Dow Jones' Factiva Buy-out: It's Still All About the Content

Last week’s announcement of Dow Jones’ buyout of Reuters’ 50% share of Factiva was not surprising, especially after Clare Hart’s promotion in January to President of the Dow Jones Enterprise Media Group. In a shrinking market for subscription-based information, focused leadership is required, and this is almost impossible for a company that is run by two parents. There are tough decisions to make – e.g. what new users to pursue, and what technologies and services to invest in. In the end, control would have to be ceded to one parent or the other, and in this case, as Rich Zanino pointed out during the DJ earnings call, “the bottom line is Factiva is much more strategic to Dow Jones than it is to Reuters.”

Keeping Factiva squarely within the strategic focus of Dow Jones is largely due to Clare Hart’s unfaltering vision and leadership. Clare recognized, probably better than anyone, that keeping Factiva a step ahead of competitors and the free Internet would require continually increasing the value of the content offering. Partnering with Reuters back in 1999 was all about leapfrogging US competitors Nexis and Dialog by building the largest collection of premium international content. To keep revenues growing, they have to continually up the ante.

The need to continually add more premium content was also underlined during the same analyst phone call: Factiva will soon begin to distribute real-time Dow Jones Newswires content for the first time, something that Factiva customers have been requesting for years. This would probably never have been possible under the former joint ownership structure, due to the fear that doing so would directly undermine the huge piece of DJ’s core business that competes directly with Reuters.

To those who have been predicting for some years the demise of premium content services, here is evidence that such predictions may have been premature. While content itself may no longer have the absolute power of a “king” any more, with a sound business strategy behind the throne, it still can wield a lot of power.