Tag Archives: Financial Times

Large Pearson shareholder against deal for Dow Jones

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A large shareholder of Pearson, the parent company of The Financial Times, has expressed his opposition to the company making a bid with GE for Dow Jones & Co., the parent of The Wall Street Journal, writes Alistair Osborne, the business editor of The Telegraph in London.

Schroders owns more than 4 percent of Pearson. Osborne interviewed Richard Buxton, head of British equities. Osborne wrote, “Mr Buxton said: ‘Given the firepower of Murdoch, it’s difficult to see how they can structure a deal that involves at least one other party, and possibly the Bancrofts as well, that would work.’

Asked if he would welcome Pearson putting more cash behind the FT, which analysts value at £600m-£650m, Mr Buxton said: ‘No. Most Pearson shareholders would not want them to be spending a lot of money on this deal.

“‘The most value you could get from the FT would be by selling it to Murdoch not by trying to compete with him. When you are not getting an economic value from the FT and the value is as a trophy asset if it is sold, the last thing you would want to do is pay a trophy asset multiple to buy another one [the WSJ].’

“He said there were risks that Pearson’s move ‘could be seen as an acknowledgement that the FT isn’t working in the States’.”

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Bancrofts would ask for same safeguards with GE/Pearson offer

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Aaron Patrick and Sarah Ellison of The Wall Street Journal write for Tuesday’s paper that the Bancroft family that controls Dow Jones & Co. would ask for similar editorial safeguards for the Journal from GE and Pearson that they have asked for from News Corp. CEO Rupert Murdoch should they combine to make a bid for the company.

GE owns business news cable network CNBC, while Pearson is the parent company of The Financial Times. Combined with the Journal, they could comprise the largest business journalism outfit in the world.

Patrick and Ellison wrote, “Bancroft-family members, who haven’t been briefed on the GE-Pearson talks, were concerned that GE and Pearson might cut staff and shut the Journal’s international editions, people familiar with the matter said.

“‘It wouldn’t be optimal at all,’ one Bancroft said. ‘The fact that Murdoch wants to commit to dumping capital into the business after a sale is a good thing.’ Other family members said a GE-Pearson deal sounded like a good fit.”

Later, they noted, “The easiest way to meet the cost-savings goals would be for the newspapers to cut their biggest expense — journalists. The Wall Street Journal has roughly 700 reporters and editors, and about 100 of them work outside the U.S., while the Financial Times has 510 journalists, the majority of whom are in the United Kingdom. While it is unlikely the two newspapers would be combined, they could share some stories, allowing the FT to cut its staff in the U.S. and the Journal to cut back in Europe.”

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Dow Jones board will get sued no matter what

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Joshua Chaffin of The Financial Times writes for Tuesday’s paper that the Dow Jones & Co. board of directors could be put in a precarious position if the Bancroft family that controls the company eschews News Corp. CEO Rupert Murdoch‘s $5 billion bid for the company for a lower bid that guarantees editorial independence of The Wall Street Journal.

Financial TimesChaffin wrote, “‘They’re going to get sued no matter what they do,’ said Nell Minow, editor of the Corporate Library. ‘The question is whether the litigation will have merit.’

“Under Delaware law, the board is obliged to seek the best price available once it decides to sell the company. It has been sidelined for the moment by the Bancroft family, which controls 64 per cent of Dow Jones voting shares and rejected the first offer from Mr Murdoch’s News Corp in early May.

“The Bancrofts have since softened their stance, and are now trying to agree with Mr Murdoch on safeguards that would protect the editorial independence of the Wall Street Journal in the event of a sale.

“If the Bancrofts and Mr Murdoch can resolve that issue, then the board’s work would be straightforward. At that point, they would begin negotiations to try to extract the highest price.

“Things would become more complicated, though, if another, lower bid were to emerge from a suitor that the Bancrofts found more palatable. There is legal precedent for the board to recommend a lower offer if they can prove it is in the company’s strategic interest. They may also have more lee-way if an offer includes shares as opposed to pure cash.”

