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$1.3 billion Financial Times deal was very good for Pearson: Sorrell

“Pearson got a good deal. A very good deal,” said Sir Martin Sorrell, CEO of WPP (WPPGY), the world’s largest advertising firm.

Nikkei announced Thursday it was buying the Financial Times from Pearson for the equivalent of $1.32 billion. According to the legendary ad man, that may turn out to be a smart move for both companies.

The Financial Times "was a trophy property clearly; the price it got is a trophy price,” said Sorrell.

His company, through investing on behalf of its clients, is “well over 10% of the total income of the FT conference and newspaper division...about 20% of its advertising revenue,” he said.

Nikkei, Japan's largest media company, was not the first name trying to be the next owner of the FT. Germany's Axel Spring was also said to be bidding on the the 127 year-old newspaper. But Sorrell is not surprised by this deal.

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“It is a branding story,” he said.

Despite the hefty price tag, “the cash price Nikkei paid is not the last payment it’ll have to make. They’re going to have to invest even more to make the FT work in the new digital era.”

Sorrell believes the need for money to compete in today’s media industry propelled the sale. “I doubt Pearson would have been prepared to make the investments necessary,” he said.

From his advertising business perspective, Nikkei may bring a welcomed change in culture at the Financial Times.

"The FT tended to be inflexible. It’s tended to be a little bit of a premium, that narrow niche.” Sorrell said. “The potential could be very significant if Nikkei encouraged the FT to become much broader.”

 

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