November 29, 2011
Bloomberg v Thomson: Playing Risk for World Domination
In The Daily Beast article titled Bloomberg's Plan for World Domination, Nick Summers profiles media giant Bloomberg (the company) while observing that
It’s impossible to talk about the aspirations of Bloomberg the business without addressing Bloomberg the man: it is a company owned by a politician, buying companies that influence politicians.
Long averse to acquisitions, Bloomberg has also started buying up things it covets, like Businessweek magazine and, just this August, the legal-political research behemoth BNA. There is talk that the Financial Times might be its next meal.
And after spending $900 million to acquire BNA this year, it sounds like the Company's got plenty of cash on hand.
For 2010, revenue approached $7 billion. Comparisons to public companies are inexact, but the New York Times Co. reported $2.4 billion in revenue for 2010, and Thomson Reuters $13 billion. But while Reuters’s operating margin is 19.6 percent, and the Times Co.’s is about 10 percent, Fortune estimates Bloomberg’s to be an astonishing 30 percent.
Given that most of Bloomberg's revenue and its associated estimated profit margin came from Bloomberg's online financial data and information services in 2010, one can understand why the Thomson family is kicking Thomson Reuters executive butt to ratchet up Markets performance. I'm thinking the Thomsons thought they would have an easy go at dominating the world. Risk is underway. Meet Bloomberg... . Here's where the Corporate just might get Personal in the world of family mega-fortunes. In this game of Risk, I would bet on Bloomberg winning.
It is clear that Reuters’ Eikon and Elektron platforms haven't been attracting as many financial services customers as TR hoped. "The Bloomberg" as the service is called in the financial industry continues to be a well-established platform. Bloomberg's move to extend its user population beyond its core financial markets clients by adding multimedia and social media features is a matter of concern for Reuters. Here's a thought ... why not steal some talent to play this game of Risk.
Oh wait, TR did that recently. paidContent's David Kaplan reports that Dan Colarusso is leaving his post as managing editor of Bloomberg Television to join Reuters as the news service’s global head of programming. Colarusso will take over responsibility for Reuters Insider, a video on demand option for its subscribers. Ain't competition grand.
Playing Risk in the Professional Legal Services Marketplace. In the professional legal services product mixes of both TR Legal and Bloomberg, only one is competitively positioned to integrate multimedia content into its online service. Yup, that would be BLaw and BGov. But multimedia is only one facet in this game. Already positioned for the 21st century New Normal is much more fundamental.
What are the odds that TRI made an offer to acquire BNA during the bidding war with Bloomberg? I think the odds are very high. If so, what are the odds that BNA would accept any competitive offer from TRI? Considering TR Legal's track record of distroying the editorial quality of past legal publishing acquisitions, my hunch is the odds are slim to none. The Bloomberg offer presented a golden opportunity for BNA to participate in the New Normal of 21st century e-delivery of high quality legal content with a digital-first publisher not hampered by TR Legal's legacy of a 20th century business model. Sure BNA also had a similar legacy. However, the Company recognized that to be a 21st century player, it did not have the cash or credit line to make the transition. But Bloomberg did and did without the baggage of TR Legal's corporate reputation. Due note that Nick Summers' Bloomberg's Plan for World Domination discusses Bloomberg's acquisition of BNA in the context of the Company's overall strategy one can expect to be played out on the Board(room) table game known as Risk.
What are the odds that Bloomberg will make a bid for Lexis Legal and Professional? Since the launch of BLaw I've been asked that question by several European investment house analysts (usually after the question re what impact will BLaw have on WEXIS). Both questions were repeated after the BNA acquisition. My 2-cents response has been that it doesn't make a lot of sense in terms of acquiring online primary and secondary content. But the more I think about it, the more I think about the competitive advantage Lexis has over TR Legal in terms of productivity-workflow "solutions." Lexis has been much more software engineering focused than legal publishing focused vis-a-vis TR Legal for many years now.
I view "solutions" (some which integrate legal search) as the strategic objective of WEXIS. The hodge podge of various WEXIS offerings will be more integrated eventually in an attempt to offer one-vendor-will-fit-all (private sector)-needs as soon as you sign the licensing agreement. Lexis certainly has the executive suite and product development team talent but does Reed have the intestinal fortitude to make the capital investment required to take this next step?
Don't know. But I do know one thing. Bloomberg may. Bloomberg also does not have a competitive "solutions" line of product and services yet. If the Company intends to be a player by integrating "solutions" to become a more complete professional legal services vendor for its high-end business and law subscriber base, Bloomberg will have to make a choice -- create "solutions" internally (some of which can be organically enhanced extensions of what BNA already offers) or acquire them. If the latter, Lexis Legal & Professional, or some part of Lexis Legal & Professional would be a logical target of acquisition. [JH]