The decision by the Nikkei group, publisher of Japan's top financial newspaper, to pay £844 million (€1.2 billion) for one of the marquee brands in global journalism has raised concerns about editorial independence.
British publisher Pearson has agreed to sell the FT Group, including the Financial Times, to the Nikkei, beating out German media company Axel Springer. Pearson was reportedly looking to sell the much-coveted property for £1 billion.
The all-cash deal is part of a long-term strategy by the Nikkei to break out of a shrinking domestic market and shift to digital journalism, particularly in Asia. Its flagship Nikkei Keizai newspaper has a circulation of about 2.75 million but Japan's ageing readership casts a pall over all the big domestic dailies.
John Fallon, Pearson's chief executive, said the "explosive growth of mobile and social media" had driven the sale of the 127-year-old title. "In this new environment, the best way to ensure the FT's journalistic and commercial success is for it to be part of a global, digital news company."
The Nikkei has long had ambitions to compete with the big global business titles and once mulled publishing an English-language daily. But it's subscriber base outside Japan remains small. An English-language weekly largely failed to gain traction, as has the Nikkei Asian Review, launched in 2013.
The editor of the FT, Lionel Barber, has been at pains to reassure his staff that the takeover will not affect the newspaper's day-to-day operations. He said the newspaper has "every reason to believe" that the Nikkei is committed to the "vital principle" of editorial independence, according to tweets from reporters at the FT.
The Nikkei has a reputation for solid financial reporting – and for soft pedalling on big stories. In 2011, it missed Japan's biggest business scandal in years, involving the covering up of about 117 billion yen in losses by optical-maker Olympus. The company's British chief executive, Michael Woodford blew the whistle in the Financial Times, later accusing the Nikkei and other domestic papers of ignoring him. In an interview with the London Times yesterday he said if the FT had been owned by Nikkei at thetime the scandal was breaking, "I would have gonve [with the story] to the New York Times or The Wall Street Journal instead."
In the late 1980s, journalists at the newspaper found that Yamaichi Securities, one of the world’s largest brokerages, had buried millions of dollars in red ink off the books, setting up dummy companies to absorb the losses. Before the story could run, it was spiked, said a senior editor who subsequently left. Yamaichi collapsed in 1997 under the weight of more than ¥300 billion in debt.
Subscribers have recently complained that the newspaper has adopted a largely uncritical stance toward Abenomics, the inflationary economic creed of prime minister Shinzo Abe, who returned to power in late 2012. "The Nikkei is a virtual cheerleader for Shinzo Abe's administration and its policies," said Makoto Honjo, a businessman and consultant who subscribes to both publications.
Analysts say the Nikkei management is likely, however, to be careful about imposing editorial changes on its new acquisition. "They can influence domestic coverage in Japan but not in British newsrooms," said Kaori Hayashi, a media expert at the University of Tokyo. "They're not in a position to do that and nobody would take that seriously."
Naotoshi Okada, the Nikkei’s president and CEO, insisted on Friday evening that the company “cherished” editorial independence and would do nothing to threaten it at the FT. “We are different newspapers, so the way we cover the same events might differ but the editorial philosophy and culture of reporting will be maintained.”
Nikkei comprises more than 3,000 employees with an oveseas network of 36 bases. Along with its daily Nikkei Keizai, it also publishes specialist newspapers including the Nikkei Business Daily, Nikkei Marketing Journal and Nikkei Veritas, a financial weekly publication.
The FT has a combined online and hardcopy circulation of 737,000. Last year it generated £24 million in operating profit. Despite plummeting print sales, the title has made an agile transition to the digital world.
But Pearson reported a pre-tax loss of £112 million for the half-year 2015. The cash flow from the FT sale will be important to the education side of Pearson’s business, said Tom O’Sullivan, an Irish financial advisor with strong links with the media and investment community in Japan.
The merger will be closely watched in the coming months for signs of friction. “What worries me is that the culture of reporting is so different that communication will be difficult,” said Hayashi. “It could create big problems.”
