Dame Marjorie Scardino once said she would sell the Financial Times (FT) “over her dead body”. But following Rupert Murdoch’s $5 billion (Rs20,500 crore) bid for Dow Jones & Co., it wouldn’t be surprising if that turned out to be a politician’s promise. Indeed, the bid might make Pearson Plc.’s boss keener to offload FT.
Imagine if Murdoch’s bid succeeds. A Murdoch-controlled Wall Street Journal could make life much harder for FT. The paper is only just recovering from years of losses, and it would face fiercer competition from its main rival, The Wall Street Journal. Pearson probably wouldn’t want to slug it out with Murdoch, especially since the FT paper and website make up less than 10% of its enterprise value, which is now dominated by the education business.
Meanwhile, the sale option has become more appealing. Apply the same eye-popping multiple that News Corp. is offering Dow Jones to FT’s sales, and the newspaper plus FT.com is worth around £650 million (Rs52,650 crore). And that’s not even including other assets in the FT publishing group, such as the Interactive Data Corp.
Bending on price: Pearson chief Dame Scardino may not wait for a trophy price, if Murdoch were to buy WSJ.
The problem is who might buy it. In theory, it could be of interest to anyone who coveted Dow Jones. But Reuters and Bloomberg, both of which have been mentioned as possible rivals to Murdoch, are not thought to be very attracted to newspaper ownership. The FT group doesn’t have the same spread of electronic assets as Dow Jones. That leaves a more motley cast list.
Private equity might be keen, but wouldn’t be prepared to pay a trophy price. Then there are media barons, such as Britain’s Lord Rothermere, and members of the global mega-rich elite, such as the Russian oligarchs. Trade buyers such as General Electric Co., which owns the NBC broadcasting unit, and Yahoo Inc., which has a massive online financial channel, could take a look. There’s always a possibility that Murdoch himself might be interested were he to fail to buy Dow Jones.
The list is never going to be super long if Scardino holds out for a buyer who’s willing to pay a knockout trophy price. But with the threat of a Murdoch-dominated Journal on the FT’s case, perhaps she and her board might be slightly more willing to bend on price.