Pearson eyes Brazil

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[Rio de Janeiro] The U.K.'s Pearson, publisher of The Financial Times, is in advanced negotiations to buy a minority stake in Brazil's leading business daily Gazeta Mercantil, the first deal since Brazil's Congress approved a new media law this year that allows international companies to buy up to 30% of Brazilian TV, radio and print media businesses. Previously, foreign ownership wasn't permitted in Brazil's family-dominated media sector.

International media groups have been eyeing Brazil for years, waiting for the law to change. And the country's largest media groups, including publisher Abril Group and TV giant Globo, owned by the Civita and Marinho families, respectively, have been restructuring to prepare for foreign investors.

Pearson is conducting negotiations through Spanish publisher Recoletos, 80% owned by Pearson. Gazeta Mercantil is Brazil's largest business and financial daily, with a circulation of 120,000, but has struggled financially for years. Last year the family-owned newspaper cut 600 jobs as costs were slashed 45%. It also brought in Sergio Thompson Flores, then president of a consulting firm called World Invest, to run the Gazeta Group.

David Bell, Pearson's executive director, has been quoted in Gazeta confirming negotiations between the two groups, but he warned that it is a difficult time due to the slowdown in advertising.

A deal is expected to close by November.

"We have two objectives, strategic and financial," said Luiz Fernando Ferreira, a Gazeta executive and family member. "We hope to combine both in one partner, and that's what Pearson represents for us."

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