After a decade or so of being unloved, print media is suddenly looking like hot property. If Japanese financial publisher Nikkei’s move to scoop up the Financial Times for $1.3 billion wasn’t enough, now former FT owner Pearson is set to jettison its 50 percent stake in the Economist Group, publisher of the venerable self-titled magazine.
Given the hefty premium the Nikkei shelled out -- over 35 times the FT’s estimated operating income, according to Ken Doctor in Nieman Lab (http://bit.ly/1IlV6V7), way beyond media industry norms -- the Economist sale is bound to attract a lot of interest, probably from more than a few companies that were prepared to give old-school publications up for dead.
So -- is this the beginning of a newspaper/magazine bidding frenzy? Can we expect private equity funds to start squabbling over other well-established broadsheets that may (or may not) be up for grabs, like the Los Angeles Times? Maybe not. For one thing, it’s probably no coincidence that the current buzz surrounds two of the few ‘legacy’ publications with successful digital strategies -- over half the FT’s revenues come from digital, and the Economist’s ‘Espresso’ daily briefing app has been downloaded over 800,000 times since its launch late last year. The FT and the Economist are powerful names; two of the very few publications globally with broadly affluent and sophisticated audiences, sterling reputations, healthy independent streaks and genuinely international credibility. Viewed in that light, the Nikkei’s purchase looks like a bargain.
The Nikkei-FT deal also seemingly vindicates a couple of strategies that raised questions in the past. One is the FT’s reluctance to work through middlemen, no matter how big or powerful, for the sake of a larger audience, demonstrated by its decision to ditch its iOS app for one of its own making. The other is Pearson not rushing to offload the paper at the earliest opportunity. It’s a simple enough calculation that paid off: in this world, there are (and always will be) only so many FTs and Economists to go around.
It’s also a nice reminder that bidding excitement, and heady valuations, aren’t limited to the current crop of digital-first, platform-neutral, social-media driven publishers (Buzzfeed, Vice, Gawker, etc.) that tend to dominate industry discussions. Relentless dedication to quality, combined with a certain degree of exclusivity, also creates massive value. It's a formula the luxury industry knows very well, but many in the media sector seemed to have forgotten -- until now.
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