Why it’s hard to be a financial news wire CEO

In the wake of the resignation of Reuters CEO Andrew Rashbass, Felix Salmon of Fusion writes about the difficulties faced by news wire executives.

Salmon writes, “The result is that the media CEO is, almost by definition, marginal. At Bloomberg, where there’s lots of money, the CEO’s job is to intelligently spend money at the margins, on things like Businessweek or the TV channel or Bloomberg Pursuits magazine or the Bloomberg.com website, so as to increase Bloomberg’s general influence and brand recognition. Ideally, much of that money will come back in the form of advertising dollars, as the Bloomberg brand becomes increasingly valuable and something advertisers want to associate themselves with.

“At Reuters, the CEO’s job is tougher, because there’s less money to spend. Rashbass was brought in because he’s an effective cost-cutter, and indeed his first major decision was to cut the ambitious new website that a large team of people (including myself) had spent about 2 years and more than $10 million developing. While the website was really good, it was never going to be a profit center, and so killing it was immediately accretive to Rashbass’s bottom line. Under the ownership of the Thomson family, it’s the bottom line which matters, not the fact that only 42% of Americans even know what Reuters is.

“So while it might seem that the media CEO is in charge of the newsroom, in reality he has very little leeway to meddle with the core of what the newsroom does. And yet, at least at Reuters, all of the costs associated with the newsroom — and we’re talking hundreds of millions of dollars per year — are attributed to the media business. The media CEO has all of the costs of those coupon-pass reporters, and gets no benefit from them, and has no real ability to alter what those reporters do. It’s a thankless job.”

Read more here.