Financial Times Launches Major Offensive In U.S. p. 6

By: Joe Nicholson Armed with nearly $160 million, a British publisher is maneuvering to seize a chunk of the Wall Street Journal's stateside readership

Britain's Financial Times has launched a $160 million, five-year global campaign to boost circulation, with a lion's share of the money earmarked for an American offensive against the entrenched Wall Street Journal.
The overall plan of the venerable British daily, founded in 1888, is to increase global circulation from 340,000 to 500,000 with an interim goal of tripling American circulation from 32,000, where it stood at the start of last year, to 100,000 by the end of next year.
FT's parent, the $3.7 billion British corporation Pearson, knows that challenging the Wall Street Journal means taking on a prestigious powerhouse owned by the $2.6 billion Dow Jones & Co.
All parties agree the increasingly globalized economy has increased demand among U.S. investors and corporate executives for more overseas news. "The changes in global business have created this opportunity, and FT is uniquely positioned as a result of it," said Stuart Arnold, managing director of the Americas.
The Journal, he contended, is locked into coverage of American business and has already done what it can within its format to respond to the demand.

FT's editor Richard Lambert last year shifted his headquarters from London to Manhattan to lead what he calls the campaign's "central" battle in America. In early skirmishes, his troops have lifted circulation over 50% since the beginning of last year, when circulation stood at 32,000. By January 1998, it had jumped to 46,879, and unaudited reports show over 50,000 in the first week of March.
"We're on target," crowed Lambert. He believes FT provides unmatched global coverage, but recognizes the paper is largely unknown in America. To get Americans to take a look-see, FT replaced the U.K. version it had been selling here with a U.S. edition, launched last September. It is supplementing printing plants around New York and Los Angeles with a third plant in Chicago scheduled to begin printing in May. And in January the price per copy was slashed from $1.50 to $1 to coincide with a national barrage of ads using network, cable and closed-circuit TV; radio; three national newspapers; airport posters; and direct mail. At least half of FT's readers also read the Wall Street Journal, with a cover price of 75 cents.

cream of WSJ readers?
FT tells advertisers that its readers have an average income of $268,000, average net worth of $1.6 million, and are the cream of the Journal's far larger crop of 1.8 million circulation, which makes it the largest U.S. daily.
Journal executives disagree. Managing editor Paul Steiger said, "We're the global business daily. We've got more circulation, we've got more reporters, and we've got more readers around the world than anybody else."
Journal publisher Peter Kann told a business meeting: "The Financial Times is a fine newspaper. As a business proposition, it is not a significant competitor for us."
Analysts weren't dismissing the prospects of an Old World David against the New World's Goliath.
"They have chosen to invade the territory that has long been commanded ? and I use that term in the strongest sense of the word ? by the Wall Street Journal," said newspaper analyst John Morton, adding that it's always difficult to displace "a dominant newspaper from a market that is being well-served by that newspaper."
However, Morton said FT's circulation growth over the last year "clearly shows there is some kind of appetite for what they are doing." He said FT executives were wise to invest heavily in a promotional campaign. With 100,000 circulation, he pointed out, FT "gets certain kinds of national advertising. They might get Rolls Royce, but not the Buick ads."
"Competition usually equates with pressure on profit margins," Morton said. "I don't think it is going to be anything that will seriously undermine the Wall Street Journal."

may triple circulation
FT is likely to triple U.S. circulation, according to media analyst Pete Appert of BT Alex Brown in San Francisco. He rated FT editorial quality "as high as it gets in business journalism," but suggested it may need 300,000 circulation before seizing a significant share of national advertising.
Until then, Appert said FT's high demographics will help pull financial ads, but it is unlikely to attract much national advertising for computers, autos and liquor.
"Displacing the Journal? The odds are zero," said Appert. "Being a profitable niche player, I think that can be achieved."
So far, FT's U.S. operations generate about $40 million a year in ad revenues, including $1.3 million in the U.S. edition, Arnold said, adding that the U.S. edition is profitable.
"Financial Times is small, but people will experiment with it. Circulation is a big barrier right now," said Larry Dex-heimer, partner in a New York ad agency that uses the Journal and is considering FT. He said FT is a good paper and can make inroads be-cause it is "reaching the kind of readers that many products are looking for."
To up the ante, FT is targeting liquor ads: Its profile of worldwide readers emphasizes that 92% keep wine at home; 76% whiskey; 66% gin; 62% sherry; and so on.
Another FT observer, Wesley Mann, editor in chief of the Los Angeles-based Investor's Business Daily, the nation's second-largest daily financial sheet, offered this take on taking on the Journal: "I'd be the last person probably to say it can't be done. If you develop a good product that the public finds more useful, you can take market share from existing publications. It's the old build-a-better-mousetrap."
Mann understands the possibilities because IBD, which sells for $1, has cut into the Journal's market by building circulation to 256,000 since its launch in 1984.
"We started from scratch to go after the bible of financial journalism," said Mann, adding that circulation jumped 26,000 over the last year ? many of them former Journal subscribers, and many investors attracted by IBD's exclusive stock information provided by IBD's parent, Data Analysis Inc. The newspaper's daily stock charts, for example, in-clude a ranking of every stock based on growth over five years.
FT's global fo-cus means it is unlikely to compete for readers of IBD, which concentrates on news for investors, said Mann. IBD officials hope to crack 1 million circulation, and Mann, 50, has high hopes to do so before he retires.
Even with circulation growing, IBD remains a well-read skeleton of information, with little advertising to give it the thick feel of a prosperous newspaper. As analyst Appert said, "It doesn't look like it carries sufficient advertising to be meaningfully profitable."
IBD chairman William O'Neill re-fused to comment on profitability but said advertising was rising "substantially" in the last few years.

