Waiting for the other shoe to drop
Thursday 3 October 2013
It didn’t take long - just 24 hours - for Reuters people to learn what the chief executive of Thomson Reuters meant when he announced the company needed to change and many tough decisions would be needed “to redirect our efforts toward our future potential”.
James Smith said on Tuesday the business had been stabilised and its credibility restored since he took over as CEO in January 2012. It was ready to turn the page to the next chapter of its evolution. He appointed a change czar, Neil Masterson, as full-time chief transformation officer to manage the process.
For some, change means pain, and it was felt quickly.
On Wednesday, Reuters president and editor-in-chief Stephen Adler set out in a presentation that was light on detail what that will mean for the news agency - “some small staff reductions”. In fact, around-the-world, across-the-board job cuts of around five per cent. Reuters editorial employs more than 2,800 journalists in nearly 200 bureaux, so that translates to approximately 140 jobs to be eliminated at all levels of the organisation, including management. The axe will fall swiftly. Most of those who will lose their jobs will be notified this month. Redundancy packages are being calculated. Cost savings from the cuts have not been disclosed.
Adler said there will be investment in expanding into emerging markets - sub-Saharan Africa, South East Asia and parts of Latin America - a strategy first tried by Reuters three decades ago.
We want to be and stay the greatest news organisation in the world
Staff morale had already been hit by cancellation of Reuters Next, an ambitious web project that cost too much and failed to reach market quickly enough. Reuters’ new chief executive Andrew Rashbass killed it off last month. Adler acknowledged that Next “may not have been the right thing to do”. His thoughts are now aligned with those of his new boss Rashbass - more emphasis on local language sites.
What will Reuters look like after the cuts? Adler set out the editorial mission as follows: “We want to be and stay the greatest news organisation in the world. Over the past few years we have followed a two-track strategy, delivering fast, accurate and neutral news and on the other hand building greater capacity and commentary as value added. We need to be different when a lot of news is becoming commoditised. We have to provide another reason why people have to subscribe to Reuters. The two tracks are essential, and they are supported by the sharper file initiative. This means fewer marginal stories and fewer unnecessary updates.”
There will be changes to the beats covered, too. “To adapt is really exciting for journalists,” Adler said. “There are lots of new skills to learn. There are new beats that we’re going to have to master. There will be some assignments in emerging markets where we’ll be strengthening coverage. But we have to reduce staff and costs in some areas. There will be cuts. Some people will be given the opportunity to transfer to jobs elsewhere in the company. Those people who are leaving will be eligible for severance packages. And there will be packages for voluntary departures.”
Fewer people means more automation to “help us maintain our speed advantage and free up journalists for more complex work”.
“You can’t stand still when the world is changing,” he said. “It’ll be a more exciting and fulfilling place to be a journalist.”
Is there any more to come for editorial, Adler was asked. “There’s not another shoe dropping on this. I’m telling you the full extent of the plan,” he said.
That may be true for Reuters but, painful as job cuts are, editorial is only a small part of the Thomson Reuters organisation with its 60,000 employees in the legal, tax and accounting, intellectual property, pharma and life sciences and other sectors. The group has already taken steps to cut costs this year, launching plans to eliminate 2,500 jobs from its core financial and risk division in February.
Since the arrival of Rashbass two months ago there has been a clear move towards appreciating what sets Reuters apart – its traditional strengths of a global footprint, local languages, presence in underdeveloped economies, multimedia cover, speed and accuracy. To some, it seems that the days when most of Reuters energies were directed at becoming a US media giant following the Thomson family’s 2008 takeover may be over.
Demand from the group’s financial services clients remains weak. Financial and risk division has suffered in recent years as big bank clients reduced headcount and amid struggles in various European economies. Eikon, the financial desktop platform launched in the wake of the financial crisis, has only recently shown signs of growth.
In that climate, it is impossible to believe the cost-cutting will stop at Reuters editorial. Editorial’s 140 jobs targeted for the chop represent less than a quarter of one per cent of the group’s headcount, an insignificant reduction that could easily be achieved within weeks by natural staff turnover. So more cuts seem certain to follow. CEO Smith told an investor conference in New York last week that “there is ample opportunity inside the business for us to continue to take costs out for the foreseeable future and particularly in the near term”. How far the cuts extend in the rest of the business remains to be seen. That’s the other shoe. It hasn’t yet dropped. ■