The 'Big Bang' in Thomson Reuters' future

This dramatic change in the shape of Reuters’ editorial department was one of two scenarios for the next five years presented by company management last month to Andrew Rashbass, former chief executive of The Economist Group who took up the new post of CEO of the news and media business on Thursday.

Insiders say the preferred strategic scenario is known internally as “Big Bang”. It would front-load the one-time costs, including those related to the “exiting” of roughly 200 under-performers in addition to the 195 people – 6.6 per cent of the workforce – who have gone since 2011. It would also provide for the hiring of “nimble, high calibre talent” more capable of producing value-added journalism, who would be located increasingly in emerging economies.

Management, according to the presentation, sees no negative effect on editorial production as a result of these measures, and argues that the quality of news output would emerge at least equal to what it is at present, but probably better – all with smaller expenditure.

On the other hand, the alternative scenario – which insiders said was very unlikely to be adopted – could pose risks to the quality of the news file because it would not allow the company to make changes to departments, areas of coverage and the geographical location of journalists, Rashbass was told. This scheme was described as a tactical continuation of present policies of reducing head count by attrition – or simply not replacing employees retiring or departing Reuters on their own initiative.

The presentation said the new organisation under “Big Bang” would have fewer social costs – apparently, although this was not spelled out, as a result of locating more staff away from developed economies with high levels of social protection – and a “more flexible workforce” better able to adapt to the needs of the company’s business and allowing for a more rapid transformation in critical areas of its operations. The aim was to maximise the capacity of the news operation to enhance the overall company brand, deliver revenue and generate access to global news sources and journalistic talent and improve efficiencies through operational discipline, performance management, and automation, all while remaining within financial targets.

Reuters’ “sharper file” programme, apart from driving the departure of less-capable or less-productive staff, would re-allocate resources to expand coverage that is critical to customers – going beyond market moves to expand and explain underlying trends, as well as delivering insights to customers by covering in some detail the economic influences around large-cap companies, like the smaller firms that supply them.

It would provide incremental benefit to the organisation in the form of a stronger file for Eikon, the flagship data and trading platform which received a mixed response from clients when it was launched three years ago, and stronger coverage of asset classes. Reuters would also invest in supporting professional news needs in the areas of data-driven journalism, multi-media and visualisations. And it would “increasingly routinise and automate basic company coverage”.

Among current and pending initiatives over the next three years to expand the reach of the Reuters brand were such value-added services as embedding editors at client sites or providing Reuters reporters for special coverage, and doing third-party deals on sports and archives.

Rashbass was told the company had seriously under-estimated severance costs for unionised employees in continental Europe, Britain and the United States, and that natural attrition was running below historic rates by about 12 people a month. He also heard that businesses across Thomson Reuters were resisting cuts already under way and were in fact seeking more coverage rather than the reduced volume provided for by the “Big Bang” scenario. This resistance was emerging, his briefers said, despite the fact that editorial costs were heading to show an overrun against budget this year of $15 million.

Rashbass was also told that over the last 17 months Reuters News had migrated about 30 roles to Bangalore, where Thomson Reuters recently opened a large campus that brings together about 6,000 people, with cost savings. At the current pace, he heard, editorial headcount is expected to drop by 114 more by the end of this year and contractor costs were on course to save 13 per cent by year-end. ■