Stop the press: how data displaced trade publishing

In over 500 games for the staff football team, Mark Kelsey was happy never to run out as captain. Back at Quadrant House, a 20-storey office block that looms over the small town of Sutton to the south of London, he eventually accepted the leadership challenge. In fact, when the top job at Reed Business Information (RBI) came up in February 2010, even Kelsey’s on-pitch position of sweeper - a versatile back-line player supposed to soak up defensive breaches – suggested he was ideal.

RBI, part of RELX, had a vibrant past but an uncertain future. For decades, more than 300 trade titles including New Scientist, Travel Weekly and the showbusiness bible Variety had served their industries with news, commentary and analysis. But traditional media was digitising and income was unpredictable. RBI revenues were two-thirds print, one-third online and it relied on advertising - much of it job-related - for half its sales. Whereas the rest of RELX, or Reed Elsevier as it was then known, was 60% online already, Kelsey’s business was trailing. It needed a new direction – even if it hadn’t been able to secure a new owner to help it find its way.

RBI had been put up for sale by RELX in February 2008 to defray the cost of the group’s second-biggest acquisition. With a price tag of $4.1bn, ChoicePoint was a US data provider whose information was used to support insurance underwriting, employment screening and property leasing. Its activity was high-growth, high-margin and highly predictable, everything that RBI’s advertising income and cyclical business model was not.

Despite good interest from private equity buyers, the global financial crisis that blew up later that year ensured the sale process was unpredictable too. With a severe recession on the way, RELX dropped the plan that December. The 2009 numbers told a torrid tale. RBI suffered an 18% decline in revenues and 35% slide in profits as margins contracted to 10%. “The business was in absolute crisis at that point,” says Kelsey. “In many ways we felt like an orphan, not wanted, not quite sure what to do.”

By February 2010, and only three months in the post himself, Erik Engstrom, RELX’s chief executive, knew that he wanted three things from RBI. First, get the division back into growth; then, devise a plan for creating value for shareholders; and, thirdly – to justify RBI’s place in the group Engstrom wanted to build - drive up the profit margin to 20%, even though the best performance in its 100-year history thus far had only been 15.4%.

More than most, Kelsey knew where the business had come from. When he walked into the Sutton building for the first time in 1983, having been appointed as a marketing executive on Computer Weekly, the walls were still covered with Sanderson wallpaper, a business that wasn’t sold until two years later. A sharper focus on publishing – which had echoes of founder Albert Reed’s original newspaper printworks – was compounded in 1993 when the company merged with Dutch academic journals house Elsevier to create at that time the world’s largest consumer of paper.

The young Kelsey had thought he would stay two years before the bright lights of the consumer goods industry called him. But he fell in love with publishing – which made reinventing RBI later on all the harder.

Because of harsh trading, the company had by 2010 already sold or closed many of its North American broadcasting and hospitality titles. With his background in the private equity industry, Engstrom encouraged Kelsey to take a three-to five-year view on each remaining business across 60 sectors, instead of sticking to a traditional one-year horizon. “That was the eureka moment,” Kelsey adds. “We went through all the assets trying to work out for which ones we could see a route to success and which ones we couldn’t.” They judged that a third of the portfolio would succeed in the digital world, a third would not, and for the remaining third it was unclear.

A long heritage helped, but it soon became clear that RBI had the best chance in markets where it had developed online services going back a decade or more that, incidentally, had continued to grow during the troubled 2009. And even though it remained more than half of the income stream, Kelsey’s analysis confirmed that that lingering dependency on advertising had to go. “It was too volatile and Google was changing the world. Our premium pricing had been completely smashed.”

One pioneering digital launch in 1996 was EGI, whose name was inspired by Estates Gazette. Studying readership surveys, Kelsey had noticed that subscribers spent longer with the property magazine – founded in 1858 and part of RBI since 1990 - than most other trade titles. But they spent even more of their working day poring over databases that had collated deal activity or lease ownership. He thought there was an opportunity here, not least because all the press releases announcing deals were already sent to Estates Gazette’s news desk.

Investing £1m, Kelsey hired 40 people, mainly chartered surveyors, and installed them on a different floor to the magazine. “In that early phase we wanted a different culture,” he explains. Customers still wanted headlines – but they wanted to succeed at business even more. What was the fast and accurate industry intelligence worth paying for, even when internet penetration was still low? In the same mould, Air Transport Intelligence sprung up a year later alongside Flight International as an online news and data companion charging users $1500 annually compared with a £50 magazine subscription.

It was to be a template for many of the industries where RBI has maintained and built its presence. Capitalise on existing knowledge and a long-standing title’s credibility, package must-have data into a high-margin subscription format, augment with acquisitions, develop tools that exploited the gathered information - and then jettison the publication that had been the starting point.

“In the early days, the magazine gave your authority and free marketing which was very important. But as time went on, online went deeper and deeper and you just didn't need that distraction,” Kelsey says.

In a decade, he presided over 65 print disposals. “When I sell a business, I always try to explain that you want to be owned by someone that really wants to invest in you.” The last title to go was Farmer’s Weekly in December 2019, a year after the Dutch farming title Boerderij.

