First glimpse of FT sale seen in Dow deal
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By Kate HoltonLONDON (Reuters) - Acquiring the publisher of the Wall Street Journal might appear to run against Pearson Plc's current strategy of focusing on education, but a deal could mean the eventual sale of its Financial Times newspaper.The world's largest educational publisher, London-based Pearson has long been under pressure from investors and analysts to dispose of the high-profile newspaper, a notion that has firmly been rejected by Chief Executive Marjorie Scardino.The two business newspapers reported on Monday that Pearson was working with General Electric Co. to make a bid for Dow Jones & Co. Inc. in a deal that would place GE's CNBC business television channel, the FT and Dow's Wall Street Journal in one privately held joint venture."Some investors have been keen to see Pearson sell the FT in any case, and this could be taken as a step towards this," Citigroup analysts said, suggesting it might ultimately provide an easier exit for Pearson to sell its stake in the newly combined group.Uniting the two newspapers is generally seen by analysts as a good geographic fit, with the Journal strong in the U.S. and the FT a leader in Europe.In the scenario envisaged by the reports, GE and Pearson would each take a 40 percent or 45 percent ownership in the new entity, with Dow's controlling Bancroft family holding 10 or 20 percent.The Bancroft family are already considering a $5 billion buyout bid from Rupert Murdoch's News Corp. , which would potentially strengthen the Wall Street Journal and present a bigger challenge to the FT.Any purchase by News Corp. would also deliver a stream of real-time news from Dow Jones Newswires to Murdoch's Fox Business Channel, creating stronger competition for CNBC.Toby Thompson, manager of the New Star Higher Income Fund, which has 2.5 percent of the fund invested in Pearson, told Reuters he did not think it meant Pearson was looking to "bulk up" in newspapers and said it could consolidate the industry, demerge it, sell it or take synergies."There is a lot of overlap between the Wall Street Journal and the FT," he said.Pearson has already been shedding newspapers around Europe, including selling its Recoletos business in Spain, and is seeking a buyer for its Les Echos newspaper in France, a source familiar with the situation has said.Journalists at the French business paper published a letter on Monday voicing their concern over any sale.Analysts at Collins Stewart said in a note that a successful deal by Pearson would allow it to profit from shedding the FT if the deal included a sell option, while also reducing competition for printed news.ABN AMRO said Pearson was in danger of being "damned if it does" due to execution risks and the need to match Murdoch's already high offer for Dow, and "damned if it doesn't" as it will have revealed its concern about Murdoch owning the Wall Street Journal.News Corp. has submitted an unsolicited bid to buy Dow Jones for $60 a share, representing a 65 percent premium to the stock's price when the offer was disclosed.Murdoch has met with the Bancrofts, who initially opposed the bid, but who have recently said they would consider that and other potential offers if they protect editorial independence.Pearson declined to comment on Monday. Its share price was down 1 percent at 1250 GMT at 864-1/2 pence.(Additional reporting by Lawrence Fletcher)
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