'Over my dead body'? Pearson chief may have to sell the 'FT'

Shareholders step up the pressure for £500m sale of trophy asset that takes up 'disproportionate amount of time'
Click to follow
The Independent Online

Pressure is mounting on Dame Marjorie Scardino, the chief executive of Pearson, to sanction the £500m sale of the Financial Times - something she has said will only happen "over my dead body".

Two leading shareholders are publicly calling on the company to sell the newspaper, while others are telling Pearson behind the scenes to get rid of the "Pink 'un".

Axa Investment Management, which owns 2.2 per cent of Pearson, making it the sixth- largest investor, is urging management to consider cashing in on the FT's "trophy asset value".

Pearson reports annual results tomorrow, when it is expected to confirm that the FT broke even last year after two years of losses.

Pearson's largest shareholder, the US fund manager Franklin Templeton, first broke ranks last year when it publicly questioned why the group did not sell the newspaper. There are few synergies between the FT and its education and Penguin publishing businesses. Franklin Templeton's views are thought to remain unchanged.

Richard Marwood, a fund manager at Axa, said the FT would be worth more to another company. "It is the wild card of the valuation within Pearson. It certainly has few earnings to value, but it is hard to imagine it does not have some trophy asset value."

Another investor, who did not want to be named, said management was "well aware of shareholder pressure" for the FT to be sold. "There is a discussion. It would be received extremely well. It makes good sense for them to dispose of it. The FT takes up a disproportionate amount of management time."

Of Pearson's last 30 press releases, nine relate to the FT, which is expected to have made a profit of around £5m last year. Only two releases concern its education business, which made £277m profits in 2004, out of £421m for the whole group.

In November, Pearson said that recruitment and luxury goods ads had lifted revenues at the paper by 6 per cent since the start of last year. Analysts say the FT could fetch as much as £500m, with the likes of Rupert Murdoch's News Corporation likely to be interested. They add that Pearson has already restructured the FT, leaving few more savings to be made by current management.

Dame Marjorie, who has been chief executive since 1997, has underlined Pearson's commitment to the paper. But the replacement of Lord Stevenson as chairman in October by Glen Moreno, who has a background in fund management, has raised expectations that the strategy may change.

Shareholders also point out that as Dame Marjorie turned 59 last month, she may retire next year, which could pave the way for a sale.

Daily Mail & General Trust (DMGT) shocked the City earlier this month when it announced it was pulling the sale of its Northcliffe regional newspaper group after failing to attract the hoped-for sale price. But analysts say that because of the prestige attached to the FT, its price tag would be higher than its pure economic value.

Comments