Scott Henderson is embarking on his second year as chief financial officer of
the Financial Times. And there is good reason to believe that this
could be the most challenging year the youthful Canadian has yet faced in his
Finance professionals and business executives are worried that 2008 could
prove to be a tough year. If the hawks are right, then the wobbles in the market
in 2007 caused by the credit crunch are just the overture to a broader slowdown.
And that could make things very interesting for the pink ’un as it is so reliant
on advertising revenues.
For Henderson there is a sense of déjà vu about standing on the precipice of
a market slowdown. He moved to the Financial Times, in a more junior
role, in 1999 because he was excited by the opportunities of the technology
boom. He remembers the sense of excitement that pervaded the corridors of the
paper’s riverside headquarters. ‘Back then, it was all about building websites
and seeing if people would come. And they did,’ he says.
Nine years ago, times were good in the City with markets soaring and bonuses
climbing. The FT was doing equally well, with its coffers bulging with
advertising revenues as companies spent a fortune in the rush to establish their
brands in the new digital marketplace and a hiring boom meant that there was a
flood of recruitment ads.
Then the internet bubble burst and both the City’s fortunes reversed with
high levels of redundancies and shrinking investment banking profits. The FT’s
fortunes mirrored that of the City’s and when the FTSE-100 hit rock bottom in
2003, the Financial Times notched up a loss of £32m, as advertising revenues
fell almost two-thirds from their peak in 2000.
Those early years of the new millennium were a time of belt-tightening and
introspection. In Henderson’s opinion those lean times were crucial to the
long-term success of the paper. ‘Instead of just thinking about building new
sites, we switched our attention to how to make money.’
One of the biggest changes over the past few years has been the integration
of the paper with the website so that the two work seamlessly together. There
has also been considerable investment to ensure that there is the technology in
place to support the smooth working of the website as well as integrating lots
of sites all into the main
The hard work has paid off: the paper has seen its circulation rise; an
achievement not to be underestimated when the trend for newspaper sales has been
down for the past few decades.
But it is the website’s advertising revenues that has notched up the best
performance. The focus on the website has seen
revenues up 50% compared with this time last year.
Most consider the media industry to be a young and dynamic business sector,
but there are sections that are quite conservative and resistant to change.
‘It took a long time for fairly conservative media buyers to understand the
online environment and to get the budgets to start to shift. Now we’re even
starting to tap into television advertising budgets,’ says Henderson.
After experiencing the highs at the start of the millennium and a couple of
the bad times, he moved back to work for Pearson, the publishing giant that owns
the FT along with other well-known brands like Penguin, in 2002.
His role at Pearson was very different. ‘Pearson operates on a much bigger
stage. It has the capacity to invest much larger sums of money. My role there
was much less about business development and much more about buying companies
that filled gaps in the Pearson portfolio.’
Henderson considers his time at Pearson working in M&A as an exciting and
highly educational time. ‘I think these skills are vital for people who want to
have a long career in business. Buying businesses to fill gaps in your portfolio
is an accepted way today to build your company, rather than just focusing on
And deciding which business will fit within the portfolio also means that
finance directors are forced to understand their own businesses better. ‘I think
the ability to price, acquire and integrate acquisitions is vital for today’s
‘To make the right acquisition, a finance director needs to have a deep
understanding of their own company, be prepared to sift through a lot of frogs
and be honest with people about your interest in their company.’
Henderson has taken the lessons he learned at Pearson and applied them to the
FT. ‘Six months ago we sat down and looked at our online recruitment business.
We have a big print recruitment business and we’ve tried to build our online
recruitment business several times without much success. We decided the only way
forward was to acquire an online business,’ he says.
The FT acquired a UK start-up company called exec-appointments.com which has
created its own technological platform for online recruitment of senior
Investing in online recruitment now makes good strategic sense. Online
recruitment will increase in popularity as the younger generation of business
executives that have spent all their lives using computers grows up, he
The current turmoil in the global markets has helped to provide the paper
with a rich vein of news to tap into. But there remains lingering concerns that
while the FT may be doing well out of the current market jitters, it could
suffer if the crisis in the market deepens.
Henderson seems unperturbed by such concerns. ‘We like volatility. It’s a
time when people need us and when we are more valuable to them and that helps us
to build our business,’ he says.
Things really are different this time; the FT has taken on board the lessons
from the last downturn in the financial markets. ‘We now put money into the
areas that we know the FT will be involved in come good times or bad so it’s
that much less likely that we will abandon those investment plans. For example,
we will continue to invest in executive advertising and killer content.’
He admits that the best part of his job is planning and investing in the
future of the FT brand. But, unlike finance directors at other companies, he has
to keep the board of the Pearson Group happy, as well as his own board.
Coming up with the annual budget is a process of negotiation. ‘The bulk of
revenues come from advertising. That’s quite easy to predict as there are a
number of studies conducted over the year. The discussions really focus on how
much of these revenues are then re-invested in the development of FT.com and how
much Pearson expects to receive.
‘Today we are a print business with a digital future and we are going to
become a digital business with a print legacy. That is going to take money and
time. And we have to keep them apprised on how we are progressing towards that
aim and discuss whether achieving by investing in capex or making some key
hires,’ says Henderson.
He is not complacent about the challenges that the FT continues to face.
‘Keeping the business as fleet of foot as possible is vital. We need to be able
to keep developing our business at the speed that younger more nimble businesses
are moving. We have to turn our size into a strength, not an impediment.’
While the downside to being a part of Pearson is that he has to relinquish a
certain amount of control, Scott Henderson there are advantages to being a part
of the group: as he says, the heavy lifting on issues like pensions can be left
to the main group.
But that does not mean that the FD can completely dodge all of the more
mundane tasks of leading finance. There are still internal audits and quarterly
reporting. The trick as far as Henderson is concerned, is to carry out these
tasks as efficiently as possible.
He takes his lead from Pearson CEO Marjorie Scardino: ‘She wants less
information – but of a higher quality so she can zero-in on the decisions we
have to make, make them quickly and get on with things.’
Making rapid decisions will certainly stand Henderson in good stead in the
coming year. Along with challenges posed by uncertainty in the financial
markets, there is another threat to the newspaper: Rupert Murdoch’s decision to
acquire The Wall Street Journal.
There are good reasons to be nervous. Murdoch’s recent reshuffle of his media
empire, made one of his most trusted lieutenants, Les Hinton, the chief
executive of Dow Jones, The Wall Street Journal’s parent company. This was
interpreted by analysts of Murdoch’s intent to take on the FT.
Henderson shrugs off any possible threat posed by The Wall Street Journal.
‘He’s giving the paper away today in Europe so he can’t compete on price. That’s
alright by us. The people who read the FT aren’t enticed by saving a pound here
or there; they buy the paper because they need the analysis to help them make
better decisions,’ says Henderson.
This is an abridged version of an article that first appeared in the
January edition of
Andrew Tyrie airs views on the Finance Bill, 'Making Tax Policy Better' report, and Brexit
After a seven-year saga, a result has been reached between Margaret May and CIMA over misconduct
Top 25 firm HW Fisher & Co has acquired London firm Rhodes & Rhodes
Top Ten firm Smith & Williamson has appointed Rupert Phelps as a partner