Exponential August 9th, 2015

Exponential the Skillbridge MagazineBetting on growthWhile Pearson has relinquished the London-based paper tofocus on its core education business, the Nikkei group is lookingto use the FT as a “fast ticket” to global expansion.Ken Doctor, author of Newsonomics, points out that the FTboasts an editorial team of roughly 500 journalists in more than50 locations. By contrast, Nikkei’s “huge staff” is concentratedon serving their predominately Japanese readership. Doctoropines that the FT’s “reporting resources could be redeployed inKorea, Hong Kong, Singapore and maybe China”.Nikkei generated $2.4billion in revenue lastyear more thanquadruple the FTgroup’s sales.Digital subscriptions are keyThe profitability of Nikkei’s acquisition depends on their abilityto sell digital subscriptions. The Japanese media titan alreadyboasts 430,000 digital subscribers but this impressive figure isput in the shade by the FT’s 500,000 online buyers.Emile Feldman, a Wharton management professor, argues thatthe FT has been a “leader in managing [the trend towards]digital subscription”. The FT has proved particularly adept inconverting readers into paid subscribers when they reach theirlimit of free articles. With this pedigree, the FT “is probably theright [partner] for the Nikkei”.The privately-heldNikkei group boastsmore than 3 millionprint and digitalsubscribers.What the brains think…Newspapers are frequently seen as analog businesses strugglingto meet the demands of the digital age. In a strategy article forthe HBR, Scott Anthony argues that the media industry canprovide salient lessons about digital business models.A common reaction to digital disruption is to create new digitalunits which have significant independence from the rest of afirm. Anthony counsels business leaders to take a moreintegrated, two-step approach which he dubs Transformation Aand Transformation B. Using this hybrid method should ensurethat CEOs do not make a false choice between “using digitaltechnologies as a way to improving operations or using digital asa platform for new growth.”Key Reading:• FT: FT provides ‘fastticket for Nikkei’sglobal expansion• HBR: What themedia industry canteach us about digitalbusiness models9 +1 (212) 548 4548 www.skillbridge.co