Financial Times hunts firms for digital subscriptions

NEW YORK: The Financial Times is in talks to buy companies that strengthen its digital subscription business as the newspaper capitalises on greater financial support from its new owner, Japan’s Nikkei Inc, says John Ridding, the FT chief executive.

The publisher is hunting for companies that can “support and accelerate our growth in quality content and, in particular, are based on digital subscriptions,” Ridding said in an interview in New York. The company is also interested in technology firms that bolster its data analytics — valuable for targeting readers with advertising and subscriber offers, he said.

“We have a number of opportunities in the acquisition zone on the radar,” Ridding said. The newspaper declined to comment on which companies it was talking with. “There are some irons in the fire.”

Nikkei bought the London-based Financial Times a year ago for US$1.3 billion after a bidding war with Germany’s Axel Springer SE. Prior to that, the financial newspaper was owned for 58 years by Pearson Plc, which had focused resources on turning around its education business.

“That left the FT needing support in particular areas of development,” Ridding said. “Nikkei has been very supportive of the investments we need to make.”

With Nikkei’s backing, the FT bought a controlling stake in London-based Alpha Grid in June to make more branded content, such as creating videos for advertisers.

The Financial Times is getting help from Nikkei by combining their ad sales teams in Asia to offset headwinds in the ad market, Ridding said. While the outlook for print newspapers in Japan is better than other parts of the world, Nikkei, which publishes the country’s leading business daily, is learning from the FT how to adapt to a digital world.

Meanwhile, the salmon-coloured paper is increasing digital subscriptions with help from two major news events: the Brexit referendum and the US presidential election, Ridding said. It saw a 600% increase in online customers the weekend after Brexit and a 10% boost in US subscriptions after the Nov 8 election. Since Nikkei bought the paper, the FT has seen 17% growth in digital subscribers. It has 825,000 paid readers, including 625,000 digital, and aims to reach 1 million in total by 2020, Ridding said.

By comparison, News Corp’s Wall Street Journal has just over 1 million online subscribers, while the New York Times has 1.6 million paying digital customers. The New York Times said Thursday it added 41,000 subscribers in the week after the Nov 8 election.

The recent subscriber boost is a rare bright spot in what has become an increasingly bleak outlook for the industry as digital competitors cause print advertising to erode. Newspaper ad spending is projected to be $12 billion in 2016, a 75% drop from the $49 billion logged in 2005. Newspaper ad revenue may shrink to $6 billion by 2020, according to Magna Global.

Ridding said the advertising market has been “tough” for newspapers, which is why the publisher is trying to reduce its dependence on ads and have a business model based more on getting readers to pay for its journalism. This year, the paper reached a key milestone, generating more of its revenue from digital sources than print.

“We are effectively a digital content business more than a print and ad business,” he said.