"The CNN Village: the crisis of news agencies", A book by Patrick White @ copyright 2008

THE CNN VILLAGE. A BOOK BY PATRICK WHITE. UNIVERSITY OF MONTREAL PRESS, 1997. CHAPTER 1

In the 1970s, they were considered as a symbol of the Western domination on the world information market. Today, however, the climate has completely changed : two of the four major news agencies, AFP and UPI are facing major problems. In France, the international nature of Agence France-Presse is being questioned. The issue is raised differently in the United States : is there enough room for two worldwide agencies, namely AP and UPI, of American origin? Moreover, can one still consider Reuters as a news agency when one knows that 93% of its revenues come from financial and economic information services destined to businesses and banks?
Jean-Louis Missika

(AP), (AFP), (UPI), (Reuters). Symbols we see everywhere, those of the four largest news agencies in the world. Why study them? Because they supply 90% of international information we read every morning in our newspapers, hear on the radio and watch on television. Because they bear influence on our lives. Because they are at the very heart of international politics. Because it is through them that an important segment of international relations is done.
Each major declaration by a head of state or political figure ends up on the news wire of one of the four agencies. The 850,000 reporters of the world use them as source material. The agencies are also intermediaries and players who fully participate to the international political life. “Indeed, agency information is used as a means of communication between countries and governments on a worldwide scale. Part of diplomatic information is broadcast through the services of world agencies.” Others constantly refer to them in trying to know what is being said about them and their neighbours. All governments, Prime Minister offices, consulates, major ministries and embassies subscribe to one of the four major international agencies while also being the sources of those agencies. The fact that an agency opens an office in a country is always the reason for great pride for a government. As a matter of fact, several countries explicitly ask that the agencies maintain correspondents on their territories. On the contrary, shutting down an office is often considered as inadmissible and the dispossessed country often protest and ask the Foreign Affairs Ministry of the agency’s country of origin to intervene.
Jeremy Tunstall, a renowned specialist of news agencies at the City University of London, maintains that the agencies are full-fledged and critical players to the good operation of international affairs :
“The four Western agencies thus act as international go-betweens for newspapers in different countries, for news agencies, for banks, as well as go-betweens for governments. Foreign relations departments have their own diplomats and embassies upon which to rely. But for diplomats, the international agencies provide the basic service of fast news; and as the only supply of fast information (…) all the players in the world diplomatic game (…) hold in common, the international agencies inevitably play a large part in updating and setting the diplomatic agenda. Moreover, these agencies do not merely play a major part in establishing the agenda, but they have done so now for a hundred years.”
As an internal document of AFP from the early 1990s reminds us, “the political issue in agencies is not new, but it is today more complicated than ever by the ideological squabbles and ambitions of imperialisms. As a frequent interlocutor of political powers and natural intermediary between them, other media and the public opinion, the news agency inevitably raises envy or, at least, tentations of influence.”
Yet, these agencies are undergoing a crisis since the end of the 1970s and they have to reassign themselves. The Reuters group only gets a negligible portion of its revenues from its news service and almost exclusively devotes itself to the transmission of financial data. The American media, on their part, have reached the conclusion that the UPI was superfluous to the market. The agency has been under the protection of the Bankruptcy Act since 1992 and, despite that fact, the news services of major national newspapers offers serious competition to the Associated Press monopoly. Finally, Agence France-Presse is still wondering if it truly has the resources to be present on all continents.
Through this book, I propose to answer the following questions. What is the recent history of news agencies? What is their structure? In what financial position are the members of this select group? What are the factors which have created the crisis the Big Four are currently undergoing? What type of crisis is it? What could be the outcome of such a crisis on the international information system? What is the outlook for news agencies? Could CNN replace the agencies? Does the future of newspapers depend on multimedia and the Internet?
It is always surprising to see how withdrawn from the public these agencies operate. They are indeed organizations which are mostly unknown from the public. Yet, these four enterprises form a private club that is so tight-knit that it yields upon each of its members tremendous political power. In this sense, this book will shed light on the problems they have had to face since the 1980s.
Chapter I
The agencies in crisis. Why?

1980 marks the arrival of the Cable News Network (CNN) channel on the market of international information. It also marks the banking of the political debate on the New World Information and Coomunication Order (NWICO). In the 1970s, NWICO generated major political debates which revolved around a perception common to developing countries : the AP, AFP, UPI and Reuters news agencies held a monopoly on information, twisted the reality of the Third World and were motivated by capitalist and colonialist interests. In 1980, the Unesco gave itself more moderated objectives and put it assault on the international agencies on the back burner.

1.1 The crisis
This crisis is defined as a period of disturbance which provoked major changes in the internal and external environment of the four international news agencies. These four corporations, traditional written agencies to begin with, rapidly transformed into large scale information agencies. Their nature and role have been profoundly transformed since 1980. Therefore, we shall not study sudden changes in the evolution of international news agencies. A crisis-bearing process was sparked sometimes in the early 1980s. The resulting crisis was provoked by disturbances :
- within the agencies;
- in the international media system;
- in the geopolitical and economic environment of the world.
The idea of a “crisis in news agencies” is not new. Used since the early 1980s, it presents two major manifestations. First, the debate on the New World Information and Communication Order (NWICO), held at Unesco in the 1970 and 1980s and where countries in the Southern hemisphere accused Associated Press, United Press International, Reuters and Agence France-Presse of throwing out of balance the flow of information between industrialized and developing countries. The idea is also associated to the important fiscal imbalances the agencies underwent following the rapid transformation of forces on the market of international information. “This identity crisis (the NWICO) preceded a financial crisis quite important for two of the agencies (UPI and AFP) and which revived several questions on the role news agencies, their fate and the transformation of their activities” remarks Catherine Conso.
Lets now look at the various aspects of this state of crisis. It is first and foremost an internal management crisis for the agencies followed by financial problems. When put in the perspective of an incessant flow of technological development and worldwide economic and geopolitical disturbances, this crisis is indeed a very influential one. the agencies are less influent than they were before 1980. Increasingly trailing round-the-clock news broadcasters such as CNN and BBC World, their role is more and more restrained. Is the global CNN village looming over the horizon?
The corporation that are AP, AFP, UPI and Reuters are navigating through this state of crisis since the beginning of the 1980s. In fact, these businesses have had major profitability problems in their activities as general information suppliers to traditional mass media. Faced with no other choice, they had to branch out in order to come out of these dire straits. In order to grow, they had to begin offering information services to other clients than mass media and also to develop specialized services for their traditional clients. A rupture had to take place : from their old, generalist position they had to revise their approach in order to become specialized information agencies.
Beginning a few years after the oil shock of 1973, the crisis has rocked all four of the international news agencies. UPI presented its bankruptcy statement in 1985; AFP came close to collapsing following a painful internal restructuring in 1986; AP lost its influence outside of the United States following its retrenchment on the American market and, finally, Reuters the agency now generates less than 5.7% of the revenues of its holding corporation, Reuters Group Plc. From many standpoints, it can no longer be considered a true news agency.
The crisis at hand is quite complex. There are several levels of explanations, internal and external. Evident for about fifteen years now, it affected each of these corporations in function of its structure, type of status, management and recent history.

The news agencies' crisis has several specific explanations :
- Major financial problems have diminished the international stature of the agencies. The financial balance has completely changed over the past fifteen years. Agencies went from a single product (general news) and varied, more or less rapidly, their products to broadcast information at large, only reacting to competition and the evolution of the market;
- The cost of gathering and broadcasting news increases more rapidly than the revenues it generates. Media are not willing to pay higher prices;
- Customers require increasingly expeditious and customized services. The technical and labour investments thus required represent colossal sums;
- The agencies, with the exception of Reuters, more or less foresaw, during the 1960s and 1970s, the exact nature of the fundamental changes in the international news market. Their adaptation was late;
- As a direct consequence, their market share in clearly declining from a commercial standpoint;
- For a long time, the four major agencies were practically alone and evolved in a market that could accommodate all of them. But for a few years now, the major agencies and smaller ones have engaged in ferocious competition.

The crisis facing the agencies was also brought on by more global and general factors such as:
- The rise of audiovisual as an increasingly important source of international information : the CNN and BBC phenomenon;
- The rising competition of regional news agencies such as EFE (Spain), ANSA (Italy) and DPA (Germany) in markets traditionally controlled by AP, AFP, UPI and Reuters;
- The arrival of low cost news services (NYTNS, The Washington Post Service, The Los Angeles Times Service, The Guardian, The Observer, The Economist, etc.) who appropriate themselves a large market share, especially in the United States and Canada;
- The general disarray of the international media system;
- Mind-boggling technological progresses;
- The new geopolitical order : the european agencies (AFP and Reuters) dominate while AP loses influence following the decline of the American economic hegemony;
- The globalization of economies has created a growing need for fast-breaking news in traditional media.

1.2 What is an international news agency?
The notion of news agency comes to us from the French industrial society of early XIXth century. Right from the beginning of that century, the economic and political elites understand the advantage of being rapidly informed on the important events of the world.
In his classic book The International News Services, published in 1986, the American media specialist Jonathan Fenby maintains that “the international news services are commercial organizations whose sole objective is to gather, distribute, sell and supply international information in the most rapid and exact manner possible” to subscribers in markets as different as Africa, Asia, the Americas or Europe while ignoring the political characteristics of those markets.
However, such authors as Jean-Louis Missika and observers in the world of communications ask themselves if the very concept of a news agency is inappropriate or even obsolete. Since agencies now sell their services (news, financial data, photographs, videos) to whoever wants them (consumers, universities, specialized industries, stock exchanges, radio, television, newspapers, governments, embassies, etc.), the news agencies have transformed themselves into information distribution agencies…
It is also interesting to note that news agencies have never received a recognized definition in international law. Thus, the term news agency is relative to a certain number of things. Even though it is summarily defined in the French law, it remains that the best and most accurate definition was coined by Unesco in a document published in 1953 entitled Les agences télégraphiques d’information :
“an information agency is an enterprise whose main goal, no matter what legal form of organization it has, is to seek news and, in general, documents on current events whose exclusive goal is to express or represent facts and to distribute those to information businesses, exceptionally to individuals, in order to ensure them, in exchange of a royalty and respecting conditions conform to laws and practices of the commerce, an information service as complete and unbiased as possible.”
Thus, the role of the news agency is to collect and process informations in the form of texts, video images, graphics and sounds, and forward them to media, businesses, State administrations, and all categories of organizations and associations. They act as supplier to media who do not have the resources to maintain correspondents in the most remote corners of the world.
Authors such as Philippe Beaudelot make a distinction between international news agencies and global news agencies. According to him, international news agencies are “national agencies who have extended their services to the international level through the availability of permanent correspondents or special correspondents in the most important places of the world and by completing their services by buying complementary informations from global agencies. Their clients are mostly national but sometimes international also.”
He therefore creates a different category which leads to the concept of global news agency :
“The are four global news agencies : AFP, AP, UPI and Reuters (five if we include, as some do, TASS as a full-fledged news agency) to which we can add three television agencies, namely Visnews (an affiliate of Reuters), Worldwide Television News (WTN a former affiliate of UPI) and CBS News. All of them are governed by a status near that of a cooperative. They dispose of a network of correspondents throughout the world, their clients are international and they offer services in many languages. As we have seen, these agencies have taken the brunt of the crisis of the last fifteen years. However, they are also the ones manifesting the best evolutive capacities whether for the adoption of new transmission technologies, or by the creation of new services which sometimes make them resemble a pool of specialized agencies.”
This book only discusses AP, AFP, UPI and Reuters. The Deutsche Press Agentur (DPA, Germany), EFE (Spain), Agenzia Nationale Stampa Associata (ANSA, Italy) are national agencies with a network of foreign correspondents and a few hundred subscribers outside of their country of origin. Their scope is too limited and they do not broadcast on all continents. Besides other international news agencies are State-controlled and therefore politicized (ITAR-TASS, Agence Chine-Nouvelles). They do not meet our criteria and their diffusion is limited outside of their boundaries. For example, the goal of former soviet agency TASS, called ITAR-TASS since January 1992, is to be “the central state information agency of the Russian Federation whose activity is designed for the inner state and international audience.” It clearly is not apolitical and broadcasts almost exclusively in the Commonwealth of Independent States (CIS). Yet, some observers like Mark Alleyne of the Chicago University maintain that ITAR-TASS deserves the status of global news agency just as Reuters, AFP, AP and UPI.

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CHAPTER 2

Chapter II
The Agencies Before 1980

2.1 The Glorious Years
According to Unesco data, between 1945 and 1980, the news agencies AP, AFP, UPI and Reuters broadcast 80% of the international information around the globe. This quasi-monopoly on the global flow of information was denunciated many times by the UN and developing countries who accused the agencies, considering them the undisputed leaders of international news diffusion.
Until 1934, the agencies AP, Reuters, Wolff (from Germany, no longer existing), Havas (now AFP) shared the world between themselves according to spheres of influence. At the time, the agencies were referred to as a cartel. Created in mid-XIXth century during the industrial revolution, the agencies Reuters, Havas and Wolff had signed a covenant in 1859 which delimited the territory covered by each of the agencies involved.
- The British Reuters covered its colonies, namely Egypt, India, Turkey as well as China and Japan;
- The French Havas covered Latin America, the French Empire, Switzerland, Italy, Spain, Portugal and Belgium;
- The German Wolff covered the Reich, Scandinavia, the Slavic countries (including Russia), Holland and the Austro-Hungarian Empire;
- The Associated Press joined the cartel in 1875 and covered only the American market.

