LONDON—Pearson PLC on Thursday said it is in advanced talks over
the potential sale of FT Group, which includes the Financial Times
newspaper.
The talks could result in the publisher jettisoning one of its
flagship media assets to sharpen its focus on its key education
businesses.
For years, the U.K.-based company—which generates about 60% of
its sales in North America and three-quarters of its revenue from
education—has rejected talk it would sell its celebrated
salmon-colored, business-focused newspaper, which it has owned for
nearly 60 years. On Thursday, though, it noted recent media
speculation and confirmed that it is in "advanced discussions"
regarding a potential disposal.
Pearson didn't say who it was in talks with and said there was
no certainty that the discussions would lead to a transaction.
Shares in Pearson traded about 2% higher after the
announcement.
Pearson's long-standing former Chief Executive Marjorie Scardino
was clear during her tenure that she would reject any proposal to
take the Financial Times away from Pearson. Current chief John
Fallon has also said repeatedly that the newspaper was integral to
the group's commercial and strategic vision.
As well as the Financial Times, Pearson's FT Group includes the
website FT.com, a noncontrolling 50% stake in the Economist Group
and a joint venture with Russian business newspaper Vedomosti.
The Financial Times increased its circulation in 2014 by 10%
year-over-year to almost 720,000 across print and online. Digital
subscriptions rose 21% to almost 504,000—70% of the FT's total
paying audience.
Previously, Mr. Fallon has openly questioned the future of
Pearson's stake in the Economist Group, which publishes the
Economist magazine. The publisher's 2014 performance was hurt by
currency effects but the magazine's circulation remains robust at
1.6 million, Pearson said in February.
In February, Pearson said it expects group sales this year,
excluding acquisitions and disposals, to increase for the first
time in five years amid a recovery of its core education markets,
including the U.S. The company has also completed a two-year
restructuring plan, which has hit Pearson's earnings but saved the
business hundreds of millions of dollars.
For 2014, Pearson reported a fall in net profit to £ 470 million
($724 million), compared with £ 538 million the year before.
Adjusted operating profit, before restructuring charges, fell 5% to
£ 720 million, in line with company forecasts. Sales fell 4% to £
4.87 billion, in line with market forecasts, with North America
revenues down 3%.
Pearson is set to report first-half earnings on Friday.
As well as focusing on its U.S. operations, Pearson has trained
its gaze elsewhere overseas.
Amid flagging Western education markets, the company is
bolstering its global presence with language schools across
high-growth international economies such as China and South Africa,
where learning among the middle class is booming.
The company's changes in recent years follow a wave of
digitization for its businesses.
The company's core services are increasingly online. Ten years
ago, two-thirds of what Pearson made and sold was in print, but now
the same proportion of its business is a digital service, such as
running English-language courses online. In 2014, 11 million
students in the U.S. took the company's tests on cellphones,
tablets or laptops.
News Corp, which owns Dow Jones & Co., publisher of The Wall
Street Journal, competes with Pearson's book publishing,
business-news and education divisions.
Write to Simon Zekaria at simon.zekaria@wsj.com
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