Once the world’s largest magazine publisher, today the division’s only printed trade publication is Estates Gazette. Kelsey is hanging onto it even though its digital sibling EGI is three times the size. With the transformation from print to digital complete – and the drive into analytics accelerating – RBI, now part of RELX’s Risk & Business Analytics business, has weathered the Covid-19 downturn well. In the first half of 2020, Risk & Business Analytics’ revenues grew 3% and adjusted operating profits were up 4%, a big difference from the recession in the late 2000s. In the first half of 2020, print accounted for just 7% of RELX’s revenues, compared with more than 50% in 2006. The transformation from publisher to information-based analytics group is complete.

When RELX finally acquired the business he was running, Hugh Jones expected to be asked to leave. The group had been circling Accuity, a provider of payments data to the financial services industry, for years but it took until September 2011 for the £343m deal to be struck with its private equity backer Investcorp.

“Frankly, I expected to be tossed out on my ear,” says Jones, who had previously founded and sold a start-up that calculated chemotherapeutic combination therapies on behalf of oncologists.

Accuity, based just north of Chicago, was the mirror image of Bankers’ Almanac, a mainstay of RBI that had compiled research on the worlds’ banks for over 160 years to help clients make payments and assess credit risk. Both had just about made the digital transition, having published the last edition of their hefty, well-thumbed directories.

Whereas Bankers’ Almanac was particularly strong tracking European and Asian institutions, Accuity had focused on US banks during its longer history. Crucially, since 1911 it had been the official registrar of American Bankers Association (ABA) routing numbers, which were devised to identify individual bank branches on the bottom of paper cheques but continue to be used to route electronic payments. Both helped banks with straight-through processing that strips duplicate checks from transactions and hence keeps errors and costs low.

Accuity is a textbook example of one of the selective acquisitions made to bolster RBI over the last decade – many done when investors thought the division was not worth bothering with. At a combined cost of more than $1bn, each purchase had to deliver some or all of three criteria: must-have pools of data, technological capability and talented people. That is why Jones was asked to stay on and run the combined business, under the Accuity banner. “I'm not a publisher,” he says. “I am however used to manipulating data that delivers increased value to customers and increases margin.” It was the same across RBI: journalists were swapped for data scientists, production staff for web designers.

The follow-on deal Jones masterminded in 2014 added software, not another database, to the mix. A payment matching system operated by a French firm, Fircosoft, was deeply embedded in the top tier of global banks and buying the firm tightened Accuity’s relationship with customers.

These deals were matched by organic initiatives. First of all, Jones encouraged his combined team to sell better, for example charging a leading bank five times the price that Fircosoft had previously asked for after explaining the value in Accuity’s data over time. “I said we should have the courage to walk in and price the way we deserve,” he says, later moving to become chief executive of Reed Exhibitions in 2020.

Teams also worked together to exploit their data that tracks 750,000 global institutions in new ways, such as sanctions checks to ensure that banks are not transacting with banned people or countries, and dual-use goods screening to spot cargo that may be used for terrorist purposes and is often disguised through its financing paperwork. All the while, Accuity’s long heritage means it has remained a trusted partner to gather from lenders sensitive data that would now fill hundreds of directory volumes – if they were ever to be printed again.

Cirium has also found new customers for its flights data, such as hotel groups and car ride sharing apps, which can vary staffing and pricing to tally with late arrivals, for example. “Our capabilities mean we can approach different customers with different problems for the first time,” says Dominic Feltham, one of Mark Kelsey’s key lieutenants during the RBI transformation who now leads Reed Exhibitions in Europe, the Middle East and Africa.

Flight International had some databases that generated published directories. Feltham knew he had to acquire many more if RBI was going to fashion something well-rounded and indispensable. In 1997 his first acquisition was ACAS, a global database of aircraft with maintenance details run from a garage in the English Midlands town of Rugby. “We were aware of some of the attractive data plays that were out there and we wanted to go after them,” he says. Nineteen years later, alongside FlightStats came the purchase of Diio (Data In, Intelligence Out), whose expertise was in deriving value from the air schedules, fares and traffic data it collated.

The companies that joined the group also benefited from its scale. In January 2018, RELX spent £580m to acquire ThreatMetrix, a California-based venture that tracked the online identities of 4.5bn devices to help lenders judge risk as banking moved from branch to mobile. The firm employed 22 US salespeople, compared to RELX’s 500-strong sales team in the field. In addition, the new owner already had commercial relationships with everyone ThreatMetrix wanted to reach.

A decade on from Kelsey’s brainstorm, what has been reconfigured as the Risk & Business Analytics division contains – somewhat ironically – ChoicePoint, whose purchase was meant to hasten the old RBI’s departure from the Reed Elsevier portfolio. Those 60 industries served by trade magazines have been focused down to in-depth data services covering seven sectors including Nextens (tax), ICIS (chemicals and energy) and XpertHR (workplace).

In 2019, Risk & Business Analytics was not only the fastest-growing of RELX’s four component parts, improving sales by an underlying 7%, but the operating margin rose to a record 36.8%. “It was very challenging and very bumpy when you look back,” Kelsey says. “But it's been a wonderful journey.” And the headlines of the future? More data, yielding better and faster decisions.