It is the arrival of United Press (UP) in 1907 that will disturb the established order. Aiming to conquer new markets and gain a global status, UP began, in 1917, to open foreign offices in order to compete against AP in the United States as well as to gain new customers in Latin America and Europe. The efforts of UP combined to AP’s desire to desegregate the international communications system led to the covenant to be broken in 1934, meaning that the four agencies can compete with each other in any part of the world. This also means the end of the European monopoly on agencies. From now on, the colonial order is a thing of the past.
Philippe Beaudelot brilliantly summarized this era :
“Up to the Second World War, even in relative competition, the four agencies always kept close ties with each other and never sought confrontation. These major agencies were benefitting from a quasi-monopoly which more or less met all the needs of their clientele, the economic partaking of the world and the type of international relations being practiced at the time. They processed virtually all the information for a flourishing press in the absence of television.”
The onset of the Second World War in 1939 only reinforced this tendency towards increasing competition and, as soon as hostilities were over, Havas stopped being a martial propaganda tool for the French State and became Agence France-Presse in 1944. The war over, Associated Press preserved its status of cooperative of American newspapers, the British Reuters is also a cooperative controlled by British dailies and by the national news agencies of New-Zealand and Australia. United Press maintained its growth and associated with International News Service in 1958 to become United Press International (UPI).
Observers generally consider that from 1945 to the end of the 1970s, the international information circulation system was quite stable despite the arrival of television in 1952 and the development of new telecommunication and information technologies during the 1960s. The international information system remains a Western monopoly until the end of 1970s for AP, AFP, UPI, Reuters). However, the American agencies (AP and UPI) dominate. Before Second World War, it was mostly a European and colonial monopoly by Reuters, Havas and Wolff.
Again, Beaudelot aptly describes the situation of news agencies from 1945 to 1975, thirty years of vitality during which photo agencies, film agencies and television slowly assume their positions :
“Just as the end of World War II marked the arrival of a new type of international relations in terms of politics and economy, it will mark the dawn of a new era for news agencies. Thus, the current domination of the world by four agencies, two American, one British and one French, and excluding Germany and Japan, corresponds to the way political power is shared after the victory of the Allied forces. National news agencies multiplied and the daily press was undergoing a boom helping more than ever the four global news agencies to boost their vitality. The photo and film agencies (and later televisions which were generally closely tied to networks) adopt right away a median line due, in part, by the slow transmission of images until the arrival of video and telecommunications satellites at the end of the sixties. During the “glorious thirty” following the war (1945-1975), the news agencies were able to develop constantly and fitfully.”

The dynamism of news agencies and their quasi-monopoly situation is confirmed also by their numbers. According to Unesco data published in The World of News Agencies in 1978, their profile looked like this :
WOLRD NEWS AGENCIES IN 1978
Name of the agency Words per day Employees Subscribers

ASSOCIATED PRESS 17 million 2600 5720
REUTERS 1.5 million 3600 5000
AFP 3.35 million 1990 1729
UNITED PRESS INT’L 11 million 1825 9300
DEUTSCHE PRESS AGENTUR 115 000 800 n.d.
ANSA 300 000 570 1600
EFE 500 000 545 1730
NY TIMES 100 000 n.d. 500
TASS 100 000 560 13 525
TANJUG 100 000 895 n.d.
INTER PRESS SERVICE 100 000 390 420
KYODO NEWS SERVICE 100 000 1900 215
Source: UNESCO
A quick look at this table allows one to notice that the four big agencies do not have any real competition at the end of the 1970s. Even an “international” news agency like TASS does not manage to broadcast more than 100 000 words per day.

2.2 The agencies are accused of misinformation
The news agencies AP, AFP, UPI and Reuters are at the heart of the political debate of the New World Information and Communication Order (NWICO) which raged at Unesco from the late sixties to the late eighties. This debate, which involved the leaders of the four big agencies, revolved around the fact that the agencies were extremely powerful and were at the root of the problem of imbalance of information exchange between industrialized and developing countries. Henri Pigeat, president of AFP from 1979 to 1986, was involved in the debate and maintains that “the debate rapidly turned into a full-fledged attack against global agencies which were at once accused of blocking the development of local agencies and of being a nuisance for developing countries.”
This political debate, it must be said, is rooted quite deep in history. Following its creation in 1946, the United Nations Organization defined the principle of the free flow of information in article 19 of the Universal Declaration of Human Rights : “All individuals are entitled to freedom of opinion and freedom of expression, which implies the right of not being harassed because of one’s opinion and the right to receive or diffuse informations and ideas by any means, without consideration for boundaries.”
As early as 1953, concerns were expressed at Unesco against the one-way flow of information between the North and the South and, consequently, against the agencies who were called, at the time, “the four sisters”, a term was widely used until recently to speak of the four major international news agencies.
The decade of 1960 is one where many countries, especially in Africa and Asia, gained independence. These countries want to be admitted to the United Nations in order to have a forum to express their political desire of distancing themselves definitely from the occidental way of thinking. It is also a decade animated by the tensions from the Cold War which in turn created the non-aligned nations movement. From all this, three conceptions on the status of the press will rise :
- freedom of press
- the press at the service of the State (socialist conception)
- the press at the service of development
It is during a Unesco meeting in Montreal (1969) that the term New World Information and Communication Order was coined. During this meeting, African and Asian and Latin American countries identified three threats that will lead them to demand a new order because of the one way circulation of information from the North to the South :
- the power of the news agencies AP, AFP, UPI and Reuters
- the american television programming
- the telebroadcasting satellites
In Nairobi, in 1976, the Director of Unesco was asked to prepare a report that shall be used to “reinforce media of the Third World, to offset the action of occidental media in those countries and to propose ways to achieve a better balance and a better reciprocity of information.” The mandate was given to Sean MacBride, former Irish minister and recipient of the Nobel peace prize. The Unesco will toil on the adoption of a declaration on mass communication media (voted in 1978) which connoted (according to American media) a control of media by developing countries. Influenced by the logic of the Cold War, occidental countries opposed the declaration. The final declaration will recognize that there is a need for a more balanced diffusion of information. The triggering element was indeed the deposition of the MacBride report in 1980. The Report on the State of Communications in the Modern World maintains that the inequities in the exchange of information is imputable to the four occidental news agencies AP, AFP, UPI and Reuters. He insists that “at the international level, information circulates almost exclusively from countries with the technical means towards those who do not possess those means.” This voluminous report aims at reaching a better balance of news flow between the North and South while allowing States to define themselves what consists in a “responsible” and “well-balanced” coverage of events. “News agencies stand indicted. The authors of the MacBride report tried to reach a consensus but the document includes several reserves which contradict its affirmations.” This report, which received the support of the USSR, alarms Americans who declared that this study was the official position of Unesco.
The Unesco, on the other hand, maintained that the news agencies created a quantitative and qualitative imbalance of information. Quantitative in the sense that a majority (65%) of their news concerned industrialized countries due to their supply and demand based market. For example, in 1980, 75% of the Associated Press’ market was in the United States. Agencies thus seek to satisfy their clients, newspapers which are not evenly spread over the globe :
AFRICA : 700 million people 1% of the world’s newspapers
OCEANIA : 8 million people 2% of the world’s newspapers
LATIN AMERICA : 450 million people 8% of the world’s newspapers
NORTH AMERICA : 300 million people 14% of the world’s newspapers
ASIA : 3 billion people 24% of the world’s newspapers
EUROPE : 1 billion people 51% of the world’s newspapers

Source : L’État des médias, Montreal-Paris,1992

For news agencies, the Third World market is clearly not important on a quantitative level. The Unesco also mentioned a qualitative imbalance because the news from the four major agencies offered a negative image of the Third World, putting too much emphasis on coup d'états and not enough on the changes taking place in those countries. At the time, the criticism emanating from the Third World well well summarized by the former Tunisian minister of information and ambassador at Unesco, Mustapha Masmoudi :
“The vertical flow of global information is controlled by the Western transnational corporations AP, AFP, UP, Reuters and TASS… 80 percent of world news flow emanates from the major transnational agencies. They monopolize between them the essential share of world news… It enshrines a form of political, economic and cultural colonialism which is reflected in the often tendentious interpretation of news concerning the developing countries.”
News agencies are still powerful and influential at the end of the 1970s. Even American specialists agree with Masmoudi :
“The four predominant transnational agencies and the two largest television news enterprises, Visnews and Worldwide Television News (WTN), are immensely powerful and influential organizations, far outpacing their operating budgets. These agencies are influential not only in effectively transmitting news around the globe but also, more subtly, in defining news values and styles. Journalism in much of the Third World is patterned after Western perceptions, values and practices, especially in agency style writing.”
In their book Contra-Flow in Global News : International and Regional News Exchange Mechanisms (1992), Oliver Boyd-Barrett and Daya Kishan Thussu demonstrate that news agencies, in particular, and information, in general, are perceived as important and modern instruments of domination. They also point out that the Southern hemisphere theory according to which the “four sisters” hold an Imperialist agenda is still hotly debated today. “This strong version of media imperialism theory, however, is equally hotly contested by the western transnational themselves. The empirical evidence does not consistently support the media imperialism thesis, and in some cases the burden of responsibility can be laid at the door of Third World élites themselves.”
The NWICO debate is considered by analysts as having greatly contributed to the departure of Unesco from the United States. The attacks of Third World expressed at Unesco against the Unites States and the agencies AP and UPI were taken very seriously in Washington. The American administration left Unesco in December 1984. It contributed to 25% of the US$535 million budget of the UN agency. Great-Britain left for the same reasons, leaving a 5% hole in the budget of Unesco. These two countries often accused, as all other industrialized countries, the Unesco and its then director, Amadou Mahtar M’Bow, of being anti-American and anti-Occidental.
Since the departure of the Unites States, the budget cuts at Unesco have been considerable and the stability of the organization has been threatened. Since then and the arrival of Frederico Mayor at the head of the organization, the NWICO debate transformed into a technical debate without much scope. This is true to the point that the Unesco has decided to burry the original charter of the New World Information Order on November 10, 1989, despite the vigorous opposition of Third World countries. “The new text maintains the need of an initial charter in favour of well-balanced information and against any obstacle to freedom of expression. The Third World countries who represent the majority at Unesco, wanted to promote through the original charter a rebalancing of the means of information to their profit.” This disappearing act ends a political and ideological debate between North and South, East and West, capitalism and socialism.
All in all, the international news agencies crisis manifested primarily with the intense debate surrounding the New World Information and Communications Order. This debate, which reached a peak in the late 1970s and early 1980s, strongly destabilized the very foundation of the agencies, questioned their credibility and made them adopt a defensive position. Indeed, the partisans of the NWICO came to demand a boycott of the four international news agencies in order to decolonize information. For Michæl Palmer, a world specialist of news agencies and professor at the Université de Paris - III, “the New World Information Order represented a very real danger for the agencies.”

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CHAPTER 3

Chapter III
The Associated Press (AP): the strongest to face the future?

“There are only two things which can light up the four corners of the world : the Sun and the Associated Press” — Mark Twain

3.1 A few facts about AP

The Associated Press is a news agency that was created in 1848 by six New York newspapers who joined forces in order to cut costs and to receive and process news from Washington and Europe. In the beginning, the agency was only concerned with the American market. This was the era of “wireless telegraphy, which ended the reign of carrier pigeons and news boats” . In 1849, AP opened its first foreign office in Halifax, Canada the main port of entry to North America. News arrived by ship and were telegraphed to New York. In 1871, AP joined the cartel of European news agencies (Havas, Reuters, Wolff) and laid its first land wire to be used uniquely for the transmission of news. Then, in 1899, AP became the first news agency to test Marconi’s wireless system to send dispatches. From this point on, things evolved rapidly and a photo service was launched in 1927.

Specialists agree that AP began opening to foreign markets during the 1920s, long after Havas and Reuters. From 1848 to 1934, the agency distributed its American news through the national agencies since the cartel prohibited the agency from selling them directly. The AP had close ties to the American government at the time and in 1919, Congress “directly supported the efforts of Kent Cooper (the president of AP) which were aimed at breaking the cartel of European agencies, thereby expanding and to expand the foreign markets of Associated Press.”

With financial support from the government and with the benefit of discount transmission rates, AP consolidated its position vis-a-vis United Press (founded in 1907) and continued to distribute the international dispatches from Reuters, Havas and Wolff in the United States. Frustrated by this position whereby it could not sell its news on the foreign market and where the cartel agencies could do what they pleased with the news it supplied, the Associated Press withdrew from this constraining association in 1934 and assumed the distribution of its news.

