Pearson Sells Off Remains of 60 Year British Media Portfolio
The Economist Group’s largest shareholder, Pearson, announced Wednesday its decision to sell its 50% stake in the London-based newspaper business for £469 million, in a move that will end the education group’s six decade-long investment in British media.
The announcement follows Pearson’s sale of The Financial Times Group to the Japanese media corporation, Nikkei, for £844 million last month, after a difficult financial year for the education and publishing company — its sales were down 4% (by £195 million) and its operating profit fell 2% (by £14 million).
Under the terms of the deal, 30% of Pearson’s shares are to be sold to the Italian investment group and owner of car company Fiat, Exor, for £287 million, and the remaining 20% will be bought back by The Economist Group itself for £182 million.
“Pearson is proud to have been a part of The Economist’s success over the past 58 years, and our shareholders have benefited greatly from its growth,” said Pearson Chief Executive, John Fallon. “[We are] now 100% focused on our global education strategy.”
The sale will make Exor, owned by the Italian Agnelli family, the largest single shareholder of The Economist Group, with a 43.5% stake in the business (up from 4.7%).
Before Wednesday’s deal is finalised, measures to secure the paper’s editorial and financial independence will be voted on at a shareholders’ meeting next month. These include a 20% voting cap for any individual shareholder and a 50% limit on owning shares for any single individual or company.
The agreement comes in the wake of rising profit and digital readership for The Economist magazine. Figures published Friday (by the Audited Bureau of Circulation) show that the title’s digital circulation increased by 22% in the first half of this year, although revenue from print subscriptions has declined markedly. Its £60 million operating profit was also up last year, by 2%.
The Economist Group also announced plans to sell its flagship Mayfair office complex, Economist Plaza, which was valued at £100.4 million in March. “New offices, with more space for our digital ambitions and the needs of a 21st century media company, will be found for a new chapter in our history,” Chairman Rupert Pennant-Rea told media.
Asked whether the paper could sustain continued growth in readership in a Facebook Q&A Friday, CEO Chris Stubbs said he was optimistic that readers would continue to pay for its editorial content.
“The Economist target audience is the intellectually curious who are interested in the world beyond their borders,” he said. “I am confident that there will always be a place for The Economist to serve that audience.”
The media group is now investing heavily in expansion across India, China and South Asia. Currently only 10% of The Economist’s digital circulation comes from Asia, but the paper launched Global Business Review, a Chinese-English App, in April and has plans for several other Asian language editions.
“Offering our unique content in local language opens up an entirely new market to us that was not possible to tap into before,” The Economist Group’s Asia Managing Director, Tim Pinnegan, said following the launch of the bilingual Chinese product. “Our growth strategy over the next five years is exactly focused on attracting new audiences and capitalising on innovations in product and service offerings.”