Opening The Door On A Sale

One executive leaves and another....dumps one of the company's signature products.

In publishing circles, it has long been held that Marjorie Scardino, CEO of Pearson, had a particular affinity for a daily rag. She would not sell the Financial Times, even if Pearson wanted to restructure and diversify and grow. So she didn't.

She did turn the publisher towards educational materials, and found success. Through her efforts, Pearson expanded, and the bottom line grew alongside. Ms. Scardino, in fifteen years, grew revenues. She did her job and did it well.

For some reason, she has decided to step down earlier than expected.

Her vow to allow the sale of the Financial Times over her dead body is made moot.

Those who have long lusted after ownership of the pink-sheeted newspaper are lining up, ready to pounce. Ms. Scardino's replacement, John Fallon, doesn't come out of a publishing background. He's not emotionally attached to the financial daily.

If he sees a reason to sell it, if he can generate more profit by selling than keeping, he'll do it.

He has quite a task ahead of him to begin with, given the drop in purchases made by U.S. school systems in these times of budget cuts. How does a CEO get his firm's educational materials into such a tight market? If it takes dumping the Financial Times, to focus on core elements of the conglomerate, then it will be dumped.

In which case, will Mr. Fallon find any need to hang on to the Penguin Publishing group?

Can that be a distraction that takes away focus from educational publishing?

It isn't a case of solidifying a bottom line that is already solid. Mr. Fallon does not need to go in and hold a sale.

But if his forward vision tells him it could be rough seas ahead, that Pearson would best serve its stockholders if it focused on core content, there might be a couple of divisions put on the block. There isn't much excitement about Penguin, of course, since publishing isn't a highly profitable venture.

The real interest in the market these days centers on the financial sheet. And shifting it is one way for Mr. Fallon to make his mark and make it large. Sell FT over her dead body? What better signal to give the world that he's his own man, and the Marjorie Scardino era is over.