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September 29, 2011
Thomson Reuters in Turmoil: Danger Alert, It's Time for "Chiefs" to Duck and Cover
Here we go ... TR is executing a reorg -- the Markets Division is merging with the Professional Division and the Head of the Professional Division has been appointed TRI's COO.
First Question: Why wasn't this reorg executed last summer when TR cleaned house in Markets' executive suites and CEO Tom Glocer took charge by personally directing the Markets Division?
Second Question: By appointing Jim Smith, CEO of the Professional Division, TRI's Chief Operating Officer, are Glocer's days at the helm numbered?
Let just quote from a Reuters' story dated Sept 28, 2011, I repeat a Reuter's story. It is titled Thomson Reuters appoints COO in another reorganization.
The lead paragraph in bold and several font sizes larger reads:
Thomson Reuters Corp named Jim Smith chief operating officer, putting him in a strong position to succeed Chief Executive Tom Glocer, who is under pressure to boost sales to financial institutions.
More snips from the article:
The company also said it was merging its Markets division with its Professional division, which was run by Smith, in the second major restructuring in two months.
...
The company's controlling shareholder, Canada's Thomson family, has been concerned about the performance of the unit, people familiar with the thinking of the board said in July. Glocer has been given about a year to accomplish a turnaround, they said at the time.
The appointment of Smith raised fresh questions about how long Glocer will remain CEO, and whether the Markets business had deteriorated further in the last two months.
...
Suzanne Stein, an analyst at Morgan Stanley, wrote in a note to investors that Wednesday's announcement showed that Thomson Reuters "remains in a period of turmoil."
Thomson Reuters "will need to show improved results in Markets, and continued strength in Professional in order to give investors confidence it has solved its internal issues," she wrote.
There you have it. You won't find Rudovsky published in FSupp but at least Reuters has the guts to publish. Ah, Reuters link live as of 9/28/11, 9:15 PM Eastern.
Continued Strength in the Professional Division? Perhaps, but TR Legal is still TRI's cash cow. In the context of TR Legal that "strength" in terms of financial performance is largely due to South American acquisitions. (Wasn't that Glocer's domain a long time ago? Can't remember but I think so.) It sure as hell isn't from US legal income. TR Legal's current profit margin (excluding recent South American legal publishing acquisitions) is at West's pre-Thomson acquisition level. Is a 25%-ish profit margin, instead of 32-33%, the "new normal" for TR Legal?
What if TR Legal's profit margin declines even more -- not just this or that quarter but longer term and that becomes the "new normal" for TRI's cash cow?
- Charging a WLN premium as a cost-to-user for TR Legal staying competitive in online legal search is getting a fair amount of push-back. (Let's not even talk about the "imagination" it took to apply a boilerplated 20th century pricing scheme to WLN or the concerns folks have with WestSearch.)
- Maintaining outrageously high annual print continuation pricing during this recession (instead of moderating pricing like Lexis did) lost a subsription base for "high margin" print in the Shed West Era that won't be recovered.
- Selling high priced practitioner works, particularly when compared to comparable coverage in substantially lower priced Lexis works is leading to substitution.
- Engaging in format switcheroos from "loose-leaf" titles and sets to pamphlets, re-commoditizing court rules by padding them from the content inventory to increase pricing (e.g., "Key Rules series) makes folks look at a possible new acquisition always on their guard, always suspicious, because they never know what to expect TR Legal will do with that title next year.
- Declining editorial quality standards brought to the public's attention in Rudovsky, etc., etc.
All this has produced the opposite reaction to the tag line "trusted legal resources from Thomson Reuters." No trust. And all of the above was avoidable but for a corporate culture in the executive suites -- not sales reps who may be just as frustrated with corporate policy as buyers are -- a sixth floor culture that can be characterized as arrogant, as oblivious to customer needs, as taking buyers for granted because of the Company's dominant market share.
Layoffs Coming? Again quoting from the Reuters article:
Glocer said the merger of Markets and Professional may result in some layoffs, though any cutbacks would affect "chiefs, not Indians in front of customers."
When will TR executives realize that they are not too big to fail? It sounds like it is not "good to be Tom" right now. Might not be all that great to occupy an office on the sixth floor in Eagan either.
I'm thinking recent developments aren't the end of Thomson Reuters' turmoil. Time to duck and cover because the "bomb might explode without any warning." [JH]
September 29, 2011 in Current Affairs, Publishing Industry | Permalink
Comments
its very useful tips and thanks for your sharing
Posted by: vijayalakshmi | Oct 14, 2011 4:10:14 AM
I have spent a lot of time recently working with videos. This past summer, I used videos extensively with my online Advanced Legal Research class, and this semester I have been putting an emphasis on starting the UF LIC’s video tutorial collection
Posted by: vijayalakshmi | Oct 12, 2011 2:25:13 AM
Not quite sure if glocer should be given credit for Thomson's acquisitions in South America. The Argentinian publisher La Ley was acquired by Thomson in the early 2000s, which was well before the Reuters acquisition. So it appears that the foray into South America was not the brainchild of the now under fire glocer.
While Thomson was famous for its reorganizations, it should come as no surprise to anyone that the markets division has merged with the professional division a mere two months after tom glocer was put in charge of markets. Glocer will now be able to shuffle the blame for the continued poor performance from the former markets division unto someone else.
TR Legal was the cash cow that sustained the company from the poor performance of the markets division these past few years. Print in particular was used to maintain the company’s revenue stream. What else can explain the 15 to 20 per cent price increases across the board and the numerous revenue challenges that editorial was faced with to keep the money flowing. The people in editorial were not at all comfortable with these price increases, but they had little to no power to overrule the decisions coming from finance.
Finally as more work is shipped to the Manila content center in the Philippines and more U.S. workers are shown the door look for TR to try to maintain its healthy profit margin (regardless of the effect on editorial quality). Being able to read and speak English doesn’t necessarily transfer into comprehending what you are working on. Not that that matters in the world of TR.
Posted by: Melvin | Oct 9, 2011 1:34:06 PM