In the 1940s, Kent Cooper who was still president of the AP and an experienced lobbyist, embarked on a crusade to convince the American government and the League of Nations (which became the UN in 1945) to support the idea of freedom of press, and of the worldwide flow of information free from governmental control. He succeeded in gaining the recognition of Harry Truman for this principle in 1945 and won the approval of the United Nations in 1948. At the end of the Second World War, which incidentally consecrated the decline of the European agencies Wolff, AFP and Reuters, AP set out to conquer the world. “In 1946, the Associated Press supplied clients in 20 countries. In 1948, the agency had offices in fourty-four countries.” With the financial and political help of the American Congress and the White House, AP rode the post-war momentum to develop a more agressive commercial strategy. For AP, “the principle of the free flow of information without governmental intervention was not a means to an end but the appropriate way of attacking foreign markets.”

An agreement with Dow Jones in 1967 made it possible for the agency to develop a financial news service, and the AP-Dow Jones service is in direct competition with Reuters’ financial news service in more than 50 countries (AP renewed this deal with Dow Jones in 1997, for a period of seven years). Moreover, in 1967, AP stops supplying Reuters with American news, at the request of the latter, who then launched an independant news service in North America.

Thus, since World War II, AP has constantly developed its international correspondent network and has succeeded in spreading its tentacles throughout the world.

Today, AP is a global news agency with the status of a media cooperative (newspaper, radio and television). It is the world's biggest international news agency. AP, a fully private endeavor, only charges its members to cover information gathering and distribution expenses. About 80 to 90 % of its operating costs are paid back in the American market and its services are offered almost everywhere in the world at a reasonalble cost. In Canada, all daily newspapers, radios as well as television receive the AP news through Canadian Press (CP) and its French service La Presse Canadienne (PC).

In 1999, the Associated Press had over 15,000 subscribers throughout the world, including 1,530 American daily newspapers and nearly 6,000 radio and television stations in the United States. The agency has nearly 8,500 subscribers outside the US. AP now has 3,600 full-time employees (2,700 in the US and 900 abroad), excluding a multitude of freelance journalists. The president of AP is Mr. Louis Boccardi. In August 1999, AP bought all the broadcast assets of UPI (some 410 clients), putting a definitive end to UPI's dream of a media comeback.

AP has 144 offices in the United States and 96 in 71 other countries, for a total of 237 offices. Its services are received in 112 countries, mostly through national news agencies which broadcast its dispatches. Its annual budget is nearly $418 million US, and since the agency has a cooperative status, it cannot register profits. Deficits are absorbed by the members of the cooperative. In general, the Associated Press makes slight benefits which are immediately reinvested.

The ASSOCIATED PRESS offers the following services:
- general international news (AP, 1848)
- economic and financial information (AP-Dow Jones, 1967)
- photo services (AP Wide World Photo, 1927)
- radio services (AP Broadcast, 1974)
- televised services (APTV, 1994)
- compugraphic services (AP Graphics, 1990)
- magazine services (AP Magazine, 1990)
- the Dow Jones databank (1980s)
- financial transactions with Dow Jones (1988)
- sports news services (AP Sports)
- radio news services (AP Network News)
- a computer system for television news rooms (AP News Center, 1993)
- international news services for individuals (AP On Line, 1990)
- AP adSEND (digital transmission of advertising to daily newspapers through the AP network, 1994)
- AP All News Radio (radio syndication services, 1995)

Of course, the agency operates 24 hours a day. In a typical day, it receives 900 news items at its New York headquarters, broadcasts 20 million words and supplies information to a billion readers, viewers and listeners. The information is disseminated in English, French, Spanish, Portuguese, German, Arabic, Swedish and Dutch. AP operates a service in the United States which is completely independent of services for the rest of the world. Specific services are offered to Canada, Europe, the Middle East, Africa, India and Latin America.

3.2 Causes of the crisis at AP

The crisis at AP did not develop suddenly. Surprising as it may seem, the roots date back to the glorious days of the 1940s when the American agency decided to proceed with its international expansion. Here is how unfolds this “critical phase” which has affected AP since the late 1970s :

a) causes particular to AP :
- profound modification of the financial balance
- notable increase in the cost of information gathering
- reduction of foreign services in favor of a focus on North American interests

b) general causes :
- the NWICO debate which has constantly questioned the existence of American agencies AP and UPI
- crisis in American printed news and in the information market
- competition from news services such as those of the New York Times and Los Angeles Times
- increased disinterest by Americans concerning foreign information

Following its international expansion after World War II, the Associated Press agency had to deal with the increasing cost of gathering international news. However, the difference between the increase in international and national news gathering is not very significant.

“Between 1943 and 1963, expenditures for foreign information have increased by 75% (in constant dollars) while those for national information increased by 68%. In 1963, the Associated Press allocated 55% of its financial resources for the gathering of international dispatches. Since, in each case, AP had to cover worldwide events for its American clientele, satisfying its foreign market only marginally increased the agency’s expenditures.”

It was during the 1970s that the crisis manifested itself in a concrete way for AP. The ever-increasing costs associated with the international sector, the tenacious competition of Reuters and United Press International on the American market and the general depreciation of global economics created by the 1973 oil crisis had disturbed the daily operations of the agency.

Important news services developed in the United States starting in 1970. One after the other, the main newspapers of the country began offering their news to other media at very competitive prices. These alternate news services, in direct competition with the basic service of AP and UPI, offered news features, texts by their own foreign correspondents and reprints of articles from affiliated papers. The competition gradually increases. More personalized and cheaper, these “supplemental information services” became increasingly popular. They “significantly encroached upon the traditional markets of the Associated Press.” The New York Times News Service (NYTNS) increased its subsciptions worldwide from 50 to 500 subscribers between 1960 and 1989, and this meant more direct competition for AP and UPI. The New York Times Company itself had 1998 revenues of US$2.9 billion.

All these factors are not exclusive to AP, but they did have an influence on the international status of the agency. From the onset of the 1980s, the major consequence of this increasing competition combined with the increase in expenditures, have resulted in a rupture in AP’s already fragile financial balance. The agency was faced with a financial connundrum and had to update its technology. It was left with no other choice than to proceed to the application of austerity measures such as closing news offices, most of which were located in Africa and the Middle East.

In 1999, AP was left with only six offices in Africa : Algiers, Cairo, Abidjan, Harare, Johannesburg and Nairobi. According to its advertising pamphlet “AP: Who, What, Where, When, Why and How”, published in 1995, the agency had 148 offices in North America; 35 in Europe; 21 in Latin America; 15 in Asia and 10 in the Middle-East.

For many, the recent budget cuts do not at all reflect a decline for AP. Walter Mears, a former veteran journalist-manager at Associated Press, believes that even in the long term, the collapse of AP is highly improbable.

“Not that we have not had to temper our goals and sometimes reduce our staff level in times of recession. We have had to cut expenses, but never at the cost of curbing our central, essential services. The kind of decline that has been suggested is unrealistic. (…) For most newspapers, we are a bargain. In hard economic times, we are an even greater bargain. The editorial engine of an industry, AP will be here, delivering, for a very long time to come.”

Nonetheless, AP is an agency with the means of selling its services abroad on a more or less profitable basis.

For fifteen years now, the agency has been in a fragile but stable budgetary situation. AP has a total debt of $10 million US. Expenditures continue to grow. In 1973, AP purchased $2.3 million US of equipment and the figure reached $16.2 million US in 1983. That same year, AP increased the cost of its subscriptions by 9.5%. In 1984, it had a deficit, but turned out $5.4 million US in profits the following year. In 1986, it had to invest $13.6 US million in new technology after having made $ 10.5 million US in profits. These investments were not necessarily an indicator of ill financial health, but, in 1987, AP was forced to sell all its interests ($58 million US) in AP-Dow Jones/Telerate. The agency was turning out low profits on its current operations, but this was not enough to meet all its investment needs. In 1991, AP had a cumulative debt of $41 million US. Another decrease in revenues occured in 1993 ($3.3 million US) followed by an increase of 4.5% ($16.1 million US) in 1994. It is important to note, however, that AP was forced to increase its operating expenditures by $30.6 million US in 1994 due to the introduction of AP Television. This led to a dead loss of $7.8 million US (before income tax) for 1994. AP maintains that it has had a net positive balance each year for many years now. It also says that APTV is profitable. “Overall, AP’s financial health remains sound and capable of handling the startup costs of new services without compromising the resources needed for our core misison.” This does not prevent the fact that Associated Press had a deficit of $12.4 million US (after income tax) for the 1995 fiscal year.

Moreover, the market of American daily newspapers has been stagnating for some time and there was a marked decline between 1980 and 1995. In 1980, there were 1,750 daily newspapers in the US; 1,688 in 1986 and 1,533 in late 1999. AP therefore had to reduce its foreign investments and services in order to compensate the losses on the U.S. market.

While newspapers had still been getting their dispatches directly from agency wires towards the end of the 1970s, the situation changed slightly in Canada after that point. AP’s influence was declining. For example, daily newspapers in Canada like The Globe and Mail, The Montreal Gazette and The Toronto Star could and did purchase at low cost and publish articles from Bloomberg, Deutsche Press Agentur (DPA), the New York Times, The Washington Post, Knight Ridder Newspapers, The Economist, The Guardian, Cox, Scripps, The Observer and The Independent. Even though AP is broadcast in English Canada through the Canadian Press (CP) wire service, it remains a dominant source.

In France, Switzerland, Belgium, Asia, Africa and French-speaking Quebec, AFP remained the number one agency since its services were more exhaustive, entirely French and ready-to-publish (AP also does have a French news wire). Indeed, the budget constraints at AP have had a negative influence on its French service and most of the texts on its wires are only translations. A 1993 study by Mylene Paradis of Laval Univeristy on the processing of international information from 1970 to 1990 shows that only 11.1% of international news published in Montréal’s La Presse bore the AP signature. In the influential Montreal newspaper, Le Devoir, this figure was only 2.96% while Quebec City’s Le Soleil was 13.96%. “The results of this content analysis demonstrated that the three French dailies used Agence France-Presse to a great extent. The pages of these papers are brimmimg with AFP dispatches.” Between 1970 and 1990, AP was clearly left aside, particularly in La Presse and Le Devoir. This tendancy favored Reuters and AFP. The study also explains that at Le Soleil, AP was at this time the second choice following AFP.

The situation in Canada has however improved for AP. In 1994, the national news agency Canadian Press (CP) and its French equivalent Presse Canadienne (PC), cancelled its subscription to AFP, saying it was too expensive. CP broadcasts news to more than 1,000 clients in Canada and was relaying AFP news to all its domestic suscribers. In January 1997, following a major restructuration, CP and PC dumped Reuters' French service. AP is now in a very strong situation in Canada since it is the only foreign news agency broadcast to Canadian media through CP and PC. Canadian media can only suscribe to Reuters and AFP on a one on one basis.

AP is now taking better care of its North American clientele. According to Michael Palmer of Universite de Paris, “this can be explained by a confrontation between the geopolitical and financial interests of the agency.” Indeed, the main market for AP is the United States, its geopolitical center of interest. The costs of the agency are absorbed on the American market, which allows AP to offer its services for a ridiculously price elsewhere ($30,000 per year for a French newspaper with a print run of 180,000).

Some refer to this as dumping:

“The information distribution overcost of Associated Press in other countries can thus be compensated and limited. Therefore, rates are often unrelated to the actual cost of the service and even to that of transmissions. Because of this, AP can maintain unprofitable services in France and in other countries due to a policy in which it is hard to distinguish commercial interests from a will to expand.”

The geopolitical interests of the United States are close to those of AP, namely North America, Europe and Asia. Clearly, the United States also has strategic interests in the Middle East, Latin America and in Africa, but they are more limited. The same is true for AP as an American corporation. AP is strong everywhere in the world but is less so in Africa and the Middle East. In fact, the agency manifests little interest in gathering information in the South, especially in Africa. The cost of gathering news in those countries is generally higher than the revenues generated, and Associated Press only does so because it considers it a public service. If one takes into account the rules of the market, the cost of subscirbing to AP for a Third World media is basically symbolic.

For Thomas Kent, former editor of the worldwide service at AP’s headquarters in New York, the major problem facing the agency is competition. “Competition between the agencies is very rough. We always try to work faster than the other agencies and to work better. Sometimes we succeed, sometimes we don’t. The competition also works very fast. In no way do we get the impression that the world depends on us. The competition is now tougher.”

Kent maintains that competition still exists, even in today’s circumstances. According to him, even though UPI was stronger five years ago, there are now agencies that were not part of the current picture at that time. “From our point of view, there is no monopoly. Every day, all we see is competition. There are more news agencies in 1993 than there were in 1988 or even in 1983.” Financial agencies such as Bridge News and Bloomberg are the most obvious examples.

