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Value and values

What is the real value of news? The question has been the subject of many studies and for decades has been at the core of attempts to make Reuters' news business viable. No-one has ever found the answer or devised a formula by which it can be calculated.

Some 30 years ago, Reuters turned a handsome profit from innovative financial products like Dealing that made the most of new technologies. Finding a way to make news gathering self-sufficient proved elusive, however, and editorial was marked as a cost centre.

Now the new team running Reuters is looking at the question afresh.

For Andrew Rashbass, Reuters chief executive since last July, profitability is the priority, as he told European bureau chiefs recently. Where will the profit come from? Reuters serves two discrete groups of customers: one external, the other internal. The external market - the global media sector - is largely in decline or at best static. The internal market - the largest division of Reuters’ parent company Thomson Reuters, Financial and Risk - offers potential for growth.

Informants have told The Baron that Rashbass made clear Financial and Risk, headed by David Craig who was also in on the telephone briefing, was a very important customer group and every effort would be made to please them. Negotiations on valuing the news operation are going on between editorial, headed by editor-in-chief Stephen Adler - and Financial and Risk.

money is tight, for new ventures and the traditional news agency alike

Rashbass is also leading a search for new customer groups. He did not share his thoughts on where he might find them with the bureau chiefs.

Websites serve as an important showcase but does not make money. When he arrived from The Economist group with a reputation for successfully transforming a traditional print group into a modern digital one, one of his first actions was to kill off runaway development on a much-vaunted Mark II project called Reuters Next. Like some other plans to expand editorial’s role, it had swallowed money - in this case millions - but failed to deliver. 

One area identified for development is reporting of company news, in which Reuters now covers about one-third of businesses in the Europe, Middle East and Africa region. Customers want more coverage - not just the big blue-chip enterprises - bureau chiefs were told. In fact, they want everything.

More comprehensive company reporting is seen as key to dislodging Bloomberg from its enhanced position as the leading market data vendor. Last year its market share increased to 31.7 per cent, ahead of Thomson Reuters’ 26.9 per cent, according to US information industry market research, strategy and business consultancy Burton-Taylor International Consulting. Smaller vendors like Platts and Markit accounted for the balance.

Burton-Taylor, co-founded by former Reuters executive Douglas Taylor, attributed the widening of Bloomberg’s lead to Thomson Reuters divestitures.

As in 2012, last year saw an uptick in market data spending in the Americas but weakness in Europe and slowing growth in Asia. “In 2013 it was very clear that overall industry revenue was supported by price increases, not by increases in demand,” Taylor said. In 2013, global spend on market data and analysis was up 1.10 per cent, to $25.88 billion, the weakest performance since 2009.

In spite of Bloomberg’s popularity, clients are crying out for an alternative, bureau chiefs heard at the Rashbass briefing. The unspoken corollary is that Thomson Reuters is failing to provide that alternative.

Video, expensive to produce and uncertain of success (Reuters Financial Television failed to make an impact and Reuters Insider has been described by one well-placed insider as a disaster), is seen as a possible area for growth. It’s the next frontier, according to Daniel Colarusso, executive editor of Reuters Digital. In a recent internal blog posting seen by The Baron, he said Reuters had been working hard to figure out where it fits in the world of video content on mobile devices and web-enabled televisions. It is seeking a differentiated consumer video product with a viable commercial model.

“From an editorial standpoint, we are now experimenting more than ever with using our correspondents and editors around the world as on-air ‘talent’ - presenting their stories packaged with compelling images for an audience that in the past would’ve tuned into more traditional broadcast outlets. How’s that going? So far, so good.” It is scarcely a report that brims with confidence. 

In pilots and other recent web video projects, Reuters has used video journalists and text reporters with smartphones. “In Davos, for example, our producers wore Google Glass to shoot a fair amount of sights and sounds - especially of them speeding down the ski slopes,” Colarusso said.

On the financial front, Reuters Insider continues to reach more viewers each week, thanks in large part to a new US distribution deal with TD Ameritrade - “setting new traffic records at every turn,” Colarusso said. “Now that we’ve figured out the retail client, we’re rolling out a new plan to integrate [video] into the Top News screens of Eikon.”

But money is tight, for new ventures and the traditional news agency alike. In 2013, a year in which waves of buyouts and redundancies cut thousands from the headcount at both Reuters and its parent Thomson Reuters, editorial overspent its budget by many millions of dollars. This year, Rashbass warned, it would have to hit the budget numbers. The 2014 budget would be stable and no further cuts would be needed. But he added an ominous qualifier: for now. And he indicated that might change in six months. With 2,600 journalists worldwide and 50 new posts - mostly outside Europe - being added this year, there was still enough money to cover what Reuters wanted to cover, however.

The traditional Reuters values of speed, accuracy and neutrality which are enshrined in the Thomson Reuters Trust Principles, are safe, the bureau chiefs were assured. They remain the top priority.

Since that briefing Rashbass’s boss, Thomson Reuters chief executive James Smith, has espoused a new statement of purpose and set of values for the entire corporation in which any mention of the Trust Principles was glaringly absent. He spoke of quotidian concepts like trust, partnership, innovation and performance and said a new culture must evolve “in order to inspire employees, delight customers and grow revenues”. It required “new thinking and behavior” by employees to achieve a unified enterprise.

What was so striking about Smith’s message to the group’s 60,000 employees was the implicit admission that, six years after Thomson’s takeover of Reuters in April 2008, the merged entity is still not one big happy family. Integration remains an aspiration.

He spoke of a unified enterprise rather than a portfolio of separate businesses and the transformation of the organisation, clearly not yet achieved, “into an enterprise that focuses not on the differences between our business units, but on what unites and inspires us all”. This aim evidently remains a work in progress.

As the message from the top trickles down, how does all this play with staff? With the loss of so many experienced journalists through buyouts and redundancies over the past year, morale in editorial has taken a beating, both in the big editing centres like London and New York and in the bureaus. A recent visitor to the newsroom at 3 Times Square in Manhattan found it felt like a bunker. The top staff seemed jittery and everyone seemed off kilter. Desk editors were swamped and doing lots of overtime. At South Colonnade in Canary Wharf, complaints from bureaus about the time taken to get copy through the desk were mounting.

John Jessop, a former Reuters journalist and marketing executive, has taken soundings inside the company and found employees talk of “too many chiefs”, “role confusion” and “lack of direction”. “What they yearn to hear is not an evangelical lecture in ethics but an aggressive plan for business expansion. Sadly, many suspect that no such plan exists,” he says.

Smith was put in his job by the Thomson family, so Jessop presumes he enjoys their confidence. “But one has to ask for how long. My bet is that the Thomsons are already asking awkward questions – as well they might in light of recent financial results.” Smith needs to start showing results that go beyond the moral salvation of the staff, said Jessop. “If he does not, then the Thomsons must, and surely will, consider what to do with an underperforming property – as they have done with others.” ■