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Analyst: WSJ would shutter European editions, FT to end U.S. edition if deal

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A Dow Jones Newswires story about the the possibility of the parent company of the Financial Times and GE, the parent of business news cable network CNBC, joining together to purchase Dow Jones & Co., the parent of The Wall Street Journal, quotes analysts as saying foreign editions of the papers would close under such a deal.

Dow JonesThe story stated, “A venture with GE and Pearson would create a global business news and financial information giant, with assets including the Journal, the FT and CNBC, as well as Barron’s, MarketWatch, Dow’s wire service and 50% of the Economist magazine. It would also include interests in business newspapers in Russia, France, South Africa and India, as well as leading stock indexes in both the U.S. and the United Kingdom.

“A merger between Pearson and Dow Jones ‘would create significant synergies with the WSJ being able to shut down its European and Asian editions and the FT shutting down in the U.S.,’ said Polo Tang, a UBS analyst who covers Pearson, in a report. ‘It would also provide a unique global platform for advertisers.’

“Tang said he thinks antitrust concerns arising from a combination of the only two global business newspapers would be minimal because Pearson and Dow Jones reportedly held talks three years ago about a possible merger. The prospects for that deal were damaged not by concerns over antitrust issues but by disagreements over control.

“It also depends on how regulators define the market and whether they would look at the entire newspaper landscape globally instead of focusing on business publications, Tang said.”

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GE/Pearson bid for Dow Jones makes no sense journalistically

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Jonathan Berr writes on BloggingStocks.com that the talk about GE subsidiary CNBC and Pearson subsidiary The Financial Times teaming up to make a bid for Dow Jones & Co., the parent of The Wall Street Journal, makes no sense financially or from a journalistic point of view.

Berr wrote, “Moreover, this would be a bear to manage. Running a news operation is like herding cats on a good day. Running three organizations (CNBC, The Journal and the FT) each competing for the same audience and the same stories would be Byzantine in complexity. There also would be epic bureaucratic turf wars since both companies would have equal say in managing the company. I suspect allowing the Bancrofts to continue to have a say the venture’s affairs would create an additional set of headaches.

“Since it’s obvious that the GE-Pearson deal won’t happen, why are people still trying to talk it up? My hunch is that the chatter is coming from across the Atlantic. Pearson is under pressure from its shareholders to dump the FT and focus on higher-growth businesses such as textbooks. General Electric would probably be keen on the idea of having Dow Jones as a buffer against the nascent Fox Business Channel.

“Regardless, Dow Jones is just a business to both companies. For Murdoch, it’s an object of lust. At the end of the day, emotion will trump logic.”

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Pearson/GE bid for Dow Jones could lead to layoffs

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A joint bid by the parent companies of The Financial Times and business news cable network CNBC for Dow Jones & Co., the parent of The Wall Street Journal, might not be better for business journalists than the News Corp. offer, writes Richard Perez-Pena of The New York Times.

Wall Street JournalPerez-Pena wrote, “But a person with knowledge of the Pearson-G.E. talks noted that a deal with those companies might not be to the journalists’ liking, either, because it offers more opportunities to cut jobs by eliminating overlapping functions. The Financial Times, The Journal, the newswires and CNBC often have reporters and editors doing much the same work — in some cases, in bureaus in Asia and Europe that are expensive to run.

“In addition to the strategic advantages of joining forces with Dow Jones and The Journal — two of the most respected names in business journalism — a deal would have defensive value for Pearson and G.E. The News Corporation plans to start a business news channel on cable to compete with CNBC, and analysts predict that Mr. Murdoch would try to use The Journal to crush The Financial Times, its much smaller rival.”