Finally, another factor can explain the crisis AP has been undergoing for the last fifteen years, which is the disinterest of a majority of Americans for international information. For many analysts of the American scene, including Jean-Luc Renaud of the University of Minnesota, the Vietnam War (1955-1975) did not help the cause of Associated Press. It provoked a certain apathy in the public with regards to foreign news. “The Vietnamese debacle generated a climate of introspection. The attention of the public tended to shift toward domestic affairs.” As they explain in their book UPI: Down the Wire, Gregory Gordon and Ronald Cohen, who were working at UPI in the the 1980s, it is common to hear daily newspapers and radio stations complaining about the excess international topics on the news wires of AP and UPI.

However, this lack of interest of Americans regarding international news is contradicted by a study realized during the 1980s by W. A. Hachten. “The study demonstrates that the media people estimate at about five percent the portion of the audience interested by international information, whereas 41% of their audience say they are interested.”

3.3 What Saved AP

There has been a crisis at AP, and its traditional activity as a news agency has been slightly put aside in favor of the development of more specialised services. Up to now, this crisis has affected AP’s status for various reasons. AP has comparative advantages due to its status and structure. As a media cooperative, it can, by and large, cover its finances against the vicissitudes of time. AP is a non-profit organization, and as such can remain relatively independent financially. Indeed, the newspapers, radios and television networks who are owners of AP meet once a year in a general assembly to balance AP’s $420 million US budget, and the members are willing to make compromises for the agency’s survival. If AP is faced with a deficit, a rationalisation plan is established and the members of the cooperative are required to make an additional financial effort. On the other hand, if the agency turns out a profit, it is immediately re-invested. This worldwide organization requires very strict commercial management. “If the rigors of capitalist rules are theoretically tempered by their cooperative status, these corporations, who are generally non-profit, cannot ignore the rules of commercial management for long. The notion that a small group of cooperating newspapers could support the colossal charges of a worldwide network of journalists, offices and transmissions is not feasible.”

The moribund state of its main competitor, United Press International, has also helped AP throughout the last ten years. Even though UPI began having minor financial problems in the 1960s, it was only at the end of the 1970s that everything went awry. The rapid succession of executives at the helm of UPI and their managerial inefficiency led it to table its bankruptcy statement in 1986. Since then, UPI has been in a weak position and has allowed AP to considerably enhance its market share in the United States and Latin America as well as win back former customers. On the eve of the year 2000, AP holds a quasi-monopoly in the United States, the market which provides it almost all of its revenues. According to the most recent statistics, 94% of American daily newspapers subscribe to AP, when, in 1985, it was 73%; 71% in 1980 and 67% in 1970. In 1994, only 11% of daily newspapers subscribed to UPI. This was a boon for AP. In August 1999, UPI sold its 410 remaining radio and TV clients to AP.

Finally, AP’s efforts to diversify since the end of the 1960s has allowed it to get in spite of the crisis it was facing. AP started experimenting with information technologies in the 1960s and began applying those technologies to news rooms in 1972. Its beneficial association with Dow Jones News Service in 1967 and the successive launching of new products (the AP Leaf Picture Desk digital photo service, in 1991, AP Broadcast, APTV, in 1994, AP Graphics, AP OnLine, AP Magazine, and various databanks) could eventually help the agency in developing new niches while both ensuring a certain financial stability and facing the challenge of Reuters’ intense competition in research and development.

For example, the introduction of the digital News Camera 2000 in 20 offices in 1994 allowed the agency to transmit a picture only moments after the event. With its AP Basic service, aimed at small daily newsppapers, AP now transmits 9,000 words per minute compared with only 66 in 1993. AP is definitely entering the global information market era.

For Jean-Claude Bouis, a New York AP executive, “we had no choice but to commercialise information and widen our customer base because we saw that the newspapers, radio and television markets had reached a plateau, and that we had to find new sources of revenue. We could see that our information had considerable value.” Bouis and his colleague Michelle Sagalyn, executive in charge of the information technology service, give several examples of recently implemented projects :

- A “Home and Business” information technology service through which 4 million subscribers connect their computers directly to AP through a modem;
- AP OnLine : an international information menu written in New York where eports from 91 of AP’s worldwide offices are classified;
- A databank of news concerning women, and another concerning medical information targeted for hospitals, drugstores and medical research centers;
- An agreement with the French newspaper Le Nouvel Observateur which has purchased AP OnLine and ported it to the Minitel system, providing the French with continuous information concerning the United States.

For Mr. Bouis, these initiatives “do not affect the agency’s mission of informing the public. Our customers are still radio, television and newspapers.”

AP’s diversification efforts even made Jeremy Tunstall, of the City University of London, declare, in the early 1980s, that the agency was in the best position to face the future and react to the explosion in the demand for real-time economic information :

“The Associated Press has achieved the strongest diversification within the news field because AP-Dow Jones puts it internationally into partnership in the strongest traditional form of agency news (financial data) and with financially strong American newspapers (The Wall Street Journal), and gives it a powerful position in providing general financial news in a form suitable for domestic U.S. news media.”

Ten years later, he wrote that “the lone American AP is now outgunned by European Reuters and AFP. During the 1980’s Europe took over from the United States as the world leader in news . In the 1990’s, we expect this leadership to be more recongnized.”

AP's cooperative status, the fall of UPI and its diversification efforts have all played an important balancing role with the result that the international news agencies crisis is affecting it less deeply. These effects have been limited to a rationalization of effectives, of resources and of its worldwide network of correspondents.

Globally, one can notice that the crisis at AP has manifested itself as competition from other information suppliers which have forced the agency to maintain competitive rates. The agency was forced to reduce its expenditures, especially in Africa and elsewhere abroad, as well as in its foreign language services. This contributed, along with the debate on the New World Information and Communications Order (NWICO), to a decrease in foreign newspaper subscriptions. Our main argument here is that the production costs of AP have increased more rapidly than the sales rates, which created some financial insecurity.

***

CHAPTER 4

Chapter IV
Agence France-Presse : At The Crossroads

4.1 Agence France-Presse (AFP) : A Painful Restructuring
4.1.1 Some facts about AFP
The agency, first known as “Havas” was founded in 1835 by Charles-Louis Havas. It is the oldest news agency in the world. In the beginning, Havas had two types of activities : the translation of foreign newspapers for Parisian diplomats, politicians and journalists and the diffusion of a newsletter commenting on important events in France. As early as 1838, Havas developed a privileged relationship with the French State by ensuring the distribution of its ministerial correspondence. In 1845, Havas began using the newly-installed telegraph system. On the eve of 1847, Havas had an almost complete monopoly on information in France.
In 1857, Havas created a publicity department and from that year until 1940, it concentrated its market on the sale of news and publicity; its corporate status ensured it a certain prosperity up to World War II. In 1859, Havas participated in the creation of the cartel of European agencies. The cartel allowed it, along with the Reuters and Wolff agencies, to meet the very high costs of telegraph transmissions and to divide the world into zones of influence. In 1881, the French Act on Freedom of the Press was voted by the French National Assembly. From that moment on, the use of the telephone, teletypewriter and short-wave radio was to bring about a revolution in the daily life of the agency. Cables kept reaching further and further, as the media extended their coverage. When the First World War exploded, it disrupted the cartel, and the 1930s were witness to its dismemberment. Competing agencies (AP, UPI and TASS) were growing and, at this same time, Havas was undergoing multiple financial difficulties. Luckily, the Quai d’Orsay was there to bail the agency out. In 1940, the Havas agency changed its name to the Office Français d’Information (OFI) and, in August 1944, to Agence France-Presse. “The AFP adopted its current name in 1944, after the liberation of Paris when journalist members of the Résistance traded their guns for typewriters.”
From 1835 to 1944, Havas was a global news agency which was strongly influenced by French government policies. It was considered to be more or less partisan, depending on the events in question. From 1944 to 1957, AFP was a public organization, and in 1957, the French National Assembly voted “Les statuts de l’AFP” (the AFP statutes) which confirmed its independence from the State. Nonetheless, this does not keep certain parties from occasionally qualifying it as being “unreliable for a good number of journalists.”

From 1957 to this day, Agence France-Presse has continued to develop its markets and to modernize its structure and services. Under the leadership of Jean Marin, who died in 1995, and who was active in the agency from 1954 to 1975, the agency was reborn. In 1994, the AFP celebrated 50 years of history.
AFP operates 70 permanent offices throughout the world, other than in France itself where it has 25 offices. It is continuously expanding its world presence : an office was inaugurated in Shanghai in October 1994 and others, Los Angeles, Chicago, Miami, New Orleans and Denver, are scheduled to open at some point. The agency also operates some 80 branch offices, called sub-bureaux. AFP explains that a branch office is staffed with only one reporter who is responsible to a larger main-office. According to AFP’s own statistics, the agency has 1,000 permanent journalists and 200 photographers and a total of 2,000 employees. It also employs 2,000 freelance journalists and photoraphers throughout the world.
AFP has journalists and bureaux in 165 countries and 1,050 media-subscribers (650 newspapers and magazines and 400 radios and televisions) in 147 countries. It reaches a total of 2 billion people which makes it, it says, the most widespread news agency in the world. With the help of the one hundred national news agencies which receive and transmit its information, it reaches a total of 12,000 media users indirectly : 7,600 newspapers, 2,500 radio stations, 400 television networks as well as 1,500 private and public subscribers such as banks, administrations and businesses. Its revenue is approximately FF1,3 billion ($212 million US).
The agency operates non-stop, broadcasting two million words per day in six languages (the equivalent of a 5,000 page book) in addition to some 250 photos, 20 graphs, and 15 radio chronicles. AFP is based in Paris with strategic regional news desks in Washington, Hong Kong and Nicosia. Paris provides service to France, Europe and Africa, while Washington covers both Americas, Hong Kong covers the Pacific and Asia and Nicosia is responsible for the Middle East. A Latin American service is coordinated through Montevideo, in Uruguay, since 1998.
The creation of the regional directorates helped the agency establish a closer contact with its customers while decentralizing its Parisian operations. The Hong Kong regional directorate, created in the early 1980s, made it possible to direct and regionalize the agency’s English language operations in Asia and the Pacific. A Bonn desk, which was transferred to Paris in 1987, brought the agency closer to its German-speaking customers in Switzerland, Austria, Luxembourg and Germany itself. The Washington desk was given the responsibility of the news coverage of Canada and the United States, which provides a more personalised service to the customers there. The Nicosia directorate in Cyprus centralised information gathering in the Middle and Near East. “One of the most significant gains is that, in Nicosia, Arab journalists treat, in Nicosia, the bulk of the information from Jerusalem. They speak on the phone several times each day with their colleagues in Israel. They travel to Jerusalem. For people who understand the Near East, this type of collaboration is highly meritorious.” A smaller regional bureau also exists in Sao Paulo for the Portuguese-language media.
AFP operates in six languages : French, English, Spanish, German, Portuguese and Arabic, and plans to launch a Chinese service. Specific services are offered in Latin America and North America, the Caribbean Islands, the Far East, the Near East, English speaking Africa, North Africa and Sub-Saharan Africa. Other services are also broadcast for German, French and Arabic speaking countries are also broadcast. The AFP realises half of its turnover in France. AFP says it is the leader in Asia, the first international agency in the Arab world and the most present in Africa.
Despite its already strong international presence, the agency has nevertheless deployed its own worldwide broadcasting network since 1987. It uses six geostationary satellites which feed nearly 1,500 parabolic antennas and 2,000 computers and terminals.
From a technological standpoint, AFP has five subsidiaries : POLYCOM for satellites, SPDVC for video production and broadcasting, AFX News Ltd for the English language economic service, Logipress for information technology engineering, and Inédit for editorial engineering (Internet presence and new technologies).
AFP offers the following services :
- a general news service (AFP, 1835)
- a photo service (AFP Photo, since 1985)
- a radio service (AFP Audio, since 1984)
- a telematics service (AGORA, 1983 and MINITEL, 1985)
- a telecommunications service (POLYCOM, 1986)
- a graphics service (AFP Infographie, 1988)
- an business news service (SEF and AFP-FINANCES, 1968)
- an English language economic service (AFX News, 1991)
- a sports department (AFP Sports, 1982)
- a magazine service which covers various subjects (AFP MAGAZINE)
- a publishing service (AFP-ÉDITION)
- a specialized bulletin service (Africa, sciences)
- an Internet service : France-Presse Online
- CD-ROM editing : AFP DOC (1993), AFP Sciences (1996)

The presence of AFP is particularly significant in Europe, Africa, Latin America and in the Middle East. It is less so in North America.
AFRICA: 44 offices, 72 journalists, 5 photographers
EUROPE: 25 offices in France, 27 outside of France, 630 journalists in Paris, 95 in Europe. Photos are exchanged by the European Pressphoto Agency (EPA)
NORTH AMERICA: 5 offices, 3 branches, 42 journalists, 21 photographers
LATIN AMERICA: 25 offices, 60 journalists, 14 photographers
MIDDLE EAST: 16 offices, 51 journalists, 7 photographers
ASIA & PACIFIC: 21 offices, 79 journalists, 27 photographers
Source: AFP
4.2 The crisis at Agence France-Presse
The causes of the crisis at AFP can be explained easily. They manifest themselves in various ways. For Catherine Conso, who conducted two major economic studies on news agencies throughout the world, Agence France-Presse has long suffered from an unprofitable operation which compelled it to undertake a difficult restructuring process. In fact, this inefficient management was being felt as early as the beginning of the 1970s at a time when AFP became aware of the need to follow in the footsteps of AP and Reuters in such areas as automation, the development of new products and in making massive technological investments. The crisis at AFP was manifested as follows :
a) causes particular to AFP :
- financial imbalance (accumulated deficit, cost of modernisation, cost of news gathering, competition)
- slow adaptation to the break-up of markets and to new technologies
- internal crises (strike in 1985-1986, decentralisation, cutbacks, restructuring)
- management of three-way relationships (the French State, French media and foreign media : structure of the AFP and credibility problem)
b) general causes
- weakness of the French market (70 newspapers and 25 audiovisual media; compared to 1,650 newspapers and 6,000 radio and television stations in the United States)

4.2.1 From a financial nightmare to a spectacular comeback
Agence France-Presse was unprofitable for a long period of time.
The financial imbalance of the corporation represents a true challenge. By experiencing one deficit after another, it got so financially engulfed that its complete dismantling was even seriously considered. Its economic viability had been repeatedly questioned, but in the past two years, a spectacular financial adjustment has occurred. Indeed, since 1994, the AFP has covered its expenses and is now self-sufficient. Between 1990 and 1996, the agency grew by 40%.

