked to leave shared offices in Mumbai some three months ago.
Meanwhile, BS is on an expansion spree, launching Hindi and Gujarati editions of the flagship business paper. In anticipation of the parting of ways with FT, the newspaper has internally announced it will set up its own foreign bureaus.
The significance of the relationship was because, unlike foreign wire services as well as content from the likes of The New York Times, which is widely available to anyone willing to pay for a syndicated service, the BS relationship with FT brought exclusive global business content to the paper (Mint, which competes with BS, has an exclusive print and online content relationship in India with The Wall Street Journal, which is owned by News Corp. Pearson and News Corp compete globally).
Mumbai-based FT’s director of business development in India, Khozem Merchant, refused to comment. Merchant will be on the board of the new online venture with Network18, which will also see a senior FT Web editor from London play a key content role in the early stages. Pearson has strong online presence through its mostly-free news website, FT.com.
Pearson’s chief executive Marjorie Scardino said last week that the group expects “to increase our investment in India significantly over the next three years...” So far though, FT executives have been significantly hobbled in their attempts to expand the reach of their flagship FT brand either through BS or on their own. Attempts to launch an India-based print edition of FT got bogged down in a legal dispute over intellectual property with Times Publishing House Ltd, which publishes a supplement called FT along with their The Economic Times.