Stephen Glover on the Press

Demise of Ancien Régime makes Pink Paper sale a cert

Last year saw the sale of the Telegraph Group. This year, or next, the Financial Times will be on the block. Banks are crawling over the newspaper's figures, and several media groups are licking their lips. If you are interested in making a bid, and are not doing the preparatory work, my advice is to get moving unless you want to be left behind.

Last year saw the sale of the Telegraph Group. This year, or next, the Financial Times will be on the block. Banks are crawling over the newspaper's figures, and several media groups are licking their lips. If you are interested in making a bid, and are not doing the preparatory work, my advice is to get moving unless you want to be left behind.

How can I be so sure the FT is in play? After all, Marjorie Scardino, chief executive of Pearson, which owns the newspaper, has said it will be sold over her dead body, and as recently as March declared in public that she has no plans to retire. At the end of April Dennis Stevenson, chairman of Pearson, suggested that, although the company might do all manner of things, selling the paper was unlikely to be one of them.

All that may impress some people but it does not persuade me. In the first place, the conviction of the market that the FT will be sold is difficult to ignore. In the second place, some Pearson shareholders have already indicated that they would like the poorly performing Financial Times to be off-loaded. And in the third place, Ms Scardino will not be chief executive for ever. She will probably not be in a year.

If the FT cannot be sold over her dead body, it will be over someone's live one. I do not suggest that Ms Scardino will be sacked, but she has been at the helm for eight years, and her 60th birthday does not lie far ahead. Moreover, Lord Stevenson, whose reign as chairman has exactly coincided with Ms Scardino's time as chief executive, is standing down, having been her stay and comforter. The old regime that was opposed to selling the FT is being replaced.

Logic proclaims that it must be sold. Having made bucket loads of money in the late 1990's, the FT dived into the red. In 2003 it made losses of £32 million, which were reduced to £9 million in 2004 after severe cost-cutting and some improvement in advertising revenue. The paper claims to have made a small profit in the last quarter of last year (the fourth is always best for any newspaper because of high advertising revenues) and may be almost breaking-even at the moment. But I put it to you, ladies and gentleman of the jury, that a paper that is only treading water after significant costs savings, as well as a recovery in the advertising market (though that may now be disappearing), is unlikely to be a cash cow for Pearson in the foreseeable future.

Although the FT has at considerable cost boosted its circulation abroad, particularly in Asia and the United States, its sales have collapsed in its home market. On some days of the week its fully-paid UK sales are little more than 80,000, about half its circulation of a decade or so ago. Various reasons are put forward to explain this precipitate decline. City types evidently pick up more and more of their data on-line. Some FT managers privately concede that as the paper expanded its international sales, so they may have taken their eye off the ball in Britain.

Other people suggest that the FT has been losing circulation in this country because it is by no means as good a paper as it used to be. In fact, apart from its editor, Andrew Gowers, and those close to him, it is difficult to find anyone who will speak up for it. When a newspaper falls out of fashionable esteem, its detractors almost invariably exaggerate their case. The FT is said by some critics to have dumbed down. Some businessmen complain that, with its adoration of the European Union and Tony Blair, it has little to say to them. I must say that the offerings of one or two of its columnists would take some beating in terms of their smugness and general fatuity, and its editorials are unlikely to win any prizes for originality. Nevertheless, the FT has surely dumbed down less than other serious titles over the past ten years. Its foreign coverage remains formidable, and even its fiercest critics rarely attack its impressive second section, which concentrates on company news.

If you add together all its tribulations, it will be difficult for a new management at Pearson to justify retaining the paper. That is what the market thinks. Who, then, will buy it? There is talk of a group of ex-FT journalists who have become City fat cats forming a consortium, though that has been denied, as have rumoured plans for a management buy-out (in effect this may amount to the same idea). Terry Smith, the chief executive of the stockbroker Collins Stewart Tullet (who happens to be suing the FT), has expressed an interest. He should not be dismissed lightly, as, I suppose, a management buy-out should not be, but my money is on a large publishing company that can offer considerable synergies.

One is Rupert Murdoch's News International (but would he have to sell The Times for monopoly reasons?). Another is DMGT, publisher of the Daily Mail, which fell at the final fence in the race for the Telegraph (but is the Financial Times really its cup of tea?). A third, and probably the strongest, candidate is Dow Jones, publisher of the rival, and much more successful, Wall Street Journal, which would bring the biggest synergies of all (but would it face a monopoly referral?). There might be European suitors such as the German publisher Axel Springer, also thwarted in the battle for the Telegraph. The exact line-up remains uncertain, but it is as certain as anything can be in this life that there is going to be a battle.

Alpha Mail faces war on two fronts

My esteemed colleague Professor Roy Greenslade recently suggested in the 'Guardian' that the 'Daily Mail' is muscling in on the Sun's territory. This is an interesting theory. My feeling is that Rupert Murdoch is attacking the 'Mail' from one direction with the tabloid 'Times' in the hope that if he engages the 'Mail' on that front it will have less scope to move against the 'Sun', which makes him a lot of money he wants to hang on to.

Meanwhile another newspaper, the 'Daily Telegraph', has also set its sights on the Mail's readership, though there is no evidence it is making any in-roads. Its editor, Martin Newland, has publicly said the 'Mail' is his main target. This view is having a marked effect on the Telegraph's choice and presentation of stories. Let me give two recent examples. The headline above the Telegraph's front page splash last Friday was 'Now you face jail for being nasty to Satanists'. Another recent headline was 'Sisters pregnant at 12, 14 and 16. So what does their mother do? She blames the school'. In their invitation to readers to assume a point of view, both are pure 'Daily Mail'. Incidentally, by way of declaring an interest I should mention again that I write a column for that paper.

One can see why Mr Murdoch might want the Times to take on the Mail but I am less sure about the wisdom of the Telegraph doing it. Does it not have a realm of its own?

scmgox@aol.com