* First female FTSE CEO to step down at year end
* International education boss to take over
* Move sparks speculation of FT Group sale
By Kate Holton
LONDON, Oct 3 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
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
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
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.