Agence France-Presse
A glance at AFP statistics from 1981 to the present illustrates this exceptional turnabout (FF1 = $0.185 US) :
1999 Deficit
1998 Deficit
1997 Slight deficit
1996 Equilibrium
1995 Financial equilibrium
1994 Accomplished financial equilibrium
1993 FF17 million deficit
1992 FF28 million deficit
1991 FF36 million deficit
1990 FF50 million deficit
1989 FF40 million deficit
1988 FF22 million deficit
1987 FF7.9 million deficit
1986 FF149.7 million deficit
1985 FF63.6 million deficit
1984 FF44.1 million deficit
1983 FF84.5 million deficit
1982 FF31.5 million deficit
1981 FF31.5 million deficit

Sources : L’Express, Media Moguls (1991), The European, TV5, AFP, Direction of Communications, Le Figaro

Financial imbalance, clearly visible in successive annual deficits, can be explained by various factors. First, the financial disruptions of AFP were a direct consequence of the high cost of modernizing the agency, a fact that had become unavoidable to its survival. For the financial year 1993-1994 alone, costs related to modernization were FF140 million. “In order to meet international competition and the evolving needs of its customers in the last decade, the agency has had to make an important effort to modernize and adapt to international markets” , wrote Nathalie St-Cricq in 1986. AFP spent a lot more than AP for technology because it was so far behind its American counterpart.
The introduction of information technologies in 1975 and of telematics in 1980, as well as the launching of the photo service and the development of new, real-time news services, had a considerable impact on the agency’s revenues. From FF210 million in 1976, AFP’s budget rose to FF750 million in 1985. These figures were supplied by the executive in charge of communications at AFP, Sybil de Guitaut. In 1999, the budget was FF1.3 billion. However, Conso maintains that “the increase in activities at AFP is low and not much above the inflation rate. This weak growth is actually characteristic of AFP.” Sybil de Guitaut maintains that this statement is untrue. “The growth of AFP is still superior to that of the inflation rate.”

The increase in the cost of gathering international information is another factor which has accounted for French agency’s financial crisis. Indeed, 70% of the increase in the costs of news production during the 1980s relates to the increase in the wages of AFP’s journalists. Just before he resigned as CEO of AFP, Henri Pigeat declared that wage costs were attacking the very viability of the agency : “If we want to keep this agency alive, there will be no other solution than to lessen the gap between its evolving expenses, notably wages, and its real revenues. In general, we produce more costly services than all of our news agency competitors, whether national or international.”
For example, the news agency La Presse Canadienne (PC) and its English counterpart, The Canadian Press (CP), broke their 50 year contract with AFP in 1991-1992 because their subscription rates had become too high. This means that 1,300 Canadian media no longer receive the French and English services of AFP through PC and CP. A direct subscription is now required. It must be noted that PC and CP, as well as their members, have been facing serious budgetary problems since the beginning of the 1990s. Important members of PC and CP which were already receiving AFP directly considered that a subscription as a double billing. The Canadian radio news agency, NTR, also abandoned AFP in 1995, along with the TVA network, the largest private French television network in Canada.
Moreover, as of 1986, a new phenomenon was developing : the progressive de-commitment or disassociation of the State with Agence France-Presse, which was to negatively affect the financial results. Also, faced with serious budgetary difficulties and wishing AFP to become more autonomous, the French government limited its financial involvement with the agency. Until 1985, the government provided 60% of AFP’s financing. The 1984-1989 five-year plan projected to reduce this participation to 50%. The goal was reached and, in 1999, 43% of AFP’s income was said to come from a budget voted by the National Assembly. For some analysts, it is difficult to believe that the agency could manage to continue its worldwide presence below the 50% mark, except by penetrating new markets and only if its services became profitable.

The record deficits of Agence France-Presse in the mid-1980s “have accelerated the necessity of a new vision of its place and its future” On December 31, 1988, despite total assets of FF517 million, AFP had a debt of FF264 million, almost half of its financial statement. The agency was deeply indebted until 1994, when financial equilibrium was reached. “The will to make AFP profitable, or at least to avoid making it a structurally unprofitable organization, significantly influences its operations.” Until recently, 70% of production costs have been devoted to wages. The AFP budget went from FF100 million in 1969 to FF1.3 billion in 1999. The former president, Lionel Fleury, estimates that recent deficits are not very elevated for an agency which has an annual income of over one billion francs. However, he does recognize that employee wages and production costs are too high.
“Media are looking for productivity and try to rationalise their technical means and their production in general. They do not understand that agencies are not doing the same by lowering their rates and by accomplishing gains in productivity. This is where we become a bit embarrassed. An agency’s mission is to maintain a network all around the world and the costs of this know-how has a tendency to increase, sometimes faster than the inflation rate.”
Economic realities have had a noticeable influence on AFP since 1980. AFP was late in improving its competitive edge and in implementing its technological diversification policy, at a time when the media market became saturated in occidental countries.
4.2.2 Late Adaptation to New Market Conditions
Slow adaptation to the break-up of markets and to new technologies is another factor of the crisis at AFP. AFP lagged in diversification. While its three main competitors, Reuters, AP and UPI plunged into information technologies in 1964, 1972 and 1974 respectively, AFP only began automating in 1975. This late diversification was a major hindrance to its prosperity. Another example is that of the financial and stock exchange information broadcasts in real-time by powerful computers; Reuters innovated by using this service as early as the late 1960s and AP signed a strategic alliance with Dow Jones in 1967 while AFP waited until 1991 before launching its worldwide English economic service with the Financial Times. The ever late AFP also signed a strategic alliance with British Extel Financial, but this was in 1990. AFP was the second to last of the international news agencies to launch a photo service, in 1984. AP had initiated its photo service in 1927, UPI in 1952 and Reuters in 1985. The field of telematics is one of the rare fields where AFP has innovated. In 1980, it launched a central databank called AGORA that is accessible to individuals. In France, AFP’s information is quite popular on the Minitel network. In comparison, AP OnLine was launched only in 1991, Reuters made its news accessible on the Internet only at the end of 1995 but many online services such as CompuServe, America Online and Yahoo are now suscribers !. Even UPI only launched its retrieval service, in the 1990’s.
Like other agencies, AFP had no choice but to follow technological evolution. While in the 1960s its only customers were the media and the State, AFP has since then seen its niches breaking-up and fragmenting. The demand is not what it used to be. Today, we expect news agencies to become information agencies and to offer services such as photography, information technologies, real-time economic, financial and stock exchange information, à-la-carte information, etc. The old customer base of the AFP still exists, but a new one is developing : non-media clients. This is where the competition is taking place, since media and State profits are stagnating. In France, for example, the situation has changed considerably : over 20% of agency business comes from clients other than the media or the State. This is enormous considering that the level was near zero in the 1970s. It is, however, very little when compared to other international agencies.
Catherine Conso aptly summarizes AFP’s situation : its competitive position on diversification and specialization is not as strong as that of other agencies.
“Agence France-Presse clearly appears as the one with the classic behavior of a dominant news agency whereas AP and Reuters diversified earlier on and more rapidly. (…) The analysis of AFP’s sales figures for France demonstrate the importance of public services in the agency’s overall customer base. This situation also demonstrates how little diversification the agency has accomplished.”
AFP displayed scant marketing savvy and its technological lag was quite obvious in some ways. For example, newspapers and direct customers of AFP have only been able to receive the agency’s dispatches by computer since the late 1970s. Before the 1980s, it did not even have an R&D budget.
This slow adaptation of AFP to new technologies and to the break-up of its markets also manifested itself in the adoption of a five-year plan for modernization in 1984-1989. This plan, financed by investments of FF266 million over five years, corresponded to an increase in sales figures of 40% over 5 years (1983 to 1988). The French State was to supply this financing. These investment expenses did not come from AFP’s operating budget. However, there was some revenue dependency in this field and therefore little or no State intervention. The intervention was a short term plan construed to face an ad hoc problem rather than the agency’s fundamental structural problems : it had fallen behind technologically and its competitive position was weak . Catherine Conso pretends that despite the considerable increase in investments at AFP from 1984 to 1989, “it is unlikely that a few years will be enough to makeup for a period of under-investment.” In 1992, Jean Huteau, a former AFP journalist, went so far as to write that “Pigeat’s five-year restructuring plan had been useless.”
Although it had been discussed since 1979, the plan was implemented only in 1984 after endless negotiations with the State. It has been applied since then. It allowed AFP to save face and to ensure its international status within the select group of news agencies. However, this illustrates to what point it was been difficult for Agence France-Presse to develop both its technology and a service and client diversification reflex at a sufficiently early stage. “Just look at the facts. Even when it has the required capital, AFP either doesn’t do it or does it badly. The list of lost opportunities would no doubt be quite long. Not only does the agency not investigate far enough in the sector of economic and financial information, but it also neglects other fields.”
Indeed, the agency did realize, fifteen years late, the importance of implementing products for non-media clients, which create a new demand (banks, businesses, stock markets, business people, scientific communities, etc.). According to some analysts, the major mistake was not to have made strategic decisions soon enough. “By not making the strategic decision to develop an economic and financial information service, the management of AFP missed the boat for this non-media diversification, depriving itself of an important and financially sound clientele. A particularly costly mistake.”
Neither was the international economic context and the structure of the agency to its advantage :
“The future of AFP is still threatened, notably because the diversification towards economic and financial information has occurred in a more difficult context than for competing agencies (1987 stock-market crash, increased need for profitability). Finally, its particular status does not allow it to develop by creating joint ventures with other partners which would allow a more flexible financing of the required investments.”
AFP did try to prove otherwise by developing a participation in several affiliates such as POLYCOM, SPDVC, AFP-EXTEL, and the European Press Photo Agency (EPA).
AFP’s economic recovery plan was implemented in 1984, at a time when its finances were not at their best. Following the record deficits of 1985 and 1986, AFP had no choice but to implement a draconian restructuring plan in 1986. This plan, combined with the 1984 modernization plan, led to a rationalisation of effectives and to budget cuts. The result was an internal crisis.

