A sustained growth in advertising revenues means the Financial Times will definitely reach break-even this year, publishing group Pearson said today as it reported strong trading for the end of last year.
The boost for the newspaper, which has fought hard to become profitable amid a declining circulation and highly competitive advertising market, comes as the FT tries to negotiate a settlement in its £37 million libel dispute with City broker Collins Stewart.
Settling the claim, which was originally set at more than £230 million, would provide a huge relief for the newspaper’s finances.
Having asked for a 24-hour adjournment to a court case that was originally due to start yesterday, the FT and Collins Stewart could reach a settlement as early as today.
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Pearson, led by chief executive Marjorie Scardino, confirmed that the FT “will reach breakeven” as part of a confident trading update ahead of its preliminary results at the end of next month.
It is also the publisher’s first financial update since the FT’s editor, Andrew Gowers, resigned abruptly at the beginning of last November.
As it reported healthy trading in its education publishing business, where it makes roughly two-thirds of its revenues, Pearson also said IDC, its technology research subsidiary, would “report its best year ever”.
The publisher said: “Our education business maintained its strong performance in school, higher education, professional and international markets; Penguin’s fourth-quarter frontlist performed well; the Financial Times sustained its advertising revenue growth and will reach breakeven; and IDC expects to report its best year ever.”
Charles Peacock at Seymour Pierce said: “Management expects 2006 to be ‘another good year’, with further progress on overall financial goals. We expect little change to forecasts.” The broker has a ‘hold’ recommendation on Pearson shares.
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According to the latest figures from the Audit Bureau of Circulations (ABCs), the FT’s average daily circulation rose by 4.99 per cent to 407,451 in December, although including bulks circulation over the past six months has slipped by 1.44 per cent.
Shares in Pearson gained 8p, or 1.19 per cent, to 678.5p in early trades, giving the media and publishing group a market value of nearly £5.4 billion.
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