Mar
9
“RELX, not Relicts!”
Filed Under B2B, Big Data, Blog, healthcare, Industry Analysis, internet, Publishing, Reed Elsevier, STM, Thomson, Uncategorized | Leave a Comment
It was a simple enough mistake to make. As I read my screen and saw the announcement two weeks ago I passed on the news to an American friend on the other side of the room. The response prompted the correction from me at the top of this page: Reed Elsevier have renamed themselves after their new stock exchange identity, and are not actually inviting us to call them also-rans. Everyone will appreciate the logic of removing the dual identity and the double quote and the difficult accounting exercise to keep these two trading identities in the market together. But I am left wondering if there is not another, almost subliminal, market message being left here, one to which perhaps even the senior management of RELX are oblivious. Coming a month after the death of Ian Irvine, one of the architects of the deal that brought Reed and Elsevier together, it made me wonder whether the real meaning here is a totally different orientation for the new group, one which would have invited the snarling displeasure of Dr Pierre Vinken, at whose insistence the Dual Monarchy was originally created and launched in January 1993.
Whatever else it is, an “Elsevier” is a book, and indeed in the nineteenth century became the term of use for a pocket book, the contemporary version of a paperback. Reed was a nineteenth century paper company. In some ways therefore these resonances should definitely go, especially since underlying brands like LexisNexis or Elsevier Science remain in place. Perhaps then we are being told that RELX is a bundle of brands invested by a quoted umbrella organization. That would be consistent enough with practice in recent years, and one can imagine that the new structure, the single quote, and the name are designed purely as a play to investors, and have been sold to employees on that basis. After all, one of the lamentations of successive generations of Reed Elsevier management over the years since 1993 has been that the European markets have consistently under-rated the company. After a couple of years of share buy backs and consistent dividend policy, now is the time, one can almost hear them saying, to move away from Reed Elsevier as the sluggish market benchmark in Europe, and re-align RELX as a more dynamic growth vehicle with a much improved rating. And all those with bonus scheme equity holdings not yet vested should cheer that relaunch!
And yet… there are some real risks. The views of investors are always short term and their analysts are as often wrong as right. Does Claudio Aspesi* know more than the professional management of Elsevier Science about what happens next in Open Access? I doubt it, but his views, from his influential desk at Sanford Bernstein, have certainly driven the share price of old Reed Elsevier more than many management announcements in recent years. Further, if you are a bundle of brands represented by a stock market ticker symbol, it is open to everyone in the market to rate you on that brand composition for short term interests. Thus it is now possible to read RELX critics who find the stock “unbuyable” until Lexis Law is divested, or who think Elsevier Health Science is too small in market share terms and should be merged with WK Health and then “IPO-ed”. I wonder who would profit most immediately from that, if not the market-makers themselves? I am not here concerned with whether either of these moves is feasible or desirable: just with the idea that if your focus is unbalanced in the direction of the market, you tend to be driven to appease market sentiment. And market sentiment is a quicksand.
Will it matter to lawyers or scientists that they now buy, ultimately, from RELX? Probably not at all. So what then is the issue? Really one of short versus long term. RELX has a history in science and law and some key business sectors that gives them two advantages. They have experienced management who have shown themselves close enough to ultimate users of information to allow them to judge likely outcomes. Timing is everything. When to press the button is just as important as all the other decisions in new product development. And new product development is going faster in these sectors than ever before. Is that a good time to swap areas of expertise within the portfolio, bringing in areas to which senior management have not been previously exposed and forsaking areas of traditional strength? Or is it a time for long term investment, active acquisition and development programmes, such as the ones that built Elsevier Science, which reposition the brand in the forefront of the marketplace but which take correspondingly long periods to pay back? Whatever choices are made, they surely begin in the market place and end by being packaged for potential investors. It is hard to believe that successful schemes can be created that begin with assessing what investors will swallow, and end with creating market interventions that fit that paradigm.
Fortunately I can end with a suggestion which will please all parties. In 1997-8 RELX attempted to merge with Wolters Kluwer. Why not bring it on again? WK is said to be selling its transport B2B division at the moment, just another of the long list of market exits since the European Commission made its competition opposition clear in 1998. There are now no education or STM assets at WK to get in the way. In the US there would be Health sector competition issues (though there are now other very large content players), but with Bloomberg BNA swarming into the tax market alongside Thomson, combining WK and Lexis on the tax side would make sense. In Europe, Lexis-WK would be powerful in France, though Lexis left Germany to WK, so no competition issues there. Long term bets on the Eurozone would not make the analysts happy, but lawyers in France and Germany are likely to be busy whichever direction the currency takes. And above all, for all of those investors who have boosted the WK share price for 17 years in the hopes of just such a denouement – a payoff!
RELX is not the only player to feel these tensions. Every quoted company is subject to them in one way or another. It is what management do to make these tensions creative and not negative that makes the difference. RELX? RELaX, not RELICTS!