journal counterattack
In recent months the Journal has launched a two-pronged counterattack, expanding its arsenal of global coverage and striking FT at home by launching in January a London edition of the Wall Street Journal Europe. Last fall the Journal slapped an "International" banner across the top of the first page of an expanded section of worldwide news. The London edition was created to build up the Journal's 13,000 U.K. buyers.
The Journal and FT each claim to have more foreign correspondents.
Richard Tofel, Dow Jones spokesman, proclaimed, "Our international reporting staff is about twice the size of FT's. They have 40 to 50, and we're at 90 or 95." The British, however, count heads differently. FT says it has 150 overseas correspondents, but concedes many are superstringers (with contracts) or stringers (without).
The Journal's Steiger first denied responding to FT, but added that the expanded global coverage and new London edition "may have figured in the equation somehow, but there were a lot of reasons."
FT's New York bureau chief, Richard Waters, believes Journal editors pay more attention than they admit. "Possibly our arrival," he suggested dryly, "has helped stimulate their thinking a little bit."
Will the Journal lose advertising if FT circulation hits 100,000? Steiger declined to speculate, but challenged, "Let's see if they get to 100,000."
FT has cut prices ? to $1, from $1.50, per copy and to $364, from $450, for a one-year subscription (or $184 with a 50% introductory discount, compared with the Journal's $175).
"We don't cut corners to get more readers. We're not going to discount hugely simply to buy circulation," Steiger countered.

unique obstacles
FT also faces some unique obstacles. For instance, its trademark pink pages may catch Londoners' eyes, but may strike Americans as odd.
Mann of IBD credits FT for daring to be different, and blames the declining circulation of many American newspapers on fear of experimenting. American readers will have to get used to British spelling, which wasn't changed in the U.S. version because most stories are written for a U.K. audience, explained Lambert, and "to re-edit the paper would be a big job." As soon as 1 million Americans start buying FT, he joked, he "might consider" reorganising the editing to adopt Yank spelling.
On the other hand, Lambert has been "trying to adapt our headlines" to avoid British jargon that would baffle Americans. FT retains a decidedly British flavour: A column of advise on executive entertainment, for example, talks about "taking clients to a rugby match."
The British character is certainly not an appeal to elitism, declared Lambert, adding, "I don't think we will succeed if we try to sell ourselves on snob values," he said. Rather, FT will live or die on its global reporting.
"We don't aim to match the Journal's coverage of U.S. business, but we do aim to beat them at coverage of U.S. business activities around the world,"
he declared. Moreover, the bluntness of opinions expressed in FT's decades-old "Lex" column, he boasted, offers "a kind of journalism which is not part of the U.S. tradition." The column would not hesitate, he said, to say "the chief executive of a company has made a mistake and ought to be fired."
Will the brashness of Fleet Street sell in American boardrooms? American corporate executives are "fairly serious- minded," said analyst Morton, "and are not easily titillated by extravagance like that."
IBD would never publish such subjective views, even in a column, said editor in chief Mann. "Maybe they have people with much more of a portfolio who feel they can make these judgments," he allowed. "How many of us have run companies?"
FT hopes to demonstrate it can increase circulation by providing information readers want, said Stuart Arnold, an American who is the paper's managing director of the Americas and former Fortune publisher.
Arnold said many American publishers "are rooting for us. They would like to see newspapers start to grow again in this country. There is no reason to despair."

?(Pearson's Financia Times pitches its world coverage to attract readers in a market dominated by Dow Jones & Co.'s Wall Street Journal. Investor's Business Daily has carved a niche for itself as the distant second and has no global aspirations.) [Photo & Caption]
?(Financial Times editor Richard Lambert moved to New York City to spearhead the escalated assault on the U.S. market. His new office overlloks Central Park.) [Photo & Caption]
?(Stuart Arnold, Financial Times' managing director of the Americas, is an American who sees U.S. reader demand for world news in the British daily's pink pages) [Photo & Caption]
?(Stuart Arnold, Financial Times' managing director of the Americas, is an American who sees U.S. reader demand for world news in the British daily's pink pages.) [Photo & Caption]
?(E&P Web Site: [Caption]
?(copyright: Editor & Publisher April 4, 1998) [Caption]


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