October 24, 2011
Some Thoughts on Thomson's Acquisition of West Being Honored as Worst Legal Publishing Merger
Reporting on the findings of Dewey B Strategic's self-admitted unscientific poll on best and worst legal publishing industry mergers, Jean O'Grady writes:
According to the Legal Information Buyers Guide and Reference Manual, between 1995 (the year before the Thomson acquisition) and 2008 West's print prices increased 232%. During that same period Lexis/Matthew Bender print prices increased a mere 70%.
The unprecedented and inexplicable print price increases were the overwhelming factor cited in defining the Thomson-West merger as the "worst legal publishing merger."
Is anyone really surprised by TR Legal's history of price inflation being cited for earning the honor of being the worst legal publishing merger? Along the way to achieving this high honor I think TR Legal had some help. That would be AALL but not just AALL. The inertia of collection development decisions at the institutual level also contributed greatly. It took not wasting a perfectly good recession to finally disavow out of economic necessity the traditional keep what was acquired decades ago for "the sake of the collection" attitude in the academic and public sectors. Damn those private sector law libraries for starting to shed West print and move to electronic-only back in the 1990s! Their "bad;" joking of course.
Insert your own thoughts about the anti-competitive consequences of a duopoly that displays monopolistic tendencies because declining demand does not result in declining pricing for high margin products. The very visible hand of this market meant Thomson was able to increase West's pre-acquisition 25% profit margins all the way up to 32-33%. Well, TR Legal's profit margin has headed south to pre-acquisition West territory. Everyone except TR Legal's pricing gurus have said "whoa" now.
Triving, Surviving and Fading Away. O'Grady asks would West have "thrived" in the 21st century without being acquired by Thomson? Her answer is "I suspect not."
[West executives] understood that the economics of their industry was changing, they would need capital infusion to improve their infrastructure to remain competitive. Had West not been purchased by Thomson we might have seen the company targeted by a Godon Gekko and sold off in parts. Innovation is expensive.
Indeed it is. One has to wonder what would have happened to West without Thomson picking up the tab for IT. Not having sufficient capital to invest in IT is the reason why CCH is now part of Wolters Kluwer. It is also why BNA is now part of Bloomberg. This is probably why Thomson's acquisition of West came in a second in the voting for "best merger", albeit a distance second to Lexis' acquisition of Shepard's but still a couple of percentage points higher than Matthew Bender's acquisition by Lexis.
I guess a distant second in best legal publishing industry mergers voting while earning top honors in worst merger says something about the karmic relationship between Thomson Reuters and those members of the community of professional legal information consumers who took O'Grady's survey. It's going to take some mightily complex synastric calculations to see what the future holds. If TR Legal doesn't have a corporate astrologer on staff, I'm thinking the WestSearch staff should be up to the task. Twelve signs, twelve houses and ten planets using a mystical matrix for a metadata-rich algorithmic comparison of the relative positions of the planets and the houses between TR Legal's executives and what's left of TR Legal's client base shouldn't be that hard. Got zodiac?
For much more, including O'Grady's comments on West Publishing as a "fading landmark," see The Worst Legal Publishing Merger - Can the Virtuous Circle be Un-broken? [JH]