Why the Financial Times Makes Money as Others Flail

(MoneyWatch)  Almost overlooked amidst the flood of red ink flowing from newspaper companies lately, is the remarkable success of The Financial Times (FT), most certainly one of the best business rags in the world.

No U.S. newspaper can yet compete with the salmon-colored FT for its overseas audience, which, though the paper is produced in Britain, represents almost 70 percent of its subscriber base. Today, I asked one experienced editor at an online news aggregation service to compare FT's coverage with that of the much larger (but U.S.-centric) Wall Street Journal (WSJ).

"I would say FT is not only more worldly, less provincial than say the WSJ, but individual stories are, day in and day out, richer, more insightful," he says. "The writing is better. The business hooks are clearer."

This editor says his company's site is prominently displaying around 50 separate FT articles from the past ten days alone -- about twice as many as from the WSJ.

As other observers have noted recently, FT's current success is actually a turnaround story. The operation lost over $77 million in 2003-4, but has recovered to generate $60 million in profits against revenues of about $600 million in 2007.

One of those who's noticed is WSJ owner Rupert Murdoch. "Many suspect that if Job One for a Murdoch-owned Wall Street Journal is suffocating The New York Times, then Job Two is crushing the Financial Times," Jon Fine wrote recently.

William Powers says in an article to be published tomorrow that he is "floored" by the quality of the writing and thinking in the FT, which he mainly buys in airports. "Rather than leave it on the plane, I found myself saving it to read again at home. When was the last time you did that with a newspaper? "

For media execs everywhere, this translates into two key takeaways:

• The emerging media marketplace is globalizing faster than anybody predicted. FT's success is partly due to its early recognition that its content would appeal to people everywhere, not just in its home country. FT's global strategy is on display at the company's Chinese-language web site and its various Asian print editions.
• The quality of the product still matters. Even in an age where lightning fast transmission of information appears to drive most audience behavior, you can't build a successful news brand without paying attention to the quality of your content. FT articles never condescend to readers, i.e., you're not made to feel dumb if you fail to recognize the kind of immature hip insiderism rife on much of today's web.

In addition, it was a pleasant surprise to revisit FT's website yesterday, as it appears to have improved substantially from the last time I checked in. The paper says that its online revenues grew 40% last year (about twice that of U.S. publications), though they still appear to be a relatively small slice of the company's overall revenues. Overall, FT's ad revenues increased at a rate of around 9 percent annually the past three years, while most U.S. newspapers have been suffering huge losses.

Assuming the rumors are right that Murdoch will eventually take on the FT directly, he'll start from a larger subscriber base (1.7 million), or almost four times that of FT's. But, like most U.S. pubs, the WSJ has been traditionally focused mainly on the U.S. economy, to the point it only has a paltry 3,500 readership in London to date.

Time for tea, perhaps?