Rent versus Own
The divestitures and acquisitions were all in support of the overarching strategic shift: the migration from print publishing to electronic information delivery. "I joined the company to help develop more online capability, more online services," recalls Rhyne, an electronic publishing veteran recruited from rival LexisNexis Group in 1997. "There was a great deal more print in those days, so there was a lot of focus on where we were going to go electronic."
But there was much more to the transition than delivering print publications electronically. Thomson's strategy also involved moving from the role of information intermediarynewspapers delivering information generated by wire servicesto owning the information it provided, and becoming a supplier of proprietary databases to its target markets. In addition, Harrington envisioned an integrated information enterprise, one that doesn't just sell information, but also the tools to help professionals use it and to integrate it with their own data.
Today, Thomson's products have evolved from primarily news and databases of professional information to include a range of business applications that integrate information from disparate sources, help streamline workflows and even manage client relationships. Among the best examples is the flagship product of Thomson Financial, which integrated 40 different product lines into a single suite that was released in 2002 as the Thomson ONE workstation. It combines market data and newsfrom well-known Thomson brands such as Datastream, AutEx and First Callwith financial planning applications and portfolio and client management tools into a single desktop.
Still, some analysts expected better and faster returns on the investment in electronic publishing. The exodus from the newspaper business has pleased investors as a whole, says Merrill's Fine, but the restructured company has yet to generate adequate return on capital. Thus the jury is still out on whether Thomson will earn sufficient incremental returns on the new businesses acquired with the proceeds of the newspaper sell-off.
"I think they are on the right track, but it seems to be taking longer than anticipated," she says.