An oral history of the epic collision between journalism and digital technology, 1980 to the present

A project of the Shorenstein Center on Media, Politics and Public Policy

Archive for November, 2014

Could Business Information Services Have Saved Newspapers?

Early on in the Riptide project I suggested to John Huey and Paul Sagan that we develop a “sidebar” in the area of Business Information Services. My thought was that newspapers were among the early pioneers in this highly technical area – after all, The New York Times Information Bank was the precursor to the Nexis information service. My theory was simple: Had newspapers pursued this area in earnest, they might have accomplished two things: First, they might have developed more diversified revenue streams with which to support the journalism; and, second, they would have had the technical competencies inside of their companies to innovate in the search area. We started down this road by interviewing Bob November, the executive who lead The Times’s efforts in business information services in the 1980s. But with everything else we had to do, this area of the history was never fully explored. Nonetheless, November reminds us of something very important about The Times Company:

We were the first aggregator. Actually, with the information bank, we were the first people to think of doing electronic delivery of news information. But it was not full text. It was hard because the world was not very much attuned to getting electronic information. So we had the training and the technology.

Of course, As November reminds us, the business was sold off to Meade way before the web even existed. Meade was later sold to Reed Elsevier:

When Walt Mattson became the Chief Operating Officer, he decided that we would not be in the information business. We would be in the newspaper business. Therefore, we would make a deal with Meade. They would then offer the New York Times in full text.

Don Graham and Chris Schroeder also touch briefly on the Washington Post’s efforts with their Legi-Slate division (sold in 1999), but the full history goes unreported. Ditto with Gordon Crovitz and his mention of Dow Jones Information Retrieval and Telerate. In the end, the question of whether the pioneering work in this area could have lead to businesses that would have helped subsidize quality journalism is never answered — instead, these businesses are now run by companies like Reed Elsevier or Wolters Kluwer. Now, fast forward 18 months… About two weeks ago, an email came from an ex-HR executive at Knight-Ridder named Steven Stein. Stein, it seems, had a very similar instinct to mine. It is captured in his email, which he’s given me permission to reproduce here:

I am writing to add some additional texture and information to your Riptide project pertaining specifically to the Knight Ridder (KR) company history. I have watched many of the interviews and read the transcripts of the KR interviews and there is one significant and noteworthy gap in the history that is not referenced in the interviews with Tony Ridder, Cathy Yates and Roger Fidler.

As background, I worked for Knight Ridder (KR) from 1983 to 2005, about a year before KR was sold to McClatchy. I was VP/Human Resources at the corporate office in San Jose when I left the company. During my KR career I served in a variety of senior human resources roles in both the corporate office and in what we called the Business Information Services (BIS) division. The BIS division was based in New York City and was a significant operating group that Tony Ridder eventually sold for about $1 billion. Tony then used those proceeds to purchase MORE newspapers (Kansas City, Forth Worth, etc.) during the 1990s when Tony became CEO after Jim Batten’s untimely death. I was part of many strategic planning sessions over the years and was part of the corporate move from Miami to San Jose that Tony referenced in his interview. I also worked in New York City for KR for several years in the BIS group as head of HR. I worked closely with Tony, Cathy and Roger over the years. More on this BIS division below.

In the KR interviews you have conducted I did not see any mention of the BIS group and the role this division played in the KR history. Briefly, the creation of the BIS group was the vision of Jim Batten who had a clear view way back in the early 1980s (when he hired Roger Fidler) that the future of traditional print was going to change dramatically as technological advances evolved. Over several years, through acquisitions and internal growth, the BIS division grew to a few thousand people and reached a valuation of about $1 billion dollars, collectively. It was not highly profitable, but it was growing and employed the kinds of people — engineers, programmers, digital journalists, entrepreneurs, database technologists, early-stage Internet experts, etc. — who were few and far between in the newspapers. It also was testing — and using — some of the new business models that were emerging such as paying for information rather than using advertising supported models.

At the time of the sale, the BIS division — which was a global business — contained a few distinct operating and “branded” companies: (1) Dialog Information Services (based in Palo Alto, CA) which was a proprietary information company that sold electronic information to various corporate customers. (2) Knight Ridder Financial (KRF). KRF was a news and financial information company that sold electronic news and financial information to banks and other financial institutions. KRF competed with Bloomberg, Reuters and other world-class news organizations. (3) Technimetrics, a NY-based financial information services firm. (4) The Journal of Commerce, which was a specialty transportation print publication that is referenced in the Roger Fidler interview.

Selling this forward-looking BIS group and losing all the engineering, technology and related digital talent was a significant loss for the overall KR enterprise in the view of many. While the acquired papers were well regarded and profitable, the sale of BIS and acquisition of MORE papers was a key — some would say, decisive — milestone along the road to the eventual sale of the company. For those of us who worked in the BIS group and remained with Knight Ridder, some of us (like me) made our way out to San Jose. However, most of the deeper technology talent was lost as the individual BIS companies were sold to companies that saw value in digital and electronic distribution. It is a little surprising that Roger, Cathy and especially Tony did not mention BIS at all in their comments

In hindsight the smart and not-so-smart moves are all much clearer. However, even during the times of some of the most critical change and obvious disruption (Craig’s list emergence, etc.) most of the newspaper people in KR didn’t really face up to the inevitable. Within KR there were many people at the most senior levels who DID see the future and we had plenty of outside consultants who advised us that our print-based franchises (especially high margin classified) would come undone once the digital age emerged more forcefully. We had plenty of compelling internal and external consumer research on the declining print newspaper reading habits of various aging cohorts, etc.

Stein concludes by recommending four former senior KR BIS managers who he suggests we speak with. No one can know whether “the path not taken” in business information services would have lead to a brighter future for newspapers. It is important to remember, however, that newspapers were pioneers in this pre-web, highly technical area well before others. Perhaps another Riptide Fellow will one day more deeply mine this question. For now, we thank Steve Stein for reminding us of this important part of the history.