4.2.3 Internal crisis
Since 1970, AFP is the only international news agency which has experienced major union disputes. This internal crisis, which was particularly intense from 1971 to 1974 and from 1982 to 1986, exemplifies the difficulty of managing the agency. Indeed, several trade unions coexist within.
In their book AFP : une histoire de l’Agence France-Presse (1944-1990), Jean Huteau and Bernard Ullmann wrote with much detail about the concealed conflicts that hit head-on both the agency and its image abroad. The two former AFP journalists report on how, already in 1968, AFP management, employee unions and the agency’s technical service had started to be interested by the eventual automation of certain types of information. Information technologies would truly transform the life of the agency.
In 1979, Henri Pigeat was elected to the head of AFP. Pigeat, a former senior official who was considered pro-Valéry Giscard d’Estaing, was quite unpopular among employees and their numerous unions. The trade unions were not very conciliatory. In 1981, they fought to obtain bonuses since the journalists were now being obliged to type accents, uppercase and lowercase characters in their texts… Yet, it was especially following the 1986 strikes that AFP labor relations worsened and that its international reputation was further tarnished. Indeed, under Henri Pigeat’s direction, AFP was obliged to implement a painful restructuring plan in order to counteract the effects of the record deficits of 1985 and 1986 as well as to diversify the agency’s products and customers. In May 1986, Pigeat announced that the deficit would be FF63.6 million instead of the FF40 million that had been forecast. According to the French Minister of Finances, “AFP is on the verge of collapsing and we are at a stage where emergency measures are unavoidable.”
Afraid of the idea that the agency might succumb, the executive board voted, in July 1986, a plan that involved laying-off 300 employees (15% of the personnel) at the Paris headquarters while creating 50 new openings abroad. AFP decided to decentralise the agency’s structure : Paris would remain at the heart of its activities, but regional offices in Bonn, Nicosia, Hong Kong, Sao Paulo and Washington would now have more power. The agency moved the German office from Paris to Bonn and reduced the number of regional directorates. The objective was to save FF50 million annually. Immediately, “the trade unions reaffirmed their hostility to this plan, which resulted in reoccurring strikes and incessant confrontations between management and representatives of personnel.” Henri Pigeat was blamed for “not taking the journalists’ point of view into account .” The strikes accelerated in 1986. Not one word came out of the agency’s teletypewriters around the globe. Pigeat’s head was the price to be paid. He resigned in December 1986 and the strike ended. This event only reinforced the feeling of total crisis at AFP. It shed light on the chaos that reigned within the agency. Several subscribers were seriously worried by the eight-day strike, considering it to be professionally unacceptable. “Never before has an agency deprived its customers of its services for such a prolonged period. The foreign offices have pointed it out that the loss of prestige was considerable. The severity of the conflict and its politisation would leave deep scars.”
The internal crisis at AFP was certainly quite dramatic at times, as it had been for UPI, but such incidents as these never rocked Reuters or Associated Press. Even though labor disputes have been more discreet since 1986, three employee strikes in 1994, 1995 and September 1999 have further tarnished the agency’s worldwide reputation and undermined the morale of its troops. This agency’s continual internal crises have been detrimental to its development.
In February 1996, an internal survey of 308 AFP employees showed that “90.54% consider that the corporation does not have a coherent strategy and 85% declared being dissatisfied with internal communications at AFP.”
One can see that it has been necessary for AFP to overcome its internal crises in order to finally be able to accomplish significant adjustments. This is not the case at United Press International whose services have all but disappeared today.
4.2.4 AFP : An Outdated Status and an Unreal Situation
The structure and status of AFP make it a unique news organization in today’s world. One can undoubtedly say that this structure has amplified the crisis the agency has undergone since it was voted into existence by the French National Assembly in 1957. The structure have had the effect of making AFP dependent of the French State and, therefore, of the Cabinet, Parliament and President.
The structure of AFP is quite complex. According to the incorporation of Agence France-Presse, it stands as “a worldwide information organization” that must “provide French and foreign users, regularly and without interruption, exact, unbiased and trustworthy information.” Moreover, the law adds that “Agence France-Presse cannot, under any circumstance, take into account any influences or considerations that might compromise the exactitude or objectivity of the information : it must not, under any circumstance, come under the control of an ideological, political or economic group, by right or by fact.”
This makes AFP a “legal freak”. The fact is, also, that the agency is headed by an executive board of fifteen members whose interests are divergent : a majority of French newspapers (eight seats), public radio and television networks (including the State, two seats), public services (including the State, three seats) and agency employees (two seats). The executive board elects the CEO of the agency, but, in reality, the State always gives its approval first. The independence of the agency from the State is ensured by a superior Council.
This structure accentuates the true tridimensional nature of the agency.
AFP Wolrdwide Budget

State subscriptions = 49%
French media = 22%
Foreign media = 23%
Non-media = 7%

Budget for France

Public services = 42%; French media=39%;Non-media =11%
Source: Le Monde (October 1997), L'Express (1993), AFP
AFP has therefore the difficult task of managing triangular relationships with the French State, the French media and foreign media. This makes its financial viability difficult. AFP does not even possess its own funding.
“The facts are hard. The gathering, processing and distribution of information cannot be accomplished cheaply : French users (the press, the State, and the public powers) do not supply the revenues needed by the agency in order to continue operating abroad, and foreign markets are necessarily unprofitable due to the intense competition we face from other agencies who do not need them to survive.”
Thus, it seems impossible to talk about AFP without analysing its legal status, its historical context and the French market. “The difficulties and ambiguities of AFP, a national agency with an international mission, can be explained by two facts : the situation of the French press and the sometimes conflictual relationship it maintains with AFP on the one hand and the assistance of the State on the other.”
AFP must meet on a daily basis the requirements, requests, criticisms and remarks of its French customers while keeping in mind that it must also meet the expectations of the thousands of foreign media who receive, directly or indirectly, its services. The latter would not hesitate for a moment to terminate their subscriptions if there was to be even the impression of a decrease in the quality of the service. Moreover, AFP must answer to the French government. Since it is, for the most part, financed by the government, AFP is, to a certain degree, dependent on its policies. This “French”, “strategic” and “political” aspect of the agency is not well perceived by foreign analysts. The political connection of the AFP to the French State has often been criticized by foreign journalists (see TIFFEN, 1978), by American (COHEN, 1991) and British daily newspapers and by the international journalistic intelligentsia (PALMER and TUNSTALL, 1991), who have considered AFP as sometimes unreliable, biased and a tool of the French Ministry of Foreign Affairs.
This influence of the State in the decision-making process at AFP is sometimes apparent : the State decides on agency rate increases, approves the nomination of members of the executive board, nominates the CEO and openly criticizes the agency anytime it sees fit. One can call to mind such examples as the cancellation of dispatches under pressure by spokespersons from the Élysée , the criticisms of Valéry Giscard d’Estaing and his close collaborators regarding the “«left wing tendencies» of the agency copy” , the 1975 dismissal of Jean Marin by the Council of Ministers, blackmailing and intimidating the agency , etc.
The lack of objectivity AFP would have displayed in covering some events in certain countries was exposed during a seminar on the role of media in helping developing countries which was held in November 1993 at the University of Western Ontario, Canada. Khedidja Boudaba, a reporter at the national office of the Algerian News Agency (APS) declared, supported by her colleagues, that AFP’s coverage of Algerian events was not objective. The dispatches concerning Islamist militants were “biased” and “imperialist”. She did not blame the whole of AFP’s coverage but maintained that the colonial ties of France with certain countries, such as Algeria, influence the final product of the agency : the dispatch. Only a news content analysis could confirm these allegations. The AFP declared it was “in complete disagreement with these affirmations.”
Many still remember that AFP had announced that Queen Elizabeth II gave birth to a lardon instead of a boy (garçon), referring to Prince Charles.
Claude Moisy, the former president of AFP who left the agency in January 1993, is aware of the negative image of the agency. As an example, he refers to the election of agency CEOs, a practice that casts doubts on the independent nature of the agency in the eyes of its competitors.
“It is true that the world press is interested in the underpinnings of the AFP and is sometimes brought to comment, and not always positively, on that corporation when the election of a new president leads to controversies and debates, when not actively to power struggles, especially when political considerations are taken into account. Some of our competitors often take pleasure in pointing out that those in power are trying to impose someone who is favorable to them. Obviously, this is quite detrimental to the AFP image.”
Moisy also says that political powers could, even today, intervene on the content of the AFP, although not for long.
“I did not have more difficulty with public powers than I had with business executives or movie stars. I am absolutely positive of that. It would be more accurate to talk of an absence of intervention. It is a phenomenon that progressively became natural through time. Of course, things did not happen this way twenty-five or thirty years ago. I think that today’s mores are such that even if a political figure tried to intervene on the content of AFP, he could not do so for a very long time. The whistle would immediately be blown on this anomaly. I myself, in three years, have only witnessed one serious intervention by political powers. It was at the time of the Habache affair.”
Henri Pigeat shares this point of view. “Experience allows me to say that the AFP machine is too cumbersome and complex for easy manipulation by any power, whether economic, political or social.”

Moisy adds that even international observers no longer question AFP’s independence. “Today, you could interrogate information professionals such as political officers — whether they are Scandinavian, British, German, Japanese or American — the objectivity, independence and credibility of the AFP can no longer be disputed.”
On the other hand, Pigeat adds: “At no time, was there a considered analysis in France of the situation of AFP."
Specialist Michael Palmer believes that the reputation of AFP has been tarnished by the French themselves.
In times of crisis, government politicians examined the «AFP file» as an exercise in crisis-management, rather than with a considered understanding of AFP’s complex national and international operations and standing. Franco-French considerations regrettably distort the visions of government politicians — which does not help the international reputation of AFP — and undoes the painstakingly acquired reputation for credibility.”
The facts support Palmer’s affirmation.
In February 1996, AFP was once again struck by a major crisis related to its ambiguous status : the French Prime Minister Alain Juppé, and other representative members of the State on the executive board of the agency refused to re-elect Lionel Fleury as president, despite the favorable vote of the eight voting members representing the French media. Prime Minister Juppé accused Fleury of letting the AFP “drift off course” when covering the wave of public sector strikes in France in December 1995 and also of improper conduct during the scandal concerning his subsidised apartment in the heart of Paris while he was assistant to the mayor. For almost a week, the agency was paralysed by the State’s inappropriate intervention and its international credibility was deeply shaken. The government made a value judgment on the quality of AFP’s coverage pretexting that the agency had gone astray by covering stories that were detrimental to the international credibility of France and that were embarrassing to the French government.
Lionel Fleury was dismissed and Jean Miot, president of the Fédération nationale de la presse française and CEO of Groupe Hersant, was elected CEO of the Agence France-Presse on February 3, 1996 after three ballots. Miot, aged 56, made his candidacy public after announcing his resignation from the agency’s executive board. Lionel Fleury, whose mandate as CEO of the AFP ended on January 31 was a candidate to his own succession as of the first ballot. Interviewed on the eight o’clock news bulletin of France 2 on February 2, Fleury declared that he actually had very little influence “on the agency’s copy” and that the government had been deluded if it believed otherwise.
In order to restore the agency’s credibility, Jean Miot, the new president, tried to change AFP’s 1957 status to make it more efficient, to find partners so as to develop the agency’s presence outside of France, to boost its information technology plan, to make up for lost time in the multimedia sector and to recreate a healthy climate within the agency. This constitutes quite a challenge for AFP’s three-year plan (1998-2001).
"The 1957 statute, for Jean Miot as for his possible successors, makes the chairman's seat a paralytic's chair," wrote La Tribune on July 6, 1998. "However, chaning it implies breaking many taboos," it added.
The Society of Journalists, which represents 180 of the agency's 1,200 journalists, feared AFP would follow the path of UPI.
The French government announced in the fall of 1997 it would review the status of AFP. It gave financial experts a mandate to review the company's future and structure.
Le Monde newspaper said that the audit points to "the lack of commercial policy, mistakes in the acquisitions of certain subsidiaries, centralised organisation of the business, the absence of management control or even the current management's over-blind strategy."
The audit underlined for the first time Agence France-Presse's structural incoherence, a neither a real public service nor a commercial company. It confronted what Le Monde called a taboo by commenting that "nothing in AFP's statutes prevents it from earning advertising revenue."
The audit blamed AFP's whole management team, not just chairman Jean Miot, who said there was not much in the auditor's report that the agency's managers did not know already. "It is a critical view of the business which shows up both its weaknesses and the accumulated failings of past years," wrote Le Monde.
Trade unions also blamed AFP for failing to buy Worldwide Television News (WTN), Le Monde said. Force Ouvrière, which represents some journalists at the agency, complained that AFP "failed to buy WTN", which was acquired by Associated Press. AFP could not put together a bid enough with Fuji TV of Japan and the Brazilian TV network Globo, reported Le Monde.
Jean Miot presented a three-year plan on July 15. The plan followed to main thrusts: the non-media market and the need to have a medium-term strategy. Miot urged the modernising of AFP's lilliputian business structure, which consists of only 20 people, compared to about 500 for Reuters just at its London headquarters.
Most of all, Miot did not succeed in boosting the image of an agency that was weakened by two weeks of strikes in January and February 1996. “These few days have been detrimental to the image of a major and independent agency and not to a State agency as the government would have everyone believe.”
He was forced to resign in late 1998, after the company's board refuses to renew his mandate. Eric Hiuly, a technocrat, was named to replace him and he proposed in September 1999 a full reorganization of AFP, including an involvement of the private sector that could lead to a revision of the company's statutes or to the creation of a new multimedia unit. That led to a one-day strike by French staffers in late September 1999 as employees feared the possible privatization of the firm. As far as analysts are concerned, privatization might be the last option available for the French agency.

