LONDON (Reuters) - Pearson Chief Executive Marjorie Scardino is to step down after 16 years, departing earlier than expected in a move that could clear the way for the global education and media group to sell the Financial Times newspaper.
The first female chief executive of a FTSE 100 company had previously declared that the famous pink-paged FT title would be sold “over my dead body”.
Analysts say the new chief executive John Fallon, with his non-publishing background, could be willing to think again as neither the FT nor Penguin Books fully fit with the Education division which became the dominant force under Scardino.
“Ms Scardino was a big fan of the FT and resisted attempts to sell the business,” Ian Whittaker at Liberum said. “We see John Fallon as having no emotional commitment to the division.”
The 65-year-old Scardino, who has dual U.S. and British citizenship and was made a Dame in 2002, has earned huge respect for her stewardship of the group which she transformed from a sprawling conglomerate of media and leisure assets, to nearly triple revenues in her more than 15 years in charge.
She will step down at the end of the year and be replaced by Fallon, the chief executive of Pearson’s International Education division since 2008.
Analysts said the choice showed where the group’s priorities lay and that the 50-year-old Fallon would now have to also focus on the large education business in the United States, which has been hit by tight school budgets.
The International Education division was described as fundamental to Pearson’s growth strategy, although the appointment of Fallon surprised some analysts who had seen other executives within the group as the leading candidates.
Shares in the group were down 0.6 percent, slightly underperforming a flat FTSE Index.
Both Bloomberg and Thomson Reuters have been named as possible suitors of the FT in the last year but analysts note that Pearson has a strong balance sheet and does not need to sell.
While most newspapers have been hammered in recent years by the downturn in advertising markets and the fall in circulation sparked by the move online, the FT with its niche and wealthy audience commands a loyal readership.
It has succeeded in growing digital sales and subscription revenues. However a sale would still fit with the group’s wider strategy of moving away from volatile advertising revenues.
Asked by Reuters if he was committed to the FT Group, Fallon responded: “I very much recognise and value the FT as an important and valuable part of the company.”
Analysts value the FT Group, which also includes a 50 percent stake in the Economist and other assets, at around 750 million pounds. Both Thomson Reuters and Bloomberg, which already owns the Businessweek magazine, declined to comment.
Analysts estimate that the FT newspaper and Website on their own could hold a value of around 350 million pounds but forecasts vary and the company gives few details.
“We question whether Penguin and FT Group fit strategically, given Pearson’s skew to education,” Investec analyst Steve Liechti said. “Fallon is not a life-long publisher, so could be more brutal in his strategic direction in time, and shareholders would push for asset sales and cash returns.”
The Education division, which includes North American Education, International Education and Professional Education, made up 75 percent of the group’s first half sales, with the FT Group contributing 8 percent of sales and Penguin Books the remaining 17 percent.
It said in July that it expected the FT Group profits to be lower in 2012 than in 2011, reflecting the sale of assets, weak advertising markets and the move from print to digital.
A sale of the FT Group and possibly Penguin would bring to an end the transformation of the group overseen by Scardino, one of the longest serving bosses of a FTSE company.
“She navigated two recessions, one financial crisis, a dot com boom and bust and several waves of structural industry change,” Pearson chairman Glen Moreno said.
“Not only are Pearson and Marjorie still around to tell the tale but over the past 16 years our ... profits have hit last year’s all time high.”
In her early years Scardino sold off such leisure attractions as Madame Tussauds and Alton Towers, stakes in BSkyB and investment bank Lazard and more recently a stake in Interactive Data Corp and a 50 percent stake in the FTSE International.
The Pearson share price has risen by 88 percent since Scardino took over in 1997, compared with the FTSE All-share Media index which is up 8 percent in the same period.
Reporting by Kate Holton; editing by Keith Weir and Anna Willard