Reuters loses Tribune but is not quitting yet
Reuters attempts to build a competitive wire service to the Associated Press suffered a major setback over the holidays when the Chicago Tribune and six sister papers ended a two-year relationship and switched back to the AP.
That was a double sting. Besides being Reuters' biggest and most prominent client, Chicago Tribune editor Gerould Kern had spent several years helping build out the substitute service before it formally launched (as I recounted in a detailed story last summer),
But Steven Schwartz, global managing director of the Reuters news agency, told me in an e-mail interview that he is not throwing in the towel. He wrote:
We are grateful for all of the Tribune’s insight and input in the early days to help make the Reuters America service exceptionally strong and we expect they will be back as a customer sometime down the road.
Schwartz added that Reuters recently signed its 50th U.S. customer for the service and that 40 of those are daily newspapers.
Those numbers, however, indicate that Reuters has a long hill to climb to challenge AP, which claims 1,400 newspapers clients (also owners of the non-profit cooperative). So two years in, Reuters has less than a 3 percent market share.
The change, first reported by Jim Romenesko, has been confirmed but not formally announced to readers of the seven newspapers as final deal points are being settled. Chicago-based Romenesko noted a January 2 story in the Tribune with an AP credit line.
None of the parties is offering an explanation of the change. Tribune Publishing corporate provided this anodyne comment:
The AP delivers premium content that our readers across all platforms expect. We made our recent news service choice based on a number of key criteria, including: meeting our readers' content expectations, achieving the balance of cost and value, and a desire to secure one primary news service for all Tribune Publishing business units.
(The Los Angeles Times had stayed with AP when the seven other Tribune papers switched to Reuters at the beginning of 2013).
The reversal roughly coincides with Tribune Publishing's spinoff as a separate company from Tribune's TV and digital businesses. It is probably a fair assumption that the reconsideration came from new corporate leadership. Kern, while avoiding any criticism of AP, had told me in July that he and other editors were satisfied with Reuters.
AP is heavily invested in sports and election coverage, so another factor may have been that the 2014 mid-terms highlighted its strengths compared to more rudimentary Reuters coverage.
Reuters main attraction to potential clients is much lower prices at a time when regional newspapers continue to look for ways to control expenses. Most devote much less effort and space to national and international news than they used to.
But AP has countered with improvements to its state reports (which Reuters does not try to duplicate) and more flexibility in levels of service and prices offered.
Huff Post founder Arianna Huffington told staff in a year-end memo that she plans to drop AP when the contract expires at the end of 2015. But that leaves the service a year to negotiate and many who give notice decide to stay in the end.
Reuters has some history of starting, stopping and reorganizing initiatives. It is planning a customizable Live TV video service in 2015, and I asked Schwartz whether that project might divert attention and resources from the national wire. He said not:
Reuters America is but one of the many initiatives we have launched around the world in recent years as we continue to innovate and adapt to the changing economics of news and shifting needs of our global media customer base. Whether it is providing a market alternative as we have with Reuters America, expanding our bespoke TV programming efforts around the world or investing in state of the art multimedia news delivery Reuters will continue to innovate and help its media customers engage their audiences wherever and whenever news breaks.
While I don't doubt Schwartz's commitment, priorities change, and Reuters' national wire probably needs to pick up momentum quickly to be a survivor. Clayton Christensen notwithstanding, disruptive, "good enough" challengers do not always prevail. This could be a faceoff in which Goliath AP proves the winner.