Is it judgement day for the FT?
After a difficult 12 months of falling sales, the FT is facing a potentially fatal legal battle. But its editor, Andrew Gowers, is full of optimism, he tells Ian Burrell
Tuesday 14 September 2004
All things considered, Andrew Gowers is looking pretty hale and hearty. In the pink, you might say. Which is somewhat remarkable when you consider the 12 months he has just endured as editor of the
All things considered, Andrew Gowers is looking pretty hale and hearty. In the pink, you might say. Which is somewhat remarkable when you consider the 12 months he has just endured as editor of the Financial Times.
The latest figures show that the FT's circulation is 406, 438, down 2 per cent year on year. In the UK, daily news-stand sales are barely above 100,000. Rumours persist that the paper's owners, Pearson, are looking to offload the title, which is expected to lose £12m this year (it would have been worse but for £20m of cost cutting).
Commentators were noting a year ago that the Financial Times was in trouble, and that "the Fleet Street piranhas [were] feasting on tender, pink flesh". At that point, Mr Gowers could have been excused for thinking that his fortunes were due for a change. If he did, he was mistaken. In the final week of August last year, the FT ran a piece about an allegation of malpractice at the stockbroking firm Collins Stewart Tullett. As a result, the newspaper is facing an unprecedented and potentially disastrous £240m damages claim.
The case reaches a critical stage next month, when a court decides whether or not to strike out the part of the damages claim that is based on the performance of Collins Stewart's shares. Gowers has now decided to speak out on the case, saying that the FT's battle has enormous ramifications, not just for the pink 'un but for the entire British press. "It goes to the core of journalists going about their business and reporting the proceedings of official bodies, including the courts," he says. "It is what journalists do every day of the week, every week of the year, and this is an attempt to restrict that authority."
Gowers says that by linking a fall in share price to a claim for damages, Collins Stewart is attempting "to set an extraordinary precedent". "If it was allowed to stand, it would give one pause to think about the functioning of the business press in this country," he says. "It would imply that any publication whose report was proved to have caused a share price fall could be held liable for the loss of value that occurred."
The FT piece in question was essentially a follow-up to a scoop in the Financial Mail section of the Mail on Sunday. The stories were based on allegations by a former Collins Stewart employee, James Middleweek, who claimed that the firm had sold over-priced shares to clients and engaged in insider dealing. Terry Smith, the chief executive of Collins Stewart, swiftly countered that the claims were a blackmail attempt by a disgruntled former employee who was pressing for a £2.4m pay-off. Despite these assertions, the Crown Prosecution Service did not bring charges against Middleweek.
The story electrified the City and was followed up by the rest of the business press, including the FT. Collins Stewart's share price went into free fall, dropping from 490p to 379p. Last month, the Financial Services Authority, which spent a year examining Middleweek's claims, closed its investigation and decided to take no action against the stockbroker. Mr Smith said he looked forward to seeing Middleweek and the FT in court.
If Gowers is nervous, he isn't showing it. His defence of the story is impassioned, but he appears relaxed, lifting his feet onto his office sofa as he talks. Through his window, the murky Thames waters that separate the FT offices from the City of London head rapidly out to sea.
When the case comes before the courts (the final hearing is set for April), the FT will claim that, under the Defamation Act 1996, it enjoys qualified privilege to print "a fair and accurate copy of or extract from any register or other document required by law to be open to public inspection". Gowers maintains that his reporters had the right to report on the document (an attachment to Middleweek's claim form for wrongful dismissal), "irrespective of the truth or otherwise of its contents".
"Journalists covering court cases don't have to weigh up whether what has been said before the judge is the truth or not," he says. As an example, Gowers points out that the FT quoted Collins Stewart's claim that they were being subjected to a blackmail attempt. "It was for the reader to put all that together," he says.
One of the interesting facts about the case is that Collins Stewart decided to target the FT and not other papers, such as the Mail on Sunday. The reason is that, aside from the FT's position as the City's paper of record, the stockbroker felt that the MoS had reported the story more even-handedly.
Legal departments of some newspapers took the view that the attachment to the claim form - as opposed to the claim form itself - was not covered by qualified privilege. This may explain why other titles have not rushed to the FT's defence. Some at the paper's headquarters have been dismayed to see the case reported as a David and Goliath struggle, with the newspaper cast as an establishment behemoth. But in the meantime, Gowers has a paper to produce.
This weekend the FT will print for the first time in Australia. Its new Sydney printing plant is the 24th such site around the world. Some media commentators have questioned Gowers' international strategy in light of the FT's falling sales in the UK, but he would say they are missing the point. He believes that judging the FT alongside other national titles is like comparing a national business consultancy to a global player like McKinsey.
It is now 25 years since the FT first began printing outside the UK. At that time it sold 180,000 copies, and 84 per cent of those sales were in the UK. Now it sells 406,438, and about 70 per cent are bought overseas. Gowers says: "We are the only daily paper in the world to sell more copies outside its original home market than in it."
He has been hurt by claims that the FT is losing its reputation for accuracy, firing off an angry rebuttal to the former Sunday Times editor Andrew Neil who said as much in a column. But last Wednesday's splash about BBC Worldwide being offered to foreign bidders provoked an angry denial from the corporation.
Criticism that the FT is not what it was are more likely to be heard in Britain than elsewhere, says Gowers, who joined the paper 21 years ago and has edited it since 2001. "I hear people saying that in the UK from time to time. I emphatically do not hear them saying that in Continental Europe or Asia or the US," he says. He has pressed on with his global vision, in spite of a recession that halved advertising volumes between 2000 and 2003. "We've seen the bottom of it, which was last year," he says.
Despite his worldwide ambitions, Gowers realises it is time to pay more attention to the UK. He wants to inject into the Monday to Friday editions more of the "humour and warmth" that is found in the Saturday paper, which he relaunched last year. This will mean more columnists in the style of Lucy Kellaway and the fictional "Martin Lukes", an overworked middle manager at a subsidiary of a US multinational. Gowers - who admits that he cannot afford a "hiring spree" - says: "It's a matter of trying to play new notes without over-straining yourself." He also wants to broaden the UK edition's appeal to those who run small- and medium-sized companies. "We have a strong franchise in that area, but if we are going to devote more space in the UK paper in the autumn it should be there."
After three years in the editor's chair, Gowers believes that the FT is uniquely positioned to fulfil a destiny of becoming "the paper read by the people who run the world". But such a lofty ambition also makes it vulnerable to those who believe it has overstepped the mark. Gowers knows that Terry Smith and Collins Stewart would love to cut the FT down to size. "They are looking for a very high-profile trophy, and given our position we cannot allow them to have that trophy," he says.
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