Two print media giants, The Financial Times and The Economist, shocked the financial and the print world this last year after selling for well beyond their projected value to new owners.
Print media outlets of all kinds have been lagging for years, with most transitioning to online formats as they struggle to hold on to their readership. Household names like Time magazine have had to cut employees and close down magazines entirely. Yet, volatile as the industry may be, The Financial Times sold to an employee owned Japanese publisher called Nikkei for a jaw dropping $1.3 billion, 44 times its operating profit. The Economist was sold to Italian investment firm Exor S.p.A. for a respectable $715 million, 15 times its operating profit.
To put things in perspective, USA Today, the largest currently operating newspaper publisher, trades at around five times its cash flow, only a third of what The Economist sold for. Nikkei and Exor were willing to pay these exorbitant sums for the same reason; they believe the impact of the global market on print media is being underestimated.
“If you have a distinct journalistic offer, which is independent; if you have a readership, which is growing in the world because more people want to be informed and speak and read English; and if you have technology that can help you reach much more of them than you could in the past, the combination of that, if well executed, is pretty powerful,” said John Elkann, the 39 year old chairman of Exor.
His statement is reflected in similar ones by the Nikkei chairman Tsuneo Kita. Kita shared in an email that he had wanted to partner with The Financial times to help develop his company’s presence in an English publication. Kita and Elkann both believe that as the news business adapts in response to the digital revolution that opportunity will arise for momentous change.
The potential for English print media in a world that is increasingly adopting English as a standard language has the potential to have an earth shattering impact on the business world. It remains to be seen whether these purchases will pay off, but it goes without saying that the magazine magnate sales have made waves in the previously stagnant world of print media.