FT breaks out

Pearson aims to take Wall Street by storm, writes Peter Koenig

Forget the tittle-tattle about tensions between Pearson managing director Marjorie Scardino and Pearson television supremo Greg Dyke. Forget the will-they-or-won't-they divorce chit-chat about Pearson and Lazard Brothers. Businessmen seriously interested in the pukka owner of the Financial Times, Penguin, and a range of broadcasting interests will focus this week on Wall Street.

On Tuesday Wall Street will be flooded with free copies of the newly relaunched US edition of the FT. There will be a pounds 12m advertising blitz. Billboards at US airports from JFK to LAX will come alive with the "No FT, no comment" tag line.

Over the next five years Pearson will invest pounds 100m in the FT's international edition, mostly in the US. "Our goal is to enhance the FT brand name worldwide," says the paper's managing director Stephen Hill, "but North Am- erica is obviously a key market."

Richard Lambert, who moved to New York to oversee the editorial side of the relaunch, is Americanising the paper's US edition. "US businessmen want to know what is happening outside the US," Lambert says. "We think there are a growing number of internationally-minded American businessmen interested in our style of news."

Beginning Tuesday, the FT's US edition will blossom with four-colour layouts, a crisp front-page table of contents, and other conventions of what is known in the US as the McPaper approach. The idea is to take such subjects as European Monetary Union for an American audience and make them a good read for fund managers on Wall Street and marketing directors in Silicon Valley. The US edition of the FT intends to cherry pick US stories it feels well placed to cover - "not Detroit," says Lambert, "but, for instance, stories on US trade."

The initiative is attracting the attention of the City. "We had 60 analysts here for a presentation on the US edition," Hill says. "The questions went on and on."

Publicly, the FT has declared it wants to treble US circulation to 120,000. In private the paper is more ambitious still. One Pearson employee mentions a target of 400,000. The company believes that if the FT can win the loyalty of a critical mass of top US readers, it will be an attractive option in the world's lushest ad market. Analysts believe the US edition is not profitable at its current circulation levels, but they point out that its existence has allowed the FT to win global advertising campaigns from companies like Merrill Lynch.

The US strategy has a precedent. Ms Scardino turned The Economist into just such a publishing phenomenon before joining Pearson last November. Between 1985 and 1996 the British weekly trebled its circulation to 610,000, mostly in the US, where Scardino began as The Economist's marketing director.

With pre-tax earnings of pounds 252m on sales of pounds 2.2bn in 1996, Pearson cannot compete against integrated media giants like Rupert Murdoch's News Corp or Ted Turner's Time-Warner, whose sales are three times as large. But the City is waiting to see if Pearson can establish itself as a niche player.

More, however, may ride on the success of the FT in the US than Pearson's profits. In financial markets the pink paper and the City are identified with one another. If the FT shines, the City will shine, and will be better placed to defend its position as the European capital of finance.

Even the Government may have an interest in the FT prospering in the US. Prime Minister Tony Blair has rejected the Old Labour policy of subsidising selected corporate "national champions". But New Labour wants to boost the global competitiveness of the country's corporate sector. The Government will be watching to see what rewards Pearson's investment in the FT in the US reaps. Pearson could become a model for how old-fashioned British companies can modernise themselves.

Much of Pearson's strategy for building the FT's brand name comes from two influential voices on the company's board - Reuben Mark, chairman of Colgate-Palmolive Company, and Vernon Sankey, the chief executive of Reckitt & Colman. But as a former employee of Guinness and the Boston Consulting Group, FT managing director Hill has his own experience of brand management.

Hill explains Pearson's plan to market the paper and ancillary FT business information services as a single brand. "With our global ad agency, Bozell, we have drawn up guidelines for agencies," he says. "These guidelines are designed to ensure that everywhere in the world we are delivering the same message."

Assaulting the US newspaper market, the FT will, however, go head-to- head with its arch rival, the Wall Street Journal. The Journal's circulation is 1.8 million, compared to 300,000 for the FT worldwide. The Journal owns 18 printing plants in the US. At $170 a year its subscriptions are two-and-a-half times cheaper than the FT's in the US. Charging $180,000 a page its ad rates are 10 times those of the FT in the US.

