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An Exciting Time for Legal and Professional Publishing

The recent news of PLC being acquired by Thomson Reuters is a most significant indicator of change and direction, certainly inasmuch as it affects the state of play competitively in the UK.

Finally Thomson Reuters, in its Sweet and Maxwell and Westlaw UK guises, has woken up to a world that combines a deep commitment to electronic delivery of primary and secondary content, with related workflow in the form of guidance and documentation driven by clever software. This, alongside the timely new launch of Westlaw UK Insight, seems to me to take the UK business, in one leap, to a new and higher level. It appears to have been a long time in coming, Sweet and Maxwell having looked relatively sleepy for almost a quarter of a century. However, I believe that the new developments indicate a new beginning. That said, there are those who would predict, though, that a business like Thomson Reuters may be of a character that will destroy the innovative spirit of PLC in order to make it fit with the parent company. I hope that is not the case. One might imagine that the new combination, inspired by PLC’s proud and undoubtedly justifiable boasts about product and service quality, will see potential for competitive growth built upon that and it’s capacity for innovation, combined with Thomson Reuters legacy UK and international content.

Lexis Nexis UK also seems to be in an exciting period of change, having launched LexisPSL, with its ability, for deeper research, to link to cases, legislation and commentary in LexisLibrary and its timing might be just right, according to their own research and PR.

With these two competitors at this present stage of their evolution, it feels like an important time, perhaps as in the late 1980s, when the looseleaf era had reached its peak and most of the information gathering had been done in optimistic anticipation of an electronic age to come. This was, sadly, in my view, prior to some of the disappointment at the following period brought, in terms of profitability, growth and unmet expectation. It would be pleasing to imagine that the era of poor customer service in some instances and, despite some examples of great innovation, many areas of conservatism, that reflects fear of change, market ignorance and protection of historic profits are over.

A question, or perhaps a downside, might be about whether or not this puts the two market leaders so far ahead of their UK competitors that the latter have become barely visible and irrelevant, with nowhere useful to go. The main one that comes to mind has to be Wolters Kluwer UK, with its two main brands, CCH and Croner. I imagine that revenue there is dropping still and the focus has been only on margin. Perhaps areas such as general management, customer service and market intimacy are relevant factors. When these are in good shape, good things happen. At CCH UK the period 2002-2009 was, I believe, one of modest sales growth and very respectable profit growth that had been preceded by relentless losses and decline. Managing the product and knowing the market had a lot to do with success but these days I see little evidence of competitive product development and innovation. WKUK has appointed the WK Southern Europe CEO, effectively part-time, to head the UK company, which may support a view that it’s being managed for disposal. It would not be surprising at all if the Croner part were a sell-off candidate, perhaps to a local competitor like Peninsula, Alcumus or to current or previous local management.

In my view, CCH UK has little hope of real growth and I think that at some stage it too will be acquired, ideally by Thomson Reuters to give the latter a UK tax/accountancy business. CCH is arguably No.2 in the UK tax market but its decline, while under Wolters Kluwer, appears to me to be inevitable. Another potential acquirer might, of course, be Bloomberg.

In truth, given the relative significance or Thomson Reuters and Reed Elsevier and not forgetting the potential of Bloomberg, I believe that a good solution would be the acquisition of or merger with Wolters Kluwer, or certainly its legal and regulatory, tax and accounting and financial and compliance components. I don’t think it would go to one new owner. In the UK, Thomson Reuters would hardly be in trouble with the authorities by gaining a tax/accountancy business, whereas Reed Elsevier might be. It’s the reverse in N. America. In my view, real benefits come from a combination of the Thomson Reuters and Wolters Kluwer assets outside N. America, where there is less competition between the two companies, both of which would see Lexis Nexis as the key competitor in those markets. Equally, in Europe, I could see it being split up or maybe combining in the medium term with Editions Francis Lefebvre-Sarrut (Frojal) until the whole entity is acquired by Bloomberg.

Not too long ago, Ian Whittaker at Liberum Capital produced a research report suggesting that Reed Elsevier be broken up or they should sell Lexis Nexis. He saw Bloomberg as a potential buyer for Reed’s business if it wanted to build scale If Bloomberg did want to expand its presence in the law market – which it has given indication that it wants to do – then buying Reed’s assets would be a very quick and effective way of building its presence. Liberum saw price between £1.3bn and £5bn.

Below the three or four major companies, there remains a great deal of opportunity and maybe likelihood of movement. The one that looks most interesting to me is Bloomsbury Professional, which is, in my view, less strong that it should be in law publishing but becoming quite a competitor to CCH in tax. Some time ago, Bloomsbury started to license its content to PLC to back up the latter’s more workflow/journalism/documentation approach. Now, of course, I doubt if PLC will have much need for Bloomsbury as a content provider. So, either they let their agreement with Bloomsbury reach the end of its contract life, which might be a significant blow to the smaller business, or they might just bring them into Thomson Reuters, gaining some nice ex-Lexis-Nexis content, including its impressive Irish and Scottish portfolios.

If it were a board game of some kind, it would be both easy and fun to play but of course it is not, as real people and careers are at stake. In the responsibility-free fantasy world, one might see other tidying up that might precede the evolution towards a Thomson Reuters and Bloomberg Lexis world. Perhaps Bloomsbury Professional would first build on its legal publishing side and acquire Hart Publishing (which has recently entered into a content licensing arrangement with LexisNexis UK) and/or Jordans and/or Globe Law and Business. Maybe one of the big players would persuade business-to-business publisher, Informa to focus on its core strengths and sell Informa Law. Then there is Justis, despite its reliance on others for its content. Another idea might be for the important university presses, OUP and CUP, for put their efforts into scholarly publishing and dispose of their practitioner and professional publishing portfolios.

Like it or not, even apart from the PLC acquisition, consolidation in its various forms seems to be rife at present. This is increasingly evidenced by the recent depressing news of redundancies everywhere. Further change is inevitable.

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  1. LexisNexis has acquired 55 analytical titles from Oxford University Press, U.S. Law Division, and will integrate them into the Matthew Bender portfolio of legal products. 36 Intellectual Property titles highlight the portfolio.