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Why the FT is increasing its newsstand price

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Ian Burrell of The Independent newspaper in London interviews Financial Times chief executive John Ridding about why the business newspaper is increasing its newsstand price, and the conversation touched on the quality of the journalism

John RiddingBurrell wrote, “‘We have invested steadily, building a global operation with bureaux and reporters and editing operations around the world. That has given us a 24-hour rolling news operation with hubs here, in the homeland, and in New York and in Hong Kong,’ says Ridding. ‘We do that because our audience has become increasingly global, and, frankly, our readers demand quality news and analysis wherever it happens.’

“If the audience is going to make such demands then they should pay for the service. ‘Sustained quality journalism on a global level does actually require sustained investment and I’m a strong believer that quality journalism is valuable stuff.’

“As he looks across at the takeaway coffee cup on his desk, the FT CEO makes the case that other print products could also argue they are sold too cheaply. ‘Quality journalism is undervalued. People are making decisions and forming views – this is the information age after all. Quality, independent, accurate information is valuable stuff. I’ve got my Starbucks over there and it’s a lot more expensive than newspapers and magazines.’”

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GE, Pearson discussing bid for Dow Jones

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News Corp. CEO Rupert Murdoch may yet have a competing bid for Dow Jones & Co., the parent of The Wall Street Journal, according to a story for Monday’s Journal.

Wall Street JournalSarah Ellison, Dennis Berman and Kathryn Kranhold wrote, “General Electric Co. and Financial Times publisher Pearson PLC are in talks about making a joint bid for Dow Jones that would allow the family to keep a minority interest.

“Under one scenario that has been discussed, GE’s CNBC business channel, the Financial Times and Dow Jones would be combined into a privately held joint venture, according to people familiar with the matter. The venture would be owned in equal parts by GE and Pearson, with the Bancroft family holding a minority stake.”

The Journal also reported that one family member said the Bancrofts have agreed they would give serious consideration to an offer that was lower than the $60 per share on offer from News Corp if they felt the buyer could better protect the Wall Street Journal’s integrity.

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Financial Times parent seeks partners to make Dow Jones bid

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The parent company of The Financial Times is looking for partners to make a bid for Dow Jones & Co., the parent of The Wall Street Journal, according to a story by Dennis Berman and Sarah Ellison on The Journal’s web site.

They wrote, “On paper, at least, Pearson and Dow Jones appear a viable combination, with the two complementing each other geographically. The Financial Times is strong in Europe and less so in the U.S.; The Wall Street Journal, meanwhile, is America’s leading business publication by circulation, with a smaller presence overseas. One advantage of a Pearson-Dow Jones combination could be substantial cost-savings for the two companies.

“Indeed, about three years ago, Dow Jones and Pearson had extensive discussions about a joint-operating agreement to combine the two publications’ operations in Europe and Asia, according to two people familiar with the matter. These talks eventually broke down.

“The question for Pearson is just how to fund a deal to rival News Corp.’s $60-a-share proposal. While the London-based Pearson sits on a $13.6 billion market capitalization, News Corp.’s offer values Dow Jones at about 40 times the company’s 2007 earnings. Anticipated earnings at Pearson, which also publishes educational textbooks, and the Penguin book imprint, are valued at less than half that figure. That suggests a highly-dilutive acquisition that would weigh on Pearson’s shares.”

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Financial Times also raises newsstand price

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Following on the heels of The Wall Street Journal’s decision to raise its newsstand price, The Financial Times will do the same, reports Andrew Clark from The Guardian newspaper in London.

Clark wrote, “Already the most expensive dailies on newsagents’ shelves, the two papers are banking on publishing industry wisdom that readers will continue to stump up for specialist content even in an era of free-of-charge news on the internet.”

Financial TimesLater, he added, “In April, the FT redesigned its content under the slogan ‘we live in financial times’. Changes included a fresh typeface, an extra foreign news page and more features-style content in its Companies & Markets section.

“An FT spokeswoman said the cover price increase was the first for five years: ‘We have improved our content and design and successfully built a global operation with the world’s best journalists and editors. The price increase reflects these investments, which give our readers the quality international news and analysis they require.’”

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