Reuters cuts raise questions about company's consumer strategy
Today, the Newspaper Guild, a union that represents approximately 400 employees of the global information provider Thomson Reuters, announced that management is seeking "to eliminate five Guild positions from the recently condemned Reuters Next project by Nov. 29, almost half of the current New York-based online team."
The affected employees will be offered voluntary buyouts equal to two weeks pay per year of service before involuntary layoffs are sought, according to the Guild.
It was unclear whether any additional non-Guild employees would be terminated, though an unconfirmed number of positions have already been eliminated, according to sources and published reports. Reuters declined to comment on the scope of the cuts.
The Guild news was more of the expected fallout from last week's big announcement that the company has canceled Reuters Next, an ambitious web reboot that was meant to burnish a public brand for Reuters. Consumer-based advertising revenues are a small part of the bottom line at its parent company, which acquired the Reuters news service in 2008 and derives the lion's share of its earnings from enterprise subscriptions to financial data and professional services, including its flagship wire. Indeed, the segment that encompasses Reuters Digital and the overall news division posted a $62 million loss in the second quarter of 2013.
And so naturally, employees of the 162-year-old news service are left to wonder about the company's commitment to Reuters' consumer-facing projects going forward.
At a meeting last Thursday with Reuters editor-in-chief Stephen Adler and reuters.com publisher Bill Riordan, employees who work for Reuters Digital were given a sense of how much runway they'll have before their division is expected to make money. Riordan said 2016 was the projection for the first full year of profitability, according to sources who were present, and that Reuters Digital currently sees about $20 million in annual revenue and roughly $20 million in annual loss.
Reuters would not comment on or confirm those numbers or the profitability timetable.
Over the past few years, Reuters has built up a reputation as a burgeoning consumer brand by investing in areas like opinion content, marquee talent, longform narrative journalism and even a luxury print magazine distributed to the Davos and Aspen sets.
The goal of Reuters Next, which Capital first unveiled in January, was to transform the relatively clunky and inefficient reuters.com into a slick, carefully curated platform built to showcase these goods, as well as the rest of Reuters' volumnious 24/7 news report. It was also meant to overhaul the reuters.com backend from top to bottom, correcting a number of problematic technological limitations.
But after two years of mismanaged development efforts and funding reportedly as high as $20 million, Andrew Rashbass, the new C.E.O. of Reuters News as of July, decided to pull the plug because "Next is a long way from achieving either commercial viability or strategic success," he told employees in an internal memo breaking the news.
In doing so, Rashbass was seen as knocking the wind out of Reuters' consumer-friendly sails, which had already lost some steam as a result of several recent high-profile departures. Those included Chrystia Freeland, who has been characterized both as the patron saint and black widow of Reuters Next, and Jim Impoco, who, in addition to his role as the executive editor of Reuters Digital, had conceived and edited a Reuters magazine for three issues.
Rashbass has also put the kibosh on Reuters' nascent print ambitions.
Months after Impoco's resignation in January, Arlene Getz, a former Newsweek editor who joined Reuters in 2010, was named "editor-in-charge, magazines" and tasked with developing print magazines associated with various Reuters verticals. But when Rashbass came aboard, he decided Reuters shouldn't be devoting resources to print, sources with knowledge of the matter said. The project was scrapped and Getz was given a new job on the digital side, according to a Sept. 12 memo announcing her new title of "editor-in-charge, digital news." (Getz declined to comment.)
Meanwhile, talks about turning the original Reuters magazine into a more regular offering with paid advertising fell off the radar.
"There are no plans for any further Reuters magazines to be published at this time," confirmed Barb Burg, a company spokeswoman.
Where does all of this leave the Reuters journalists who are, as Buzzfeed suggested in one of various Reuters Next post-mortems published last week, still "eager to write for an audience beyond wire service clients"?
Burg declined to comment. But in his memo last week, Rashbass promised that the company would be "enhancing and improving the existing Reuters.com sites," which drew an audience of more than 20.8 million unique visitors in August, according to comScore.
As Rashbass told the troops: "We need to take advantage of the fact that we have a constant stream of high-quality, real-time news (something most news organisations lack), created by more than 2,000 journalists around the world; we need to focus on our unique photography and video to win in an increasingly visual media world; and we need to make our core strength of international news relevant to local audiences – which means, among other things, having local-language sites."
Whether his rallying cry will be enough to stem internal skepticism is yet to be seen.
One insider described the Reuters Digital staff as "demoralized," saying: "The larger message is, 'We're really not investing in original content for the web.'"
At least they have a new leader: Dan Colarusso was promoted to executive editor of Reuters Digital on Tuesday, replacing Jim Roberts, the New York Times veteran who resigned last week after just eight months on the job.
(Ed. Note: An earlier version of this article stated that employees were told Reuters Digital sees about $20 million in annual revenue on roughly $20 million in annual costs. A source clarified that the correct wording should be roughly $20 million in annual revenue and roughly $20 million in annual loss, and the article was updated to reflect that.)