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Why the Financial Times Deal Commands a Premium

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In my opinion, aged financial media assets can be worth more than general news companies. Financial media companies like the Financial Times (FT) market to a more affluent audience that is willing to pay for access, thus subscriber revenue proves to be more sustainable than pure reliance on advertising dollars. Plus, online advertising pays far less compared to print ads. The combined print and digital circulations of the FT stand at 737,000. Companies like the FT, Bloomberg and Dow Jones make tremendous amounts of money through subscriptions like Terminal revenue or DJ’s Factiva.

Newspapers and Media Assets Acquirer Sales Price – USD
Financial Times Nikkei 1.37 billion
The Washington Post Jeff Bezos 250 million
The Boston Globe and its affiliated New England media assets John W. Henry 70 milllion
Mergermarket Group BC Partners 624 million

 

The Deal

Yesterday, the FT announced Nikkei Inc., the Japanese media conglomerate, is acquiring the salmon-tinted paper for US$ 1.3 billion in one of the largest newspaper deals ever recorded. Nikkei is the owner of Nihon Keizai Shimbun, Japan’s largest business newspaper. By focusing on its education business, Pearson Plc, the parent company of FT, has been trying to shed non-educational units over the past year. E-learning and for-profit colleges generate vast amounts of profit for Pearson. Pearson sold Mergermarket which controls brands such as Debtwire, DealReporter, Infinata, Wealthmonitor, and Xtract Research to private equity firm BC Partners (a clear sign of Pearson getting out of the media business) for around US$ 624 million.

The FT has a number of strong subscription businesses which commands a premium over traditional media. In 2014, the FT Group pegged sales at around US$ 520 million. Also the company has a level of prestige – being a trusted news source. More importantly, companies like the FT rarely come up for sale. This scarcity of opportunity commands a premium in valuation.

This article is written by Michael Maduell and his opinions are his own and not officially of the Sovereign Wealth Fund Institute.

SWFI First Read, September 19, 2018

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QIA Eyes Investment in Chinese Lender Lufax

The Qatar Investment Authority (QIA) is in talks about a possible investment into Shanghai-based Lufax, one of China’s largest online lenders. The seller of the possible stake is China’s Ping An Insurance (Group) Co. Ltd. Lufax’s official name is Shanghai Lujiazui International Financial Asset Exchange Co. Ltd.

Wealth Funds Back Hotpot Giant

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Japanese Government Capital Provides Initial Life for Texas Bullet Train

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Dallas-based Texas Central Partners, LLC is the developer of a proposed high-speed rail system, dubbed the Texas Bullet Train, between Dallas and Houston. Project costs are estimated between US$ 12 billion to US$ 15 billion. The developer secured US$ 300 million in project loans from Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN) and the Japan Bank for International Cooperation (JBIC). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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DOJ Investing Tesla Over Musk Comments

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The U.S. Department of Justice (DOJ) is conducting a fraud investigation over Tesla as its CEO Elon Musk made public statements on twitter. This is a criminal probe. In addition, earlier, SWFI reported the U.S. Securities and Exchange Commission (SEC) is conducting a civil inquiry into Elon Musk regarding his statements.

This all surrounds Musk tweeting in August that he was thinking of taking Tesla private and had “funding secured” for the transaction. Both government authorities are seeing if Musk misled investors and violated federal securities laws with his public statements.

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