Overview: paper talk

Two games are being played out at Pearson, the international publisher and
owner of the Financial Times that will reveal its interims on 31 July.

And both centre on one director, Rona Fairhead, who until recently was group
finance director and of Pearson, owner of the FT.

What’s happened?

For a number of years the Pink ‘Un has been losing cash, readers and the
support of shareholders who often wondered why Pearson didn’t sell its trophy
asset.

‘Over my dead body,’ Dame Marjorie Scardino, chief executive of Pearson,
famously cried, but it’s looking increasingly likely that we will not have to
wait that long. With Scardino’s retirement on the horizon, senior executives are
being groomed to take the top slot and Fairhead has emerged as the front runner.

Her appointment at the FT Group is also being interpreted as a signal that a
disposal is on the cards. Indeed, rumours still persist of a tie-up with Dow
Jones’

Wall Street Journal, stories that have been flatly denied by Pearson.

What’s going to happen?

Pearson is due to announce its interim results on 31 July, and all eyes will
be on the FT’s performance. In the last full set of accounts for 2005, the paper
broke even for the first time in several years, turning in a profit of some £2m.

But Pearson chairman Glen Moreno is expecting more than that now, especially
as the strength of the FT brand would suggest it is capable of far greater
things.

So if Fairhead can knock it into shape – and as an accountant her natural
inclination is to look at costs, which is why so many FT journalists fear for
their jobs – then she will be well placed to move on to greater things.

But Fairhead will need to do more than slash the payroll. While advertising
at the paper has increased, UK sales continue to slide, so she will need to look
as well at other parts of the FT Group to grow the business. For instance, it
has a half share in The Economist, another global brand going through a
period of change with a new editor at the helm, and has control of French
business daily Les Echos.

If Fairhead reads the game correctly, then we could be watching the birth of
another high-profile female business player.

IN THE PINK

In 2005, FT newspaper sales worldwide were up 6% to £221m, producing a £2m
profit, an improvement of £14m. FT advertising revenues were up 9% to 18% in the
fourth quarter and were improving through the year. The group saw a sustained
growth in luxury goods and worldwide display advertising.FT.com advertising
revenues were up 27% as the FT’s biggest advertisers shifted to integrated print
and online campaigns. More than 90% of advertising revenue improvement was
converted to profit in 2005.