After capturing the Wall Street Journal, Murdoch is gunning for the FT

[Joanne98]

http://news.independent.co.uk/media/article2836136.ece
After capturing the Wall Street Journal, Murdoch is gunning for the FT
The News Corp goliath's latest acquisition isn't just a blow for the liberal left in America. It also threatens a very British institution. By Tim Luckhurst.

Published: 05 August 2007

Dancing around whooping is still frowned upon in London's Square Mile, but this should be an occasion for unrestrained euphoria at the Financial Times. Following June circulation figures showing the newspaper up 0.72 per cent year on year to 444,763 daily sales, even better news emerged last week from publishing parent Pearson. The group, which also owns Penguin books, revealed that its pre-tax profits almost trebled in the first half of the year to £40m.

FT journalists had particular reason to celebrate. Newspaper division profits increased by 28 per cent, reflecting a 12 per cent rise in subscriptions to their title's four printed editions (UK, US, Europe and Asia) and equally impressive growth in subscribers to the online version, FT.com. Pearson's chief executive, Dame Marjorie Scardino, boasted that "the FT has never been stronger editorially" and is "doing fantastically well".

But the good news came against the background of market-changing events taking place beyond Pearson's control in the heart of New York's financial district. There, after months of ethical anguish, the Bancroft family, in effect owners of The Wall Street Journal since 1902, concluded an agreement to sell the title and its parent, Dow Jones, to Rupert Murdoch's News Corporation for $5.6bn.

In America liberal activists from Moveon.org – a campaign group trying to "fight the right and elect progressives" – advertised their fears of how Mr Murdoch may use his acquisitions. They paraded the streets with dummy editions of the WSJ carrying real headlines from News Corporation's ideologically conservative Fox News network. "Is the liberal media helping to fuel terror?" asked one.

There had been hopes – not least inside the FT – that the Bancrofts would find Mr Murdoch's reputation unpalatable and deny him the status of owning Dow Jones and the WSJ. Their spokesperson described the family's thinking as "long, complex and arduous" and insisted that the decision to end more than a century of stewardship was reached only after "much soul-searching, hard work and analysis".

The truth of that was confirmed when one family member of the Dow Jones board, Leslie Hill, resigned, explaining that although the deal was lucrative it could not compensate for "the loss of an independent global news organisation with unmatched credibility and integrity". Now Pearson has at least as much cause for concern as the American left.

Friday's FT outlined Mr Murdoch's likely ambition, explaining that the purchase is "less a bet on newspapers than a move ... to acquire content that he can use across the many media sectors in which he plays: print, television and, increasingly, the internet". The assessment almost certainly understated News Corporation's ambition to position the WSJ as a direct competitor to every edition of the FT.

The 118-year-old WSJ is hugely prestigious in America, where it has the second-highest circulation of any newspaper. It comes complete with tailored editions for Europe and Asia and a radio news operation that sells business reports to 280 American radio stations. With 931,000 paid subscribers, its internet edition, WSJ Online, is the world's largest paid-subscription website.

To this Dow Jones adds online financial and business information services, which enjoyed a 30 per cent increase in advertising revenue between the first quarters of 2006 and 2007. Other products include Barron's magazine, a weekly title providing detailed market analysis as well as its own subscription-only website. MarketWatch, a financial news and information site, is another powerful Dow Jones asset.

Adding these new prizes to his existing properties, Fox News, the New York Post newspaper and his soon-to-be-launched Fox business Channel gives Mr Murdoch a potential financial news behemoth. A few analysts question whether even that justifies his decision to pay 67 per cent above Dow Jones's market value. Media sophisticates believe he knows exactly what he is doing. They note that Pearson understood the value of Dow Jones sufficiently clearly to cast around for a partner to help it make a counter-bid.

"If I were a businessman who didn't understand media I might say Rupert Murdoch had overpaid," says Lawson Muncaster, chief executive of the London financial newspaper City AM. "But in fact it is an extremely clever move when you consider it in a global context, not a US one." Apart from Dow Jones's online power, he explains, "WSJ's strength is in Asia, where Murdoch's existing presence is weak. This acquisition makes a perfect match."

Dominic Ponsford, editor of Press Gazette, agrees: "The FT is fairly secure in the sense that its main focus is the London financial market. Much of its recent growth has emerged from the huge boom in the City. But in terms of its ambition to become a global financial newspaper there is a problem."

The FT like the WSJ, publishes tailored editions for America, Europe and Asia. It owns a magazine, The Economist, and has invested heavily in online content, acquiring 97,000 subscribers to FT.com. But Rupert Murdoch has pledged all-out war. In a letter to the Bancroft family he wrote: "News Corporation leverage its global resources and platforms to drive international growth."

A Pearson spokesman is dismissive. Pointing to evidence that many WSJ readers are appalled to see the title under News Corp control, he explains: "It has taken the FT many years to change from being a UK paper to a global business newspaper. We are not complacent, but we think our strategy remains good. The FT will be a worthy competitor for the WSJ. We now sell more copies in the United States than we do in Britain. More than half of our advertising runs in all four editions."

Pearson claims that the WSJ remains a predominantly American title, which has focused in recent years on consolidating its domestic dominance. The spokesman says: "A world audience of opinion formers is hard to build, but enormously valuable. To win that market we set out our vision of putting business and political news in a global context several years ago. That is why we are making big profits and we are confident about the future." Pearson claims the WSJ has a long way to go to match the FT's global prestige as a flagship title for international opinion formers.

It is fighting talk, but while the FT's reputation remains potent, Press Gazette's Mr Ponsford warns: "Mr Murdoch will soak up losses for years to beat off competition. The FT can't do that. It has to deliver to Pearson's bottom line."

So far it has done that with aplomb, but for all the FT's editorial and commercial achievements, the new challenger in New York makes the Pearson empire look vulnerable.
http://news.independent.co.uk/media/article2836136.ece