A reporter, a foreign correspondent, an overseas bureau chief, a deputy editor, a managing editor, an editor and publisher-and now Chief Executive! That's a splendid career graph and it belongs to John Ridding, CEO of Financial Times, the global financial daily owned by the London-based education and media conglomerate Pearson Plc, which also owns publishing major Penguin. CEO since June 2006, Ridding has seen print media in the developed world grapple with the problem of dwindling circulation.
The 2008 global financial crisis only worsened the situation, as advertising revenues shrank. Ridding saw opportunities in the crisis by putting in place a digital strategy that included monetising content-something that most publishers feared doing-and putting the 120-year-old newspaper on e-readers like the Kindle, introducing an FT iPhone app and, now, an iPad one. That game plan seems to be working well, as Ridding reveals in this exclusive interview with BT's Brian Carvalho and Suman Layak. Excerpts:
The last few years have not been great for the print media, and the global financial crisis only made it worse. How did you handle it?
The crisis has been serious and there have been questions about our business model. However, we had already adopted a strategy of growing our content revenues before the crisis hit. It was aimed at making us less dependent on print advertising revenues. We had decided to charge for our journalism online, just as we charge for print. When the crisis hit, there were two ways to respond. One was to be defensive, cut costs and scale back.
But the danger of this is you lose readers, and then you get into a vicious cycle. The other option was to keep innovating, experimenting with formats. Even when the times were tough we could still look at acquisitions (FT acquired OCO Monitor, an FDI database and OCO Assess, an online FDI location assessment tool, in April, 2008. In February 2010, it acquired Medley Global Advisors, which provides macro policy intelligence to banks, funds and asset managers).
There is a lot of opportunity to have focussed publications beneath the broad umbrella of FT. So we remained profitable through the crisis. Our content revenues increased by 15-16 per cent and we saw a 43 per cent increase in subscription to FT.com in 2009. We saw double-digit growth in print circulation revenues and our corporate subscriptions grew 40 per cent. We have seen pretty strong growth this year and we expect that our digital revenues- what we get out of FT.com-will overtake print advertising revenues this year or by the next. That will be a first of sorts in over 100 years!
Today, digital revenues (advertising and subscriptions) are about 20 per cent while content revenues (print subscriptions and other sales of content like syndications) are around 40 per cent, and the print advertising accounts for the rest. Before the online era, print advertising used to account for 80-90 per cent of the revenues. We outperformed a global market that saw a 30 per cent drop in advertising revenues. Notable success stories included the luxury sector with a three per cent increase in print and 250 per cent online, excluding howtospendit.com.
You have started innovating with the Kindle, the iPhone and the iPad. How successful has it been?
There is a great opportunity in new devices at a time when the cost involved in physical distribution of newspapers is only growing. We have seen 3,00,000 downloads on the i-Phone. We provide charts and data and the ability to manipulate data on the phone. The iPad is another step forward with good video quality. We do around 200 videos a month, which are mostly interviews with business leaders and politicians. Doing videos allows us to access newer advertising budgets (like television) as it is an important source of revenue.
You have also worked with payment models for content.
At FT.com you can get 10 stories a month for free and after that you have to subscribe. Once you have subscribed, you can get the stories from any channel-be it the iPhone or the BlackBerry. Our fundamental philosophy is to tap into the huge wave out there on iPhones or on Facebook and Twitter. Charging for the content ensures we have a more engaged readership.
That can be useful for the advertiser too as they know who the reader is. We can also use the knowledge about the reader to target the advertising. We are also working on micro-payments where a reader can pay for just one article, and not have to take an annual subscription to read one piece (which he may have been looking for via a search engine).
You have worked to create a local language product in China. You are about to launch in India-will you look at a similar strategy?
In China we had no option because of the language barrier. But in India, we see a lot of opportunity in English. We have submitted an application for publishing a facsimilie edition. We now fly it in from Singapore, but Indians want it at the same time that people get it in Singapore.
But you seem to be facing legal barriers in India, with a notable competitor not too keen on your arrival. In case you can't launch a newspaper, will digital be your Plan B?
Well, I must say here Plan A is digital. There is already a landing page for India on the website. We are still working on the pricing, but the model will be similar to but cheaper than what it is in the UK and US. We want to engage with the audience here and offer them the various news and data applications that we offer our audiences elsewhere. Obviously, we want both print and digital in India. It works to have both print editions as well as be available on digital channels as the different media can benefit from each other's presence in the same market.
Coming to our plans to launch our print edition, it is nice to come to a place where newspapers are big and are still launching even when many are closing down in other countries. We are going to be a niche publication with our target group being the C-suite-the CEOs, CFOs and decision makers. So the legal hassles we are facing now seem unnecessary. Our aim is not to do a lot of Indian news but to bring a lot of global news and analysis to India and take Indian news on Indian businesses to the global audiences.
How useful is it for the CEO of a publication group to have been a journalist?
We have a strong belief in the independence of editors. While it helps that I know how a newsroom works, I had to rescind myself from editorial. This is different from any other business, where, if the product does not work, you can go ahead and change it. In a newspaper there is total trust in the editor. But an understanding of the newsroom helps, especially when it comes to allocating resources. Also, at FT I spent 15 years interviewing business leaders, understanding their goals and challenges. That is almost like a mini-MBA.