Keep warm by polishing your share price, seems  to be the message this week.  Or by making a Bonfire of the Vanities of the traditional media.  While Autonomy gets a paste-ing for putting trade announcements into its equity markets RNS news filings, Pearson sees a steady rise in its share price because the analyst at Execution thinks that the idea that Bloomberg might buy the Financial Times is original, or even likely.  Meanwhile , the FT itself speculates that the CEO of Informa, Peter Rigby, may be fed up with his investors and be about to depart, and a snowy January in the UK is a good time for Reed Elsevier to bury gloomy news.  There are no buyers for the remaining US RBI businesses as a whole, so it is break-up , smaller scale disposals and closures from now on in.  The Reed share price fell, but not a lot.

Here then is a first clue to the nature of this new year.  Investors are getting more pro-active.  Prices for the major players have upside and, in Reed’s case, downside, built into them.  Analysts  perceive the coming media market reconstruction and want to get on with it.  At least that way share prices move and people get commissions.  Pearson is a long time target.  Its portfolio nature in Lord Blakenham’s Golden Day even included Madame Tussauds and Alton Towers.  Dame Marjorie Scardino cleared out the non-strategic, but drew a line at the FT and Penguin.  Ever since everyone has wondered why, but neither seemed likely even in the boom years to reach interesting valuations, so analysts concentrated instead on the growth and development of Pearson as a global education market leader.  But Execution is right.  There is unfinished business here.  Pearson add no value to the FT in the vertical, despite Dow Jones Mr Murdoch may still be interested, Bloomberg did buy BusinessWeek and are now as determined acquirors as they were once emulators.  And the FT would help in the great Boomberg struggle with Thomson Reuters, where IDC would be a very valuable component.

But why should a good story end there?  Penguin is now subscale in the consolidation of consumer publishing.  Would Mr Murdoch like to buy that for Harper Collins (or Hachette, or Bertelsmann for Random House?)?  The growth of world education markets, and the potential availability of Santillana, which could be an important route to building scale in Spain and Latin America, could be the targets on which investors might prefer to see Pearson concentrate. Meanwhile, Peter Rigby’s woes at Informa are said to derive from the investor revolt which prevented him from doing the Big Deal with Springer.  But Springer, now owned by the Wallenburg’s EQT, will want to do a big deal of its own to get the growth going which will justify buying that debt mountain.  Does the break up of Informa make sense, with Taylor & Francis going to Springer after all?  Or does that simply create a Reed-style problem of selling the rest at premium prices?  Datamonitor would surely find a home, but would Performance Improvement?  As buyers, Informa were fast and lucky: as sellers, those are qualities more usually found on the other side of the table.

So now we have gone full circle in investment terms from safely weighted porfolio media ownerships in which the variations in the cycle meant that not everything went wrong at once, to companies based on broad vertical specialization.  Pearson shorn of the FT and Penguin, or Thomson Reuters sans Healthcare, or, indeed, Bloomberg, are the role models.  The ancien regime is now McGraw-Hill and Reed Elsevier in this analysis.

On a cold night there may be persuasive logic here.  At least the equity markets hope so.  Something must be done to get those post-vacation media markets moving again, and what normally works is the power of rumour – turning into self-fulfilling prophesy.


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2 Comments so far

  1. Tweets that mention David Worlock | Developing digital strategies for the information marketplace | Supporting the migration of information providers and content players into the networked services world of the future. -- on January 8, 2010 15:50

    […] This post was mentioned on Twitter by Barry Graubart, David Worlock. David Worlock said: Keeping warm by writing about the sale of the Financial Times et al in the media January Discount Sales […]

  2. cna training on January 20, 2010 05:52

    Keep posting stuff like this i really like it