Feb
4
Barely a Whimper
Filed Under B2B, Big Data, Blog, data analytics, Financial services, healthcare, Industry Analysis, internet, Search, semantic web, Uncategorized, Workflow | 1 Comment
British public policy on data availability for commercial re-use died a sad, whimpering, undignified death yesterday. No one noticed. Years of political neglect, and masterful inactivity by the civil service, meant that it had long since ceased to be a public topic. The idea, borne in the Community in Brussels, enshrined in European Directives, cleverly headed by the Brits in terms of passing secondary legislation and apparently wanting to be best in class at data sharing (how often do we see that the way to best inhibit change is to assume its leadership!) probably fell mortally ill some years ago, when the current UK coalition government assumed office, but we only really woke up to the reality yesterday, when the government abolished APPSI – the Advisory Panel on Public Sector Information – to mark the fact (http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2015-02-03/HCWS245/). The idea once engendered that the swiftest way to move our society into the inevitability of the networked world was for government to share data with the private sector, to stimulate national information industries by so doing, and to reap a result in wealth creation, employment and a widening tax base is accepted from the US to China. (Think only of the Peoples Bank working with Alibaba et al to keep non-Chinese credit rating at bay.) It is widely accepted in Europe, and many countries have now moved past the UK in this area. Sadly, poor old Britain caught between blind politicians of all shades and civil servants who saw information as power – to be retained at all costs – has lost out on all fronts.
The bitterness here is personal. As a campaigner and lobbyist I fought the good fight for a decade to get the European legislation through, and when it passed I thought, as I took a seat as a founder member of APPSI, that the battle was largely done. How foolish was that! The high ground of British public information was then – and still is – in the hands of state – owned monopolies whose hugely restrictive licences and high fees have proved a barrier to letting a hundred information flowers bloom, let alone a thousand. The UK has the energy – go and look at the thousands of digital start-ups in Shoreditch if you doubt it – and it has the financial investment muscle. But the catalytic element – being able to mash cheaply available, easily licensed data with third party and proprietary content – is wholly missing. And why is that? Because we have Ordnance Survey, HM Land Registry and countless other public monopolies who have the protection of the Treasury and of departments of state still seeking to flesh out a power base and avoid financing the collection and re-use of public information – that is, information collected at the taxpayer’s expense to perform a public duty enshrined in statute – in a proper networked world manner. When the history is written it will be found that Ordnance Survey on its own has been one of the greatest barriers to change in this sector. And if you think this overstates the issue, reflect that this country, which is about to license fracking for shale gas amidst fears of subsidence, still does not universally license the data which would show you whether your home was in danger of subsidence from historical coal mining. For that, you must go to an office in the North of England, pay a ludicrous fee, sit in a search room armed only with paper and pencil and have a search done. And this useless monopoly is a fiefdom of BIS, Britain’s department for Business!
But do not, whatever you do, blame BIS. They are highly attuned to the importance of public data. So highly attuned that when they privatized the British Post Office in this government, they sold it with the databases containing the post (Zip) codes within it. Sold this data, unpriced, not as a separate entity but lumped in with the postboxes and the delivery vans. Turned a public monopoly into – a private one. No special conditions attached to licencing. And then said afterwards that they did not realise what they had done! With people like this in charge of public policy, an Advisory Panel was certainly redundant. Quite superfluous. Almost embarrassing. Just think what such a panel make of the privatization of HM Land Registry. This was halfway down the slipway last year when the politicians lost their bottle, so it was withdrawn at the last moment. Given the way these public guardians treat public data, it would have made little difference if that became a private entity as well, but at least in that instance there was a chance of defining access conditions and securing standard licensing terms in the course of its change of status. As it is, the Shareholder Executive (designed to protect the public equity in these agencies – why does government always work in complete opposite directions to the intention) and the old villain, HM Treasury, work brilliantly together to fend off the public interest and preserve what once was in the face of what might be.
By now you think you are listening to a lunatic on a cold night shouting at the moon. So let me end with the sensible voice of the leading and authoritative academic commentator in this field, Bob Barr: “In the UK we have ended up with a lazy, counter-productive, business model based on holding public data hostage wherever possible, maximising the short term return from users that can derive the highest value, and pay the highest price, and diligently preventing the maximization of use in order to protect the monopoly rents that the high value users will pay.
However cogent, or otherwise the arguments from APPSI, ODUG and many lobbying and pressure groups before us, and no doubt after us, have been, the hidden hands of the Treasury, and its wicked offspring in ShEx (the Shareholder Executive), have prevailed in private. Their arguments are never publicly articulated. They do not publicly assess the costs and benefits of their approach across the economy as a whole but they have the ear of ministers in governments of all colours, no doubt egged on by the custodians of the data. This advice appears to count for much more than any academic, expert advisory or consultancy arguments articulated in public.”
Now government, which never implemented the data policy and has no policy of its own except no change, has shut down the source of advice. Not just a sad day for this debate, but a sad one for entrepreneurial Britain.
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