Pearson’s leadership has long denied any intention to sell the Financial Times (FT). But last night’s fervent and somewhat tetchy response to a Bloomberg story, saying talks were imminent, makes you wonder if there isn’t something more to the rumor this time.
Pearson’s statement said:
We have said many times that the F.T. is a valued and valuable part of Pearson. We are not in the habit of responding to rumors, speculation or reports about our portfolio, however this particular Bloomberg story is wrong.
Pearson issued the formal declaration within an hour of the Bloomberg story appearing. Of course, there are obvious possible reasons why:
- It’s true, and Pearson is not looking to sell the FT.
- Rumors about a sale leave employees, suppliers, and shareholders skittish and can sometimes force a company into selling an asset, whether it wants to or not.
- Pearson is planning to sell the FT, but on its own terms and in its own time.
The last reason is the most likely.
Bloomberg’s story made the usual argument that Pearson is considering selling the FT to concentrate on its faster-growing education business. But two added twists make rumors of a sale more compelling: Chief executive Marjorie Scardino, a staunch defender of keeping the paper, leaves in January; and the merger of its Penguin publishing unit with Bertelsmann’s Random House leaves Pearson more focused on education than ever before. The FT, and a handful of other consumer media products, looking like they don’t belong.
The FT Group—which owns the FT, 50% of the Economist magazine, and other assets (see here)—accounts for only 8% of revenue, though 12% of profits. Pearson’s core business is in education. The company has repeatedly said it will focus on this business and over the past year has spent more than £750 million on 10 acquisitions in education, according to the Telegraph. Meanwhile, analysts have long argued that a sale of non-education holdings makes sense as a way to boost interest in Pearson’s stock. Many analysts see a sale of the FT as inevitable, and even more so with Scardino’s departure and the Penguin merger.
So who might buy it? Bloomberg mentioned a private individual, with whom a sale might be arranged even before Scardino leaves. Other possible bidders included unnamed rich people from “Russia, the Middle East, or Asia, as well as Bloomberg LP,” publisher of the “scoop” that the FT is for sale. An anonymous source added that Bloomberg has offered to buy the FT before—an asset roughly valued at £1 billion—but been turned down. Thomson Reuters also made the list.
Indeed, one of the most obvious buyers is Bloomberg, with its deep pockets. It already signaled to the market in 2009 that it had an appetite for consumer print media with its first print major acquisition ever—BusinessWeek. “We are not buying BusinessWeek to gut it,” the company’s president said at the time. “We are buying it to build it.”
This leads to one final explanation for Pearson’s uncharacteristic, almost peevish “Bloomberg story is wrong” response.
- The news of a possible sale of its trophy holding, running in the publication of a likely suitor, hit a nerve.