LONDON (Reuters) - Nikkei Inc. will use its $1.3 billion purchase of the Financial Times to build a digital media powerhouse by harnessing the English-language newspaper’s brand and skill in getting subscribers to pay for premium business news, its chairman said.
As the biggest international acquisition by a Japanese media organization completes, Nikkei Chairman Tsuneo Kita also told Reuters he would guarantee the independence of the salmon-pink title by giving his word about not meddling.
“Our management objectives at Nikkei are global and digital, those are the two key words, and so for the future, in order to grow as global media and to further promote our digital media business, the best partner is definitely the FT,” Kita said.
“We wish to expand our market,” Kita said through a Japanese translator in an interview at the FT’s Southwark Bridge offices, in central London.
Ranked as one of the world’s most authoritative newspapers, the Financial Times enjoys strong loyalty from its readers in Europe and was one of the first newspapers to successfully charge for access to its website.
Established in 1888 and first printed on pink paper in 1893 to stand out from rivals, the FT has pioneered the development over the last decade of a profitable subscription-based business model for the online newspaper.
Kita and John Ridding, the chief executive of the Financial Times, dismissed talk of a trophy purchase, saying both Nikkei and the FT saw an opportunity to move beyond the traditional defensive play of some competitors who are trying to shore up their print circulations.
“A lot of news media, particularly traditional news media, has been playing defense,” Ridding said in a joint interview.
“But we believe there’s a strong opportunity for growth, that we are at the intersection of two of the big global trends of our time which are digital, and particularly mobile, and the globalization of business.”
Ridding said the FT was “a little underweight” in the United States and Asia, where he said Nikkei could help the paper.
The FT has 750,000 subscribers, including 550,000 on digital platforms, but the newspaper was seeking to expand that total to the 1 million mark “as quickly as possible”, Ridding said. The Nikkei’s daily print circulation is 2.7 million and it has 430,000 digital subscriptions.
Kita said the Japanese newspaper market, although still huge by Western standards at 40 million print copies a day, was falling each year by 1 million and declining readership among younger readers underscored the logic of the FT purchase.
“Together we will prove that great journalism can be a great business,” Ridding said in a letter to FT staff seen by Reuters. “We will set the gold standard for news media business models as we do for quality journalism.”
Ridding said the FT and its new owners were wedded to the principle of charging for premium content, but the mechanism could vary across markets and subscriber bases.
The FT website started with a metered model, which allowed a few articles for free every month, and has been replicated by rivals like the New York Times, but earlier this year switched to trial subscriptions.
“The fundamental principle is the same: we are both believers in premium quality journalism and the subscription model,” Ridding said.
Both companies were analyzing readership data to develop new tools for readers, he added, citing as an example Nikkei’s partnership with Evernote, an app that collates and organizes content that is likely to be of most interest to the user.
“That’s something we might want to develop and introduce at the FT,” he said.
When asked whether he was concerned about a referendum on Britain’s membership of the European Union, Kita said:
“Whatever the political form, I believe there is always business and so I am sure London will continue to stay as a financial capital and that will continue to be so, so I have no concern about the point that you made.”
When asked if he was considering any more major purchases after the FT, Kita said he was too busy with the FT acquisition to do any more imminently.
Kita also said he needed an English dictionary to fully understand the paper Nikkei had just bought.
“I can understand the Wall Street Journal without using my English dictionary but for the FT I do need my English dictionary to understand the content,” Kita said though his Japanese translator.
“While I am reading the FT and when my English improves further I think I will not need the dictionary any more.”
Editing by Stephen Addison, Greg Mahlich