4.2.5 Weak Internal Market in France
One of the characteristics of l’Agence France-Presse is that it is simultaneously a national and international news agency. The customer base of the agency in France is limited, not to say frail. This is one of the disadvantages with which it must deal and which has fuelled the crisis it has been facing since the late 1970s.
A comparison with Associated Press can serve as an illustration. AP is also both a national press agency (United States) and an international agency. It serves one of the largest internal markets in the world : 1,600 daily newspapers with a total print-run of 62,500,000 copies every day; 9,200 radio stations and 250 television stations. Out of this number, AP serves 1,550 newspapers and 6,000 radio and television stations.
In France, AFP only serves 100 radio stations, 70 newspapers and 25 broadcassting corporations. The French internal market has only 82 daily newspapers with a total print-run of 12 million copies every day. This market is made up of one public radio network with several programs, four private radio networks (two of which are national) and several free radio stations. Moreover, there are just under ten national television networks in France. The margin between both countries is enormous. The nature of the French market hinders the competitive position of the agency since a majority of its revenues, besides those coming from the State, are from national media. “The size of the national market plays a determining role in the profitability conditions of news agencies : one needs only to compare the respective sizes of American and French markets.” wrote Catherine Conso. If one takes into account the fact that 39% of AFP’s turnover in France comes from local media, it is easy to understand that, contrary to AP for example, the national market is a handicap rather than an advantage. One should also bear in mind that daily print-runs have considerably decreased. “In 1947, there were 175 provincial daily newspapers and 28 Parisian daily newspapers — 40 years later, the figures have dwindled to 70 and 12, respectively. Between 1970 and 1986, the circulation of national titles fell by 9.5 percent, those of regional titles by 8.5 percent.”
The small French market, where AFP is in competition with AP, Reuters, Bloomberg and Bridge and 200 specialised national agencies, also highlights the problem of the low rates charged by the agency on its own territory. Whereas AFP cannot charge more than US$40,000 per month to a daily with a print-run of 225,000 copies, the German agency DPA charges up to US$41,800 to its subscribers with the same print-run. In the United States, AP can charge up to US$36 000 for a daily newspaper with the same print-run. Jean Miot said in an interview in October 1997 that the AP rates were "ferocious dumping" and would force the agency to have a deficit in 1998. AFP subscribers who sit on the agency’s executive board want AFP services at the lowest possible cost while the cost of gathering the information keeps increasing more rapidly than the revenues generated from the rates it charges. Moreover, the Ministry of Economy and Finances must approve any increase in AFP’s rates. This partly explains the financial crisis of the French agency. However, AFP controls about 60% of the media market in the whole of France.
4.3 What Saved AFP
The situation at AFP has improved since the 1986 crisis. What has saved AFP are its comparative advantages :
1) AFP is a latin agency and this constitutes a strong point. It is different from Reuters, AP and UPI which are Anglo-Saxon. The coverage of Asia, Latin America and Africa is exceptional.
2) The financing by the French government has a positive effect, even though this is precisely why the agency has had a hard time penetrating English-speaking markets. AFP embodies the French factor and allows France itself to radiate internationally and, in this sense, the financial support of the French government is assured no matter what dire straits the agency may endure. In this regard, it is ironic to see that until recently former CEO Lionel Fleury considered that the future of AFP would be in English.
3) Finally, the economic diversification undertaken by AFP since the mid-1980s, as well as the development of new markets, have given a reprieve.
The fact that Agence France-Presse is the only one of the four major agencies to be French is in its favor. According to Jim Hoagland, in an article he wrote in March 1972 for the Washington Post concerning Anglo-Saxon agencies, they are often obliged to remain quiet in order to avoid retaliation from the authorities. “The most serious consequence of official susceptibility and retaliation concerns news agencies and correspondents of Reuters, Associated Press and United Press International who, under moral pressure, often keep quiet unless the information is of primordial international importance.” He estimated that this situation did not exist for AFP.
Michael Palmer also maintains that Agence France-Presse is the favorite of Southern hemisphere countries. “The AFP is preferred by some third world country State agencies over the American and British «commercial and capitalist» agencies.”
Oliver Boyd-Barrett, a British specialist from Leicester University, even says that the service of AFP is the best of the four with regards to Southern countries.
As we have seen here, the status of an independent news agency financed by the French government can be detrimental to AFP, although it is sometimes a blessing in disguise. Obviously, the financial assistance of the government leaves doubts about the independence of the agency but, more importantly, it does ensure a certain stability through the inevitable financial fluctuations. Above all, the French State wants AFP to remain a world-class news agency that can proudly compete with Associated Press and Reuters. AFP, in the eyes of French politicians, is perceived as a necessity which serves to maintain the prestige of France, of the French language and of the French culture throughout the world, especially at a time when the magnetic attraction of English is universal.
“The only global agency to maintain French as an international language for part of the world is, of course, AFP. If AFP loses more ground than it has so far, the consequences would be dire, not only to itself and the independence of the francophone press vis-a-vis its sources, but also with regards to the standing of French in the world. The cultural influence of our country abroad and its own internal cultural determination are at stake in this debate.”
One last point which should be discussed is the relatively successful diversification undertaken since 1980 at AFP. Even though it was late in coming in comparison to AP, UPI and Reuters, the economic diversification of AFP has truly saved the agency up to the present. When it began noticing that its revenues were stagnating and its media customers levelling off at the end of the 1970s, the Pigeat-led AFP decided to target the non-media market in order to increase its revenues and reduce the contribution of the State.
The 1984-1989 five-year plan and the 1991-1994 strategic development plan have had some positive results among which has been the creation of new products. First, in 1985, the AFP launched a global photo service (AFP-PHOTO) that allowed it to become a full-fledged news agency. This photo service transmits 50,000 photos per year and has been successful in terms of both finance and prestige.
AFP-PHOTO allowed the agency to give itself a priority goal : to penetrate the American market, if only partially, something that was unthinkable even fifteen years ago. The New York Times, USA Today, The Washington Post, The Los Angeles Times all subscribe to AFP-PHOTO. In Canada, The Montreal Gazette, Toronto’s Globe and Mail, Le Devoir, La Presse and Le Soleil also subscribe to this service which is in direct competition with Reuters and AP (UPI sold its photo service to Reuters in 1984). Throughout the world, hundreds of media are now photo-customers of AFP, European and Latin American media among others. This made the former president of AFP, Claude Moisy, say that “the agency is gaining ground and is penetrating markets that seemed, just a few years ago, hard to penetrate or even impervious.” AFP believes that any subscriber to the photo service is also a potential subscriber to the general news wire.
The development of foreign markets was also part of AFP’s diversification strategy aimed at preserving its status as an international agency and at capturing market shares that were formerly dominated by TASS and UPI, both of which almost completely disappeared during the 1980s.
In 1999, Agence France-Presse and its various news wires are very much in the forefront and hold a dominant position in several markets. “Its geographic coverage puts it in the lead among international agencies.” Its radio service (AFP-AUDIO), launched in 1984, currently has hundreds of subscribers in France and the rest of Europe, in Africa and in Canada.
Today, AFP’s presence is strong in Africa, in Latin America and especially in the Middle and Far East. It is number one in the French parts of Canada and is the dominant agency in France, Switzerland and Belgium. It is also quite popular in Western and Eastern Europe and in South East Asia. Its weak point is definitely its inability to penetrate the American market otherwise than with its photo service. The number of American newspapers subscribing to AFP news can be counted on the fingers of one hand. Clearly, AFP is dragging its feet in the United States. Indeed, for a long time now, American media have financially supported AP and UPI. The crisis at UPI and the almost complete dismemberment which occurred between 1980 and 1986 has opened a door to AP without, however, making it easier for other agencies to fill the void.
“American media have reached the conclusion that they do not need two news agencies. This obviously curtails the ambitions of other non-American agencies on the American market. It is not clear whether AFP can hope to find any financial future there. I, personally, have never believed it would and I still don’t” declared former CEO Claude Moisy in January 1993. Still, AFP cannot completely ignore the American market, which is why the agency cut its ties with Associated Press, as Reuters did at the end of the 1960s. Until 1995, AP supplied American news to AFP. Since this annual contract, worth one million US dollars, was not renewed, AFP is now on its own in the USA with the one million dollars to invest in its own journalists.
AFP has made a major breakthrough in England and in other anglophone countries in the past recent years. The reinforcement of the English language news service, accomplished under the direction of Jean-Louis Guillaud, Claude Moisy and Lionel Fleury, is remarkable. In 1986, AFP decided to “downsize” part of the Paris headquarters and to strengthen the Hong Kong and Washington offices in order to better serve its growing anglophone markets. AFP signed contracts with two influent British newspapers, The Independent (1991) and The Telegraph (1992), both of which cancelled their subscription to Reuters (Both newspapers have since taken Reuters back). The AFP English service is also gaining subscribers in Vietnam, Taiwan, Malaysia, Singapore and Thailand, “countries where the press is expanding, along with our revenues.” One must not forget that CNN and The International Herald Tribune both subscribe to the Agence France-Presse news wire. In an interview aired on TV5 on May 21, 1994, former CEO Lionel Fleury even declared that 33% of the global revenues of the agency “regarding text” come from Anglo-Saxon media.
The collapse of the Berlin Wall in 1989, the fall of communism in Eastern Europe (1989-1991) and the disintegration of the USSR in 1991 opened up new economic perspectives for the agency. The decline of the TASS news agency, which lost its monopoly everywhere in the USSR and in countries of the Eastern block makes it possible for AFP to distribute its services directly via satellite in Russia, in the Republics of the Commonwealth of Independent States (CIS) and in Eastern Europe. However, these markets are somewhat unstable and the agency will have to be make long term efforts on this front.
There are other examples of the diversification that has allowed AFP to cease being a “one-product” agency. Its financial and stock exchange news service (AFX NEWS) is not the least of them. It was launched in 1991 in partnership with the British firm Extel and the Financial Times. This service employs 50 journalists throughout the world and costs 50 million francs. Although it has difficulty competing with Reuters’ equivalent service, it is increasingly popular in Asia. However, whereas AFP has three financial journalists in Washington, Reuters has 200.

Another example of diversification not to be forgotten is the renowned sports service, AFP-SPORTS, which was launched in 1982. AFP offers sports information in English 24 hours a day on the Internet : World Sports Report. Also very popular is the computer graphics service (AFP-INFOGRAPHIE) which has made important breakthroughs in France, Canada, Spain and Latin America. There is also AGORA, the AFP databanks. AFP-PRO and AFP-DIRECT allow ordinary people to refer to AFP dispatches through their computers and Minitel terminals. Along with the Globe OnLine company, AFP is also present on the Internet where it offers its world information classified according to country (www.afp.com) for two francs per story. Finally, the 1990 «satellisation» of the entire AFP information network has meant the death of the famous «cables».
More than 150 years after its foundation, Agence France-Presse has managed to survive the most serious crisis of its history. It has survived, and has avoided bankruptcy. It underwent a financial crisis, a credibility crisis, a crisis which deeply affected the morale of the agency. In the end, AFP has managed to stay in the select club of the three world-class news agencies, but its future remains fragile. It is at the crossroads.
With about 15% of its global revenues stemming from the «non-media» sector, AFP must further its economic diversification and find new market niches in order to reduce its dependency on the French government. It must become a true «business enterprise». As for its geographic coverage and number of correspondents, AFP claims to be the largest agency in the world in 1999, but in reality, its sales puts it in third place. It has fewer employees than Reuters or AP, broadcasts less information than AP and has fewer permanent and freelance journalists than Reuters.
AFP must closely follow the evolution of AP and Reuters and be very aware of new technological developments in order to avoid being distanced or outdated. It must also steer clear of the problem of computer piracy. The launching of France-Presse Online, a daily AFP information page on the World Wide Web (www.afp.com) was quite promising but it failed in 1999.
AFP must keep on with its international expansion. A breakthrough in the field of television broadcasting would allow it to compete with Reuters Television and AP Television, who bought WTN in 1998. On November 15, 1996, AFP signed a cooperation agreement with the image agency WTN but the picture agency has been absorbed by AP. AFP news can however be seen on Bloomberg TV now. That is a start.
The former president, Jean Miot wanted to put forth on-line services and to “adapt the agency to the new world of communications and to the digital revolution”. Sadly, he failed.
In order to be better equipped to face the competition, AFP has started to pool its resources with Radio France International, Canal France International and TV5. The reason is simple : the increasing cost of covering international events combined with the necessity of embarking on the information superhighway leave no choice but to take advantage of all available synergies.
Hopefully, AFP will survive. Competition in the international news environment is too vital for democracy.

