Reading the 10-Year Nikkei-FT Alliance Through Annual Securities Reports
More than 10 years have passed since the Financial Times came under the Nikkei umbrella in 2015. By examining Nikkei's annual securities reports from each year, we can understand the FT's financial situation and its position within the Nikkei Group over this decade.
1. FT revenue doubles in 10 years
Revenue doubled from 54.2 billion yen in the immediate aftermath (fiscal year ending December 2016, same applies hereafter) to 111.2 billion yen in 2025. Although revenue declined once during the COVID-19 pandemic in 2020, it subsequently recovered, recording five consecutive years of revenue growth through 2025.
Net profit fell for two consecutive years in 2018 and 2019 due to the sluggish UK economy following the impact of Brexit, and the company fell into a deficit in 2020 due to the impact of the pandemic. However, it has been on a recovery trajectory since 2021, recording profit growth for three consecutive years most recently (Chart 1).
The main reason for the earnings recovery appears to be the intensification of business development in the United States, the world's largest media market, following the stagnation of 2018-2019. On Nikkei's corporate history website (as of 2025), Naotoshi Okada, who was president at the time of the acquisition, stated the following, and the figures mentioned above align with this.
Active M&A has also borne fruit, and it looks like we will be able to achieve the business plan profit target, which initially seemed like a very high hurdle, by the end of the final year, 2025.
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2. Intensifying US business
Let's examine other management indicators. The equity ratio (Chart 2, bottom left) was over 50% immediately after the acquisition, but it dropped significantly to below 30% starting in 2019. The company has been actively pursuing business, such as investing in the index company Wilshire in 2021 and acquiring the event company Inviso in 2025. One can see that the cautious management stance has shifted to an aggressive one.
However, the most recent ROA for 2025 is 4.4% (Chart 2, top left), and the ROE is 12% (Chart 2, top right). Both exceed the levels of the Nikkei Group, but the fluctuations are large, and the most recent figures do not reach the record highs of 2022. This leaves the impression that stable harvesting of investment results is a challenge for the future.
3. Domestic revenue of the Nikkei Group falls to 70%
Looking at the Nikkei Group's overseas revenue after the FT acquisition, the Japanese revenue ratio (Chart 3, top left) has fallen from 85% in 2016 to 70% in 2025.
Meanwhile, in overseas markets, the United States (bottom left), where the company is focusing on market development, has risen from less than 5% to nearly 10%. On the other hand, the revenue ratios for the home base of the UK (top right) and other regions representing continental Europe and Asian countries (bottom right) have also continued to rise in the same way, exceeding 10% most recently.
4. Goodwill increasing through M&A
A point raised regarding the acquisition of the Financial Times was the massive amount of goodwill that Nikkei had to shoulder. At the time, observations such as the following were also made.
The biggest concern is likely that the 'goodwill' resulting from the FT acquisition reached a staggering 155.564 billion yen. According to the business report for the previous fiscal year (fiscal year ending December 2015), which can be obtained via EDINET, the acquisition cost of the FT was 166.3 billion yen, and when advisor fees and other costs are added, the total expenditure was 168.6 billion yen, whereas the net assets of the FT were 15.7 billion yen. In other words, this was a 'high-price purchase' of more than 10 times the value, and the difference was recorded as goodwill.
In fact, as a result of a detailed valuation, the goodwill was calculated at approximately 100 billion yen, and a policy was subsequently adopted to amortize this at a rate of 5 billion yen each year.
Looking at the balance sheet over time (Chart 4), amortization proceeded smoothly until 2020, but due to the intensification of the FT's acquisition strategy, it has followed an increasing trend again, reaching 80 billion yen recently (top of chart). At the same time, the annual amortization burden has also swelled to 7 billion yen recently (bottom of chart).
Currently, the Nikkei Group's earnings situation is at a level that can sufficiently withstand the amortization. However, it is believed that the majority of the goodwill is concentrated in the FT and its acquisition projects, and if the group is forced to undergo a large impairment loss, the concern that it will cast a shadow over the group's overall performance has not disappeared.
5. Focusing on Nikkei's Governance
Nikkei is the only domestic media outlet to have successfully transitioned to digital, with the number of digital edition ID subscriptions reaching 1.06 million (2025). However, it is certain that the domestic market will shrink in the future. While the decline of print is the immediate problem, it is highly likely that digital will follow a similar path.
Therefore, it is highly likely that Nikkei's growth will increasingly depend on the success or failure of the FT's digital strategy in the US market. Given the speed of changes in digital technology, the success or failure of this will ultimately be determined by the quality of its M&A strategy.
If so, how Nikkei, as the parent company, governs the FT will be called into question once again. Tsuneo Kita, who was chairman at the time of the FT acquisition, spoke as follows about the care he took regarding that governance. As management transitions occur at both Nikkei and the FT, the challenge will be whether that can continue to be carried through.
Immediately after the acquisition, we established a PMI (Post-Merger Integration) system. This included Nikkei holding the personnel rights for the FT's CEO, editor-in-chief, and board members, making all M&A projects subject to Nikkei's approval, and mandating monthly financial reporting and regular management reports by the CEO to the Nikkei Board of Directors. We exercised strict governance in terms of people, goods, and money. Furthermore, we established a system where the chairman, as a representative of the Nikkei side, would exercise final authority as the governing representative of the FT. (Omitted) I never once said that I would 'grant management independence'.
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(Titles omitted in the text)
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