The FT is attacking the Journal's home turf at a good time. The American paper's parent, Dow Jones, has just launched a four-year $650m investment programme to save Telerate, the company's screen-based financial information service, which is losing ground to market leader Reuters and newcomer Bloomberg.

But the Journal's vulnerability appears to have made it even more determined to fight the FT's US initiative. Dow Jones spokesman Dick Tofel disparages the logic of what the FT is doing in the US. "The FT is a very fine paper. But it is a British paper," he says. "What is it going to do in the US we do not do already?"

This week the Journal is adding a page to its foreign coverage and doubling the listing of international stock quotes to 900. Meanwhile, it continues to fight the FT on its home European market with the European edition of the Journal.

Appraising the FT's bid to grow in the US, Dow Jones spokesman Tofel says: "If they Americanise the product, lower the price, and promote the paper, circulation will grow. But they've been specific about none of those things."

The FT does indeed face a difficult task in the US. It is planning to solicit new subscribers through direct-mail marketing. This is an expensive way to approach the market. It usually involves offering discount subscriptions. Hill will not discuss the details. But he concedes that up to half the pounds 100m for the international edition over the next five years will go on marketing.

Meanwhile, Pearson must master the arcane arts of newspaper printing and distribution in the US - about half the cost of putting out a newspaper. Pearson contracts two printing sites in the US for the FT. But this leaves the great American hinterland out of range. To deal with America's geographical imperative Pearson will open a new printing site in Chicago. But it has yet to address the challenge of serving financial hubs like Dallas and Miami.

Newspaper distribution can be a cut-throat business. Hill says he has contracted out the FT's US distribution. But he will not say whether he has negotiated a flat revenue sharing arrangement with his distributors - desirable, according to Joe Werlinich, European general manager of USA Today - or an arrangement through which the FT pays a flat fee and a percentage of revenues on top - undesirable, according to Werlinich.

Werlinich recognises the FT as an awesome brand name. He and other US newspaper executives are impressed by the scale of Pearson's investment in the international edition of its paper. "A hundred million is a big number for anyone," he grunts.

But the judgement of Werlinich and others is that pushing the FT into profit in the US will be a gruelling task. It took USA Today 10 years to go from scratch to profit," Werlinich says. The question is what Pearson will do if the FT's US edition falls short of its interim business targets.

The pounds 100m to be invested in the international edition of the FT is supposed to come partly in the form of anticipated revenues. If these revenues do not materialise, or if costs overshoot, Pearson will have to decide: dig deep or scale back ambitions?

Pearson has room for manoeuvre: the FT is motoring. The paper's profits in the first half of the year went from pounds 3.5m to pounds 22.4m.

The City believes Pearson faces a strategic choice. "We believe the group will have to focus on either entertainment or information/education," says Merrill analyst Geldens.

Hill, who at 35 is the closest thing Pearson has to a management wunderkind, is guarded. Asked what Pearson will do if it is forced to choose between increasing its investment in the FT's US edition or scaling back its ambitions, he offers the latter half of the paper's famous "No FT, no comment" tagline.

Sport
Premier League Live
footballLIVE Follow all the Premier League action as it happens
Life and Style
3D printed bump keys can access almost any lock
gadgets + echSoftware needs photo of lock and not much more
News
The slice of Prince Charles and Princess Diana's wedding cake and the original box from 29 July 1981
newsPiece of Charles and Diana's wedding cake sold at auction in US
News
James Argent from Towie is missing, police say
peopleTV star had been reported missing
PROMOTED VIDEO
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
News
i100(and it's got nothing to do with the Great British Bake Off)
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
i100
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

DevOps Engineer (Systems Administration, Linux, Shell, Bash)

£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

Financial Technical Consultant (C++, C#, Finance, MSc, PhD)

£50000 per annum: Harrington Starr: Financial Technical Consultant (C++, C#, F...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone