One of the biggest and longest-running media deals of the year finally closed earlier this month. Thomson Reuters has spun its successful Financial & Risk business out into a new company, backed by Blackstone and rebranded as Refinitiv. They’ve been making quite a lot of noise about it (including, excruciatingly, in a rap.) In doing so, the business has joined the likes of Acuris and Ascential in replacing a valuable and well-known brand with something vaguely techy-sounding but completely meaningless – both to the market and in English. While the new business contains many hugely talented people and some excellent brands (including the likes of Lipper and WorldCheck), dispensing with the TR name could leave it with a serious brand recognition problem in a highly competitive market.
From the point of view of what’s left of Thomson Reuters, the decision is perplexing. Anyone who’s been following B2B media over the last few years will know that the real long-term growth is in high-value subscription-based information and data products. While Thomson Reuters will retain a substantial stake in Refinitiv, it’s also chosen to reduce its exposure to this market in favour of its core editorial products, many of which have far less potential for revenue growth.
Refinitiv CEO David Craig has said that the divestment will enable them to invest more in products to compete with the likes of Bloomberg, S&P and Factset, where previously that investment had to be shared with editorially-driven products. But the new company is also carrying an eye-watering amount of debt – $13.5bn of loans and bonds have been sold in what represents the largest leveraged buyout since the financial crisis. This leaves the company vulnerable, and it looks like it will need to cut before it can invest. Blackstone has promised to make $650m in savings over three years: hardly an ambition that shrieks of investment.
Over the years we’ve interviewed countless individuals who have worked in fast-moving, entrepreneurial, innovative businesses that have been acquired by Thomson Reuters, only to find themselves frustrated at suddenly working within a huge, sclerotic corporate bureaucracy. The business does need to simplify itself and rediscover what it’s good at. But it’s a huge moot point whether Refinitiv can maintain the quality of its products while also delivering redundancies on the scale that is likely to be demanded. And without serious investment in new product, and perhaps in management, they could end up with a business that doesn’t mean much to anyone. Indefinitiv, anyone?
Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work in the TMT (technology, media, and telecoms) space, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.