Thomson President and CEO Richard Harrington opened his keynote at SIIA’s Summit in New York Jan.31 by noting that Consultant Lee Greenhouse praised him as “the best newspaper guy I know. You got out of it.”
Indeed, Thomson bailed out of the newspaper industry in 2000, selling 150 daily and community papers at a peak price of $3.5 billion. “In 2000, newspapers were going into a seven year cycle,” he said. “I don’t know if they’ll come out of it. But people aren’t betting on it.”
The sale was accompanied by the sale of Thomson’s travel business. Summing up the divestiture of two core businesses, Harrington noted: “We did not see how they would be sustainable businesses. We chose to go after high-end knowledge workers.”
Today, Thomson is the second largest information company (after Reed Elsevier) with 2005 revenues estimated by Outsell Inc. at $8.81 billion – more than $2.58 billion bigger than Gannett. More than 70 percent of its revenues come from electronic services. More than half are on the service side.
With hindsight, Harrington said he didn’t sell the newspaper and travel businesses “to be bigger. We just wanted to be big enough to be successful going forward. We made a huge investment in reframing our market.
“Years ago, content was king. But content has drifted down,” he said. “The next level up is technology platforms. At the upper end are the high end analytics, decision support etc.” This is where Thomson has decided to focus, with deep content and services spanning the legal, financial, medical and science arenas. “We’ve shifted all our dollars to the ‘front of the house’: understanding the customer. We are using customers to be more successful.”
The key to each business, added Harrington, is the ability to take a dominant share of a premium product. “A large company will be successful if it learns how to dance. If you are going to be dis-intermediated, you are going to be blown up,” he noted. “Medium-sized companies will make it if they don’t stretch themselves too thin. Small companies will succeed if they focus on just one thing.”