Rumors had long been circulating that the Financial Times—known for its curiously pinkish hue—would be sold. But the $1.3 billion buyout, announced yesterday (July 23) by Japan’s Nikkei took many by surprise, both in Japanese and western media circles.
Perhaps it shouldn’t have. The Nikkei, which traces its history to the mid-1800s, has been quietly expanding overseas in recent years, and particularly increasing staff in Asia, including launching the English-language Nikkei Asian Review in 2013.
Nikkei’s moves mirror other Japanese companies’ strategic expansion in recent years—they have been racking up overseas deals in order to compensate for slow economic growth and a shrinking customer base at home, as the Wall Street Journal explains. In fact, Japanese companies have done more than 5,000 overseas deals since 2005, according to Dealogic data reviewed by Quartz.
The Financial Times deal is not only a strategic move for Nikkei and corporate Japan, it’s part of a wider political foreign strategy. In 2013 prime minister Shinzo Abe said in parliament (pdf) that “the ideas of our country” were being misunderstood by foreigners. He called for measures to “actively collect and spread information so that we will be correctly understood.”
The paper’s own coverage of the deal (link in Japanese) said the buyout has created the world’s largest business media company, by readership, and that Nikkei would use the acquisition to broaden its global coverage. With 3.1 million subscribers to its morning newspaper, the Nikkei already has more readers than the Wall Street Journal, at least according to the Nikkei’s calculations. The FT adds another 737,000.
Reaction in Japan has been mixed. Below, some (slightly edited) comments from around the web and social media:
“If you liken this to sports, it’s as shocking as the (Tokyo baseball team) Yomiuri Giants buying (UK soccer team) Manchester United.”—Yahoo Japan, via the Wall Street Journal.
“Obviously a trophy buy—all the more power to them. Not sure if this will be particularly strategic, though.” —Terrie Lloyd, CEO of JapanTravel and a longtime Japan-based entrepreneur, in an email exchange with Quartz.
Some observers also questioned how hard-hitting the FT’s news would be, because of several incidents in which Nikkei went soft on coverage critical of Japanese companies, such as Olympus’s 2011 accounting scandal.
“This makes financial sense for FT, but Nikkei is basically a PR machine for Japanese business—they were reluctant to report on Olympus in 2011 (broken by FT) and were late to report on lethal Japanese air-bags… “igloobuyer” on Japan Today
How do you get the foreign media to say what you want them to say? You buy them out.—”harvey pekar” on Japan Today
Doubts were also raised about how compatible the two corporate cultures would be:
“With the Nikkei’s corporate culture, can it really manage the FT well? This will be a test of Japan’s ability to control foreign businesses in the service industry.”— @hongokucho on Twitter, via The Wall Street Journal.
As Japanese companies reach outside the country’s borders, those doubts are likely to be raised many times.