In May of 1999 I was fortunate enough to be present at the announcement of the alliance between Dow Jones and Reuters that gave birth to the company we know today as Factiva. There was much fanfare and presumed hopefulness in the air as two of the world's most dominant sources of business information unveiled an alliance that would provide a powerful combined archive and technology platforms to take on LexisNexis, Dialog and other business information aggregators. The promise of an expanding market awaited all.
Today after six years of slow growth at Factiva Reuters is in essence returning its seed investment with the announcement of its selling its half-stake to its venture partner Dow Jones for USD 160 million. Given that the original combined assets of this joint venture were estimated at USD 225 million that doesn't make for a terribly glamorous return on Reuters' investment but it's enough to provide a graceful exit into a straight licensing relationship and to free both partners to pursue markets as they may.
While Factiva has progressed since those early days in many ways, it's finding its future not as a world-beating business information aggregator but rather as a provider of niche-oriented business information services that focus on value-add on top of their broad collection of news and information sources. That's good for Factiva but limiting for Reuters, whose pursuit of growth for its business information is taking it far more aggressively and broadly into online markets that reach today's professionals than Dow Jones has dared to venture with its business information offerings thus far. Factiva also has much to gain by a deeper integration with core Dow Jones assets - a move that the Reuters/Factiva relationship could only hinder.
Given the paltry rate of return that Reuters has garnered out of the Factiva relationship and the growing strength of the Reuters online media offerings it's a good a time as any for Reuters to move on to relationships that will yield them more exposure for their content and services. This may mean that Reuters will pursue a broader array of licensing deals with other vendors - perhaps even a Google? - but with much of their content already available through major online portals it's more a way for Reuters and Dow Jones to call off the brotherly love act that had long faded away and to move into more effective competitive stances. Both parties have little to lose and much to gain from calling it a day at this point - and only themselves to blame if they don't make the most of the opportunity.