Financial Times Shops For China Buyer 《金融时报》寻求中国买家
Three months after British media company Pearson (London: PSON) reportedly started testing the waters for a possible sale of its flagship newspaper the Financial Times, one of my knowledgeable sources is telling me the company’s advisers have even come to China in their search for potential buyers. My source was quick to add that a Chinese buyer is highly unlikely to make a bid for Pearson for mostly political reasons, which I’ll explain shortly and many of which are detailed in my new book, “The Party Line” about how China’s media work. (book description)
But what I find most intriguing is the fact that Pearson might even consider selling one of its crown jewels to a Chinese buyer, which perhaps reflects just how difficult the market has become for print publications that once ruled the global media market. The fact that Pearson’s advisers are looking in China also highlights the fact that Chinese media are one of the few global groups in the sector that is relatively cash rich, since many of the nation’s biggest media groups have near-monopoly status in their local markets and often have highly diverse holdings that run the range from print, to broadcasting and new media assets.
The Financial Times saga first burst into global headlines last fall, when media reported that Pearson was looking to sell the paper and the most likely buyers would include financial media groups Thomson Reuters (NYSE: TRI) and Bloomberg, as well as Rupert Murdoch’s News Corp (Nasdaq: NWSA), owner of the Wall Street Journal and Dow Jones Newswires. (English article) Later reports about a month ago indicated that Bloomberg was indeed interested, but it’s unclear if those talks ever went anywhere.
My guess is that this sniffing around for interest from China indicates that any Bloomberg talks have either stalled, or perhaps Pearson’s advisers are trying to start up a bidding war. According to my source, his company, one of China’s top media groups, was recently approached by third-party consultants acting on Pearson’s behalf to see if they had any interest in a potential bid for the Financial Times.
The fact that Pearson would even consider such a Chinese buyer is highly unusual, since Chinese media are all state owned at some level, and all practice a form of state-mandated self censorship that is regularly condemned by the west. But these are not ordinary times, and in fact Pearson may realize that the Financial Times may not have long before it follows in the footsteps of other formerly famous publications like BusinessWeek and Newsweek, both of which were essentially “sold” for very little after they suffered big drops in readership and their profits evaporated.
In that kind of environment, there probably aren’t too many western buyers out there who would want to pay a premium for the Financial Times, which is what Pearson would like. So, what exactly are the chances of a Chinese buyer stepping forward to buy the newspaper, and who might such a buyer be?
My answer to the first question is the chances of the Financial Times being sold to a Chinese buyer are probably extremely small, perhaps less than 10 percent. Most importantly, China would probably never allow one of its media groups to own such a high-profile western publication due to such conflicting media cultures. Equally important, Financial Times staff would probably revolt and leave the paper en masse if they found out they were going to be bought by a Chinese company.
In the unlikely event of a deal, the only Chinese media group with the credentials to potentially make such a bid is probably Nanfang Media Group, which enjoys a reputation as one of China’s most daring publishers and is owner of 21st Century Business Herald, one of China’s leading and most cutting-edge financial newspapers. But even Nanfang could find its hands tied, as authorities in both its home province of Guangdong and also in Beijing would probably quickly step in to kill such a deal.
Then again, no one ever thought that News Corp would ever succeed in its 2007 bid to buy Dow Jones, publisher of the Wall Street Journal. All of this shows that these are strange times that we live in, as global media undergo a radical restructuring that could easily see many of the oldest, most reputable names forced to either radically change their business models or risk closure in the near future.
In such an environment, it shouldn’t come as too huge a surprise that Pearson’s advisers are looking to China for potential buyers for the Financial Times, even if they’re just trying to stir up interest. But at the end of the day, I really do believe a China deal stands little or no chance of happening for political reasons, and Pearson will undoubtedly have to settle for selling the Financial Times at a price that’s well below the premium it’s now seeking.
Bottom line: The querying of potential Chinese buyers for Pearson’s Financial Times reflects the tough outlook for western print media, though chances of a Chinese deal are very slim.
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This article was first published in the online edition of the South China Morning Post at www.scmp.com.
