Reuters just got $10 billion to build a sustainable news business. How should it spend it?
Reuters News just won the lottery. What will it do with all that money?
It’s the biggest assignment in journalism: Take a set-in-its-ways 167-year-old news organization and reconfigure it radically so that it can compete on the global stage against countless young digital upstarts. If it’s done right, billions of people could end up with trusted, independent, impartial news they would never otherwise have had access to. On the other hand, if it’s done wrong — or if it’s not assigned at all — then one of the world’s most storied newswires might be entering its final years.
Welcome to Reuters, the news agency which faces, today, the most epochal decision in its history. If it doesn’t scale back, radically and quickly, its core financial-news offering, then in 30 years’ time it will be on life support. If it does make the change, however, then it can not only save itself; it might even be able to help transform billions of people’s access to trusted news.Opportunities like this don’t come along very often — indeed, to a first approximation, they never come along. But now, thanks to a $17 billion M&A deal in which private equity giant Blackstone is taking over the Thomson Reuters financial-terminal business, Reuters News (which is not part of the deal) has found itself in possession of an astonishing $10 billion lottery ticket. The catch: This lottery ticket is timed to self-destruct.Reuters, from its very beginning in 1851, made its name by delivering fast and accurate information to both newspapers and the financial markets. Over the years, the financial data part of the business grew to dwarf the news business, and the billions of dollars in revenue thrown off by financial terminals have helped to pay for a global news operation that now employs more than 3,000 journalists in some 200 locations around the world.But once the terminal business becomes controlled by Blackstone, led by Stephen Schwarzman rather than by Thomson Reuters, that business has much less incentive to pay Reuters hundreds of millions of dollars a year for its news. After all, Thomson Reuters had significant control over what Reuters covered. By contrast, Reuters will and must have complete editorial independence from Blackstone.
HT:The result is that if Schwarzman wants to rely on a news operation, he’s either going to build one of his own, like his fellow billionaire Mike Bloomberg did, or else he’s going to contract with a news provider who will let him specify exactly what he wants to pay for. The days when Reuters could rely on financial data terminals to pay for its global newsgathering are now numbered.
That would be bad news indeed for Reuters, were it not for one thing: As part of the deal, Blackstone has agreed to pay Reuters at least $325 million a year for its news. Better yet, that payment is guaranteed for at least 30 years. That’s a minimum of $9.75 billion in total — the kind of money most news organizations can only dream of. (To put that number in context, the Washington Post was bought by Jeff Bezos for $0.25 billion.)...MUCH MORE
Why Reuters should exit the financial news business