Synergy has been used as a code word for cost reduction: Andrew Lack

Interview with chairman, Bloomberg Media Group

Vanita Kohli-Khandekar speaks to Lack on what it takes to build cross-media synergies and economies of scale in the media business as it goes through the tumultuous changes that digital is forcing upon it. Edited excerpts:

Are cross-media synergies a myth or reality? Globally, media companies struggle with doing integrated ad sales, content gathering and other functions, but it rarely works out. Your comment.

Synergy has been used as a code word for cost reduction. Synergy is not about saving money but about collaboration, about getting maximum impact for your work. For example, the work Bloomberg TV does on, say, the Tata Group could be put in the magazines we own, on TV, on our wire service, websites. We could use the video, a text of the interview, the graphics. We have got a special bouquet of assets and if we don't collaborate we will not be able to use them well. But the problem is that journalists by nature do not collaborate. Bloomberg thankfully started with a culture of no closed doors, no walls.

Is it easier to collaborate and share news/journalism based content across media and platforms? Wouldn't the same thing be a bigger challenge for, say, pure entertainment content such as films or music?

Transformation in the entertainment business is being driven by companies such as Netflix, Amazon, Disney. There is Apple TV, there are companies like Netflix which are now creating their own content. Most people in the US have three boxes in their homes - Apple TV box, a set-top box, and a modem. Entertainment companies are experimenting with business models, they are worried about cannibalisation, so the walls are coming down fast.

In both entertainment and news, technology and audience behaviour is pushing us inevitably towards aggregators. Yet the fact remains that aggregators could not do without content creators. Many aggregators (Netflix in the US, for instance) are getting into the content business. Is this evolution or life coming full circle?

There is a lot of turmoil and churn in the media business currently. I think what the audience is saying is 'aggregation is a convenience'. But only aggregation doesn't make a business case. All aggregators are, therefore, investing in original content. But that business is about resources and also about judgement on what will work or not. And we will see who makes it to the next round. Bloomberg certainly will because we have both, resources and passion. We will be here forever.

Is it fair to say that all creative businesses (TV, advertising, films) struggle with synergy and economies of scale?

It is very difficult and expensive to have scale in a news operation. You need bureaus and reporters across the world and that requires money, which you can't get easily. So while the cost of making high quality video is going down, it remains a difficult business to scale up. Also you have to define scale - one size doesn't fit all. It depends on the size of the audience. Bloomberg has a total audience size of 3,20,000 (total number of terminals). On the media side we reach 50 million people a month through video. By the standards of the web or TV businesses that is very small, but it is very profitable and a very important audience that we reach out to. So you have to be precise about what you mean by scale.