Reuters News has announced the gradual roll-out (starting in North America) of digital subscriptions, joining a crowded market of news organizations charging for online content. Visitors will have to pay $1 a week to access the Reuters website which has previously been available free on registration. The plan comes three years after a previous launch was suspended as a result of a rights dispute with Reuters’ partner, the London Stock Exchange Group (LSE).
Reuters also licenses text, video, pictures, data and graphics to media companies, some of which offer the content free to consumers and corporates. It generates advertising revenue from the website. The company did not disclose details of how the dispute with LSE was resolved.
The latest initiative underlines the unusual recent history of Reuters News.
The 173-year-old news agency has been wholly-owned since 2008 by the Canada-based, $7bn-revenue Thomson Reuters (whose primary businesses are in legal and tax information). But Reuters revenue was transformed by the parent company’s $2.7bn sale of its Refinitiv (finance and risk) business to LSE in 2018. The deal included an extraordinary 30-year commitment by the new owner to buy news and other services from Reuters for a minimum payment of $325mn per year.
The impact of this deal on what had been a scarcely profitable operation was evident in 2019 revenues that were almost double those in 2018. The LSE payments now account for 48% of all Reuters News revenue and, presumably, most of its profit:
| Reuters $mn | 2023 | 2022 | 2021 | 2020 | 2019 |
| Rev | 769 | 733 | 694 | 628 | 630 |
| LSE | 48% | 49% | 49% | 54% | 52% |
| Subs | 81% | 83% | 83% | 90% | 90% |
| ebitda | 172 | 154 | 103 | 73 | 35 |
| Margin | 22% | 21% | 15% | 12% | 6% |
| People | 3.5k | 3.3k | 3.0k | 2.9k | 2.7k |
The LSE payments (not due to expire until 2048) have, predictably, hugely affected Reuters. Since 2019, it has increased revenue by 22% (including +10% of recurring subscriptions). EBITDA has increased by 5x but headcount – unusually among news providers – has increased 30% in the last four years.
Reuters (which accounts for a mere 10% of Thomson Reuters revenue) has cranked up the profit margins in the past two years. But it will be interesting to see whether the new subscription service can help to turbocharge revenue growth and also whether the company will resist the inevitable pressure to increase staffing still further and, therefore, constrain the profit growth. The strategy inevitably pits the company against its financial services arch-rival Bloomberg which charges subscribers the $34.99 which Reuters itself had originally planned to match.
Reuters is bullish about the future global audience for its subscription news service: “We think there is a big need for unbiased global news. Our pricing strategy is designed to appeal to as many prospective subscribers as possible. At $1 a week, our approach is simple and transparent. There are no introductory offers or surprise price increases. We believe our subscription model allows cost-efficient, unlimited access to Reuters trusted, accurate and unbiased news coverage.”
Apart from all else, the launch distinguishes Reuters from other news agencies – like PA, in the UK, and Associated Press, in the US – for which any such consumer-facing services might risk competing with media company shareholders/trustees as well as their own customers. In that sense, it’s another episode in the long-running story of how these legendary media ‘wholesalers’ are seeking to secure a future in the churning world of digital news.
