Stephen Smith and his family join a select group of families that own a media platform with over one million subscribers.Christopher Katsarov/The Globe and Mail
Stephen Smith has kept the latest edition of The Economist on his bedside table since he was an engineering student at Queen’s University in the late 1960s.
On Thursday, the Canadian financier made his relationship with the business and political journal even more intimate by closing the purchase of a 27-per-cent stake in the publication and joining a select group of families that own a media platform with 1.25 million subscribers.
“Some wealthy people buy sports teams. I bought a stake in The Economist,” Mr. Smith said in an interview. “It’s a sports team for nerds.”
A self-made billionaire through his stakes in mortgage lenders and insurers, Mr. Smith said he and his family – his wife Diane Blake and their two sons and daughter – decided to bid for a stake in The Economist in part to ensure Canadians had a role at a publication with global influence and international ownership.
“Many of the leading business publications, like The New York Times and Wall Street Journal, are American-owned and understandably U.S.-centric,” Mr. Smith said. “The Economist reflects a global audience, and we think it is important that Canada be represented in the global conversation.”
Mr. Smith, 74, will join the board of the Economist Group. He said he supports the media company’s strategy and executive team as well as 1,500 employees worldwide, including 319 editorial staff who work independently from ownership.
Toronto-based Smith Financial, the family’s holding company, is buying a stake in the Economist Group from banking heir Lynn Forester de Rothschild, who held the stake for 24 years.
Smith Financial and The Economist did not disclose the purchase price. European media outlets estimate Smith Financial paid about £300-million (about $550-million).
Ms. Forester de Rothschild put the stake up for sale in October, three years after the death of her husband, who served as chairman of the Economist Group for 17 years.
Mr. Smith initially cold-called Ms. Forester de Rothschild to express interest in investing in the Economist Group, then hired London-based investment bank Barclays and law firm Torys LLP to press his case.
The Economist Group board made it clear that shared values and backing for independent journalism were more important than the ability to write a large cheque, Mr. Smith said.
Early in the bidding, former federal finance minister and journalist Chrystia Freeland paved the way for the investment by introducing Mr. Smith to Economist chief executive officer Lara Boro, a friend and former colleague. Mr. Smith said Ms. Freeland’s endorsement helped distinguish his final pitch from those tabled by at least five other wealthy contenders.
Buying into the Economist Group is a generational investment, he said. His two sons, who work in the family’s finance companies, and his daughter, a lawyer and writer, plan to remain owners of the media company.
Mr. Smith said the Economist Group emphasized its support for independent journalism was paramount to his 27-per-cent stake in the publication.JACK TAYLOR/AFP / Getty Images
Other shareholders in the Economist Group include Italy’s Agnelli family, which owns 43.4 per cent of the platform and founded automaker Fiat, and members of the Cadbury clan of chocolate bar fame.
Smith Financial’s investment is only the third significant ownership structure shake-up in The Economist’s 183-year history.
Founded in 1843 by a Scottish hat manufacturer looking to further the cause of free trade, The Economist now has staff in 26 countries, including the United States, China and India.
In 1957, publisher Pearson plc purchased 50 per cent of The Economist from the founding family as part of its acquisition of the Financial Times. In 2015, Pearson sold most of the holding to the Agnelli family and sold the Financial Times to Japanese media conglomerate Nikkei.
Mr. Smith built his wealth as an investor and executive at First National, Canada’s largest non-bank mortgage lender, as well as Canada Guaranty Mortgage Insurance and private equity fund Peloton Capital Management. His companies are leading rivals to the country’s big banks, focused on mortgages for clients who cannot get credit from traditional lenders.
He and Ms. Blake’s other philanthropic interests include Historica Canada – which produces Heritage Minute television segments – the Royal Ontario Museum and Canadian media platform The Walrus.
But Mr. Smith’s most eye-popping gifts are the tens of millions of dollars awarded to his alma mater, Queen’s University – offerings that were unprecedented in the history of the Kingston institution.
Mr. Smith earned his undergraduate degree in electrical engineering from Queen’s in 1972 and went on to a master’s degree from the London School of Economics and Political Science. His name backs the faculties now called Smith Engineering and the Smith School of Business.
His $100-million gift to the university’s engineering school hoped to lift the institution to the top of international ranks, while his $50-million donation to the business school supported chairs, professorships and student scholarships.
Mr. Smith has spoken openly about grappling with depression after a failed venture in real estate before he went on to build stakes in public financial services companies. He is also an avid cyclist and skier.
His family’s investment in the Economist Group bridges business and philanthropy, as the media company, while profitable, has clout and brand prestige that means more to its owners than its financial results.
Last year, the Economist Group had revenues of £369-million and a profit of £48-million. The Economist increased its subscribers by 3 per cent to 1.25 million, with 70 per cent of its audience reading online, and 30 per cent setting the magazine on their bedside table each week.