****

CHAPTER 5

Chapter V
UPI : A Dead Dinosaur
“One can wonder if UPI is an agency like others and even if UPI is still a global news agency or if its example isn’t the beginning of the end for the small group that has so far dominated the international commerce of information.” Henri Pigeat, Le nouveau désordre mondial de l’information, 1987, p. 20

5.1 UPI : A Nightmare
5.1.1 Some Facts About UPI
United Press International is an American news agency founded in 1907 by Edward Willis Scripps under the name : United Press. It has a private corporation status. Scripps wanted above all to abolish the monopoly that Associated Press had on the American daily newspaper market since 1848. E. W. Scripps was also the owner of Scripps Howard, a family network of American newspapers.
The Second World War signified the rise of the United States in the international arena. This directly promoted the overseas development of the agency. Starting in 1945, UPI underwent an astounding growth in the United States, Canada, Latin America and Asia. In 1958, United Press merged with International News Service, an American agency owned by William Randolph Hearst, to form United Press International (UPI). It was definitely from that moment that UPI could lay claim to an international network of correspondents and transmissions. It was a watershed in the history of the agency. In 1958, UPI had 6,000 employees and 5,000 clients around the world. Unfortunately, its evolution was not to continue in this positive vein. As early as the mid-1960s, UPI began being besieged by financial problems. Nonetheless, it would receive nine Pulitzer prizes rewarding the excellent quality of its stories and pictures.
The heirs of E. W. Scripps, known as the Scripps Howard company, sold the agency in 1982 after helplessly witnessing both the increasing financial losses of UPI and the loss of American subscriptions.
And the situation kept on worsening : UPI changed hands four times between 1982 and 1992 and management has changed five times since 1993.
Until recently, UPI was one of the four world-class news agencies. The financial troubles it has experienced since the late 1970s have been such that they have scared away the majority of its subscribers. Consequently, the owners of UPI began dismantling its services one by one, especially following its requests to be placed under the protection of article 11 of the American Bankruptcy Act, in 1985 and 1992.
UPI headquarters are located in Washington. Until 1984, New York had been the heart of the agency.
UPI claims to have “representatives” in over 75 countries. Its news service is distributed “to thousands of media throughout the world”. Although it claimed to have 2,500 subscribers in August 1991, today it would be more accurate to say that it has about 500, given the fact that The Associated Press, its former arch-rival, bought all of its radio and television assets in August 1999. UPI operates two news wires : one for American media and one for foreign media. Until the early 1980s, it was considered as both an international and a national news agency for the United States.
UPI has approximately 400 employees. It still has 33 news desks in the United States and 47 abroad.
Its international service is based in Washington D.C. and it has international desks in Toronto, London, Hong Kong and Buenos Aires. In the United States, an organizational restructuring was announced on July 15, 1993, which transferred the coordination of the service to the six regional centres : Washington, Dallas, Miami, Los Angeles, Chicago and New York.
UPI offers an English service for the United States and the rest of the world. However, Chile and Puerto Rico have a different service than the rest of Latin America which receives services entirely in Spanish while a Portuguese service is offered in Brazil. Moreover, since June 1992 the new owner, the Saudi Middle East Broadcasting Service television network, has produced an Arabic service for UPI customers in Europe, North Africa and the Middle East.
The following services are offered by UPI :
- a general 24-hour a day news service in English, Spanish, Portuguese, and Arabic (UPI NEWS, 1907)
- a digital press photo service (UPI PHOTO)
- a telematic service which offers daily and weekly newspapers from around the world computer access to information on sports, financial, U.S. State and national as well as international news (UPI STORY RETRIEVAL SERVICE)
- UPI News You Can Use : specialized news on various subjects available from on-line servers

UPI is currently developing a series of specialized online services intended mainly for industries and private businesses. Since 1994, it has offered news services in fields where demand is high and supply is low : energy, health care, the Middle East, economic news on Pacific Rim countries, travel and tourism. UPI launched other "target news" services and says it has plans to reinforce its wire service.
Officially, UPI customers are newspapers, national news agencies, educational institutions, government agencies, businesses and online services both American and international. In reality, however, when excluding Latin America where the agency is still strong and where daily newspapers are “16% American” , the presence of UPI throughout the world is, so to speak, inexistent, with the possible exception of Japan where its most important global customer, the Kyodo agency, still has a contract with it.
5.1.2 The Crisis at UPI
UPI implemented a reorganization plan in June 1993 in order to downsize the agency. Whereas for seven decades United Press International claimed its fair share of worldwide competition alongside AP, Reuters and AFP, today it is reduced to playing the role of a second-class national news agency with a few foreign subscribers.
What caused such a crisis at the formerly world-class wire service? How did the crisis that struck UPI affect its international standing? The information obtained concerning the UPI agency only allows to hypothesize that the main factors which instigated this crisis are the following :
a) Causes Particular to UPI
1) major financial imbalance
2) the absurd management of certain agency owners

b) General Causes
3) the difficult situation of the American media market

For a long time, United Press International was America’s pride and joy, but it began experiencing financial problems in the 1960s. However, these problems did not give sufficient cause to create doubts about the future of the agency, considered to be the second most powerful. At the time, UPI had a good advance over Reuters and AFP.
The real financial crisis of UPI began in the 1980s. In his book The International News Services, Jonathan Fenby notes that the agency was losing between $ 1 and 2 million US a month as early as 1983, following the sale of UPI in June of 1982 by the Scripps family to two unknown businessmen from Nashville, Tennessee. Back then, the agency had revenues of $100 million US. As a profit-making private corporation, UPI could not have its losses absorbed by a cooperative or by the State as is the case for AP and AFP. In 1990, UPI lost $10.5 million US.
Although it is a private corporation, UPI does make its financial results public, and it is widely known that the financial difficulties were such that the agency had to claim the protection of the Bankruptcy Act twice since the beginning of the 1980s, and for very good reasons. Between 1960 and 1990, UPI lost nearly $ 135 million US in total.
United Press International (UPI):
Here are the major known financial milestones of the last fifteen years :
1999 UPI sells all its broacast assets to AP
1994 Second phase of the reorganization plan ($6 million US invested, 200 layoffs)
1993 Reorganization plan for UPI ($6 million invested)
1992 Bankruptcy sale of UPI to M.E.B.C. ($3.9 million)
1988 Repurchase of UPI by World News Worldwide Inc.
1987 $18 million deficit
1986 Mario Vasquez Rana, a Mexican, buys UPI ($40 million)
1985 UPI present a bankruptcy statement; loses a total of $17 million
1984 $11.1 million deficit : loss of $104 million in revenues
1983 $14.8 million deficit : UPI loses $1 million per month
1982 $6 million deficit in 7 months
1981 $10 million deficit
1980 $12.1 million deficit
1979 $7 million deficit
1978 $5.3 million deficit
1977 $3.5 million deficit
1976 $3.5 million deficit

The shakeout at UPI is a fact. Its revenues were close to $100 million in 1980 ($93.9 million exactly). It was sold for $3.9 million in 1992. Its assets are worth $18.2 million and it has over US$60 million in accumulated debt owed to numerous creditors. It is common knowledge that $31 million over 18 months would be required to get UPI back on track, with no guarantee of turning out a profit. It was a pathetic situation. By comparison, AFP, AP and Reuters had revenues comparable to that of UPI in 1980 (US$ 70 million, 140 million, and 150 million respectively). Today, AFP has a revenue of US$235 million, AP of US$418 million and Reuters of US$5.1 billion (including financial services).
As in the case of any such failure, the UPI experience has been extremely painful. It went from 1,715 customers at the end of World War II to nearly 5,800 in 1958, and then to 7,500 subscribers and 146 offices in the United States and 78 elsewhere in the world in 1981. Some 1,737 people worked for UPI. During the 1980s, UPI was forced to close two thirds of its offices.
In 1999, UPI had just over 500 subscribers, 30 offices in the United States and 45 abroad. It had 500 employees in 1993, but the restructuring plan forced the laying-off of 200 employees in 1994, which meant approximately 300 fewer jobs. The figures speak for themselves : the crisis at UPI resulted in the loss of 1,700 employees, 150 offices, 6,500 subscribers and nearly US$75 million in a little over 15 years. Today, UPI supplies less than 200 daily newspapers in the USA and has almost no customers in Canada, where it used to run its own news agency: United Press Canada.
In October 1993, Steve Geimann, the former executive director of the corporation, confided that a combination of factors was responsible for the fall of UPI.
“The increasing costs to maintain a global information company while media customers face tighter budgets and other financial constraints combined to cause a shortfall in UPI’s cashflow during the 1960s and 1970s. In the early 1980s, UPI longtime owner, Scripps-Howard, sold the company to other investors. UPI has had five owners since 1982. As clients cancelled the service for budgetary reasons, UPI’s cash flow was reduced. This development forced previous owners and managers to take drastic cost cutting steps to keep the company alive. Without such draconian steps the company would not be in business today.”
This combination of factors is at the very core of the crisis at UPI.
The budgetary problems of UPI have suscitated second thoughts on the very concept of “the four sisters” and put emphasis on the fragility of the agencies themselves. Henri Pigeat admitted that Agence France-Presse did negotiate to buy out UPI in the mid-1980s . Reuters also made buy out proposals without success.
It must also be noted that the financial problems of UPI are not recent ones. At the end of 1984, UPI declared its first trimestrial profit in 22 years.
However, observers have come to somewhat accusatory conclusions : UPI was responsible for its own financial ruin.
“Its financial weakness is due in part to the fact that it had not foreseen and did not adapt to the fundamental changes that occurred in the information sector. As a wholesale information supplier, UPI remained inactive whilst newspapers, the main retailers of information, and the main revenue source for the agency, were diminishing in number and were evolving technologically.”
We will see in the coming pages that UPI did try, although unsuccessfully, to diversify.
5.2 Absurd Management at UPI
“One day there will be no Associated Press. We will eliminate them.”
- Bill Geissler, owner of UPI, 1982

The moribund state of UPI in 1995 can also be explained by its failure to diversify and by the last minute strategic policy adjustments of the early 1980s under the leadership of Douglas Ruhe and Bill Geissler.
UPI launched its photo service in the beginning of the 1940s and its radio service in 1958. It was one of the first to computerize its news room and to send its news directly to customers via computer. In 1979, it even invested $10.5 million in a computer centre in Dallas.
During the 1980s, it did not properly respond to the crucial technological changes required by the American and international market. Mark Alleyne and Janet Wagner give the example of the failure of a project for the development of the photo service which was, until then, considered to be the best in the world.
“Adding to the poor financial performance of the agency have been some significant failures at investing in new technologies. One example is the «Pyxys» project. UPI executives touted the system of digital image transmission as «the most revolutionary technology ever developed for the news media”, but a few months after it was set up, the Pyxys was declared worthless for creating news graphics and the entire system was abandoned.”
In their imposing tome Down the Wire : UPI’s Fight for Survival, Gregory Gordon and Ronald Cohen (both former journalists at the agency) abundantly documented the successive failures at UPI. “The book was not authorized by UPI and does not reflect the comments of the managers at the time or presently” , declared Steve Geimann, a former executive director of the agency. Cohen and Gordon maintain that the agency, even though it had clearly realized the full impact that new technologies and diversification could have on its future, did not react in a farsighted manner in its diversification efforts, especially under the leadership of Ruhe and Geissler (1982-1985) and of Mario Vasquez-Rana (1985-1988).
Ruhe and Geissler apparently had a gift for wasting the company’s money. In 1984, they launched a Spanish language radio service for the United States. This failed adventure would end up costing two million US dollars. The same year, “the installation of parabolic antennas for customers was so badly supervised that in some States, the ground wires inadvertently remained operational, forcing UPI to pay for two parallel distribution systems.” There are dozens of such examples, such as the fiasco of the transferal of UPI’s headquarters. Ruhe and Geissler decided that the UPI administration offices, based in New York since 1907, were to be moved to Nashville, Tennessee. Moreover, they decided that the operation centre would move to the Washington downtown area. The real estate promoter went bankrupt and, at the last minute, UPI had to find a building across the street from the sex-shop district.
“But the problems don’t stop there. Expensive radio studios were built, demolished and rebuilt because the soundproofing had not been installed properly. Dozens of New York employees were told to give up their apartments and sell their houses in planning for the move. When this move was postponed, UPI had to pay hundreds of thousands of dollars to lodge its personnel in hotels.”
All this cost UPI over a million dollars. And to think the move had been decided in order to make the agency more efficient and to save money…
In order to diversify, UPI created over a dozen affiliates for potential customers. For example, it launched UPI Focus, UPI Ask, UPI Media and UPI Real Estate. Obviously, no profits resulted. The same was true of the alliance of UPI with the American corporation Fintext. The agency lost US$1.8 million. Fintext was supposed to supply a stock exchange news service for the summer of 1984. All Fintext produced was “questionable payments and a series of loans.”
Not very diversified, the sales figures of UPI stemming from financial informations was only 8% while it was 15% for AP and 94.5% for Reuters.
5.2.1 Doubtful Management
“In less than three years, UPI ended up facing a bankruptcy judge, with 45 million dollars in liabilities, leaving behind Douglas Ruhe and Bill Geissler a paralyzed agency and numerous questions on the way all this could have happened.”
Katharine Seelye, Philadelphia Inquirer
The lack of soundness in the agency’s management had disastrous consequences with regards to its diversification. Ruhe (37) and Geissler (35), newcomers to the world of business, had a rather troubling characteristic : “things rarely happened the way they were supposed to. They lacked a sense of organization, priorities and urgency.”
In fact, according to dozens of interviews conducted in the mid-1980s by Katharine Seelye and Lawrence Roberts, the story of UPI is first and foremost the story of its deluded owners.
“It is a story of artlessness and false optimism which ended as soon as an immediate need for cash was felt; the story of a corporation which poured million in doubtful businesses that have yet to produce dividends and which found money by not declaring to taxation authorities the taxes withheld at the source from its employees’ salaries; the story of an ambitious president who, after winning over the owners and giving himself a large pay increase asked his employees to accept a salary freeze. It is the story of men whose way of working has diminished the efficiency of a seventy-five year old organization.”
Not a man of many words, Douglas Ruhe declared, in 1982, during his first public address before an assembly of American newspapers owners, that UPI had no advantage over AP. This was not a very good start…
Despite the exhilaration of 1982 and 1983, a time when UPI was hiring new journalists, opening over twenty offices and increasing the value of its contracts, the owners were acting irresponsibly and without the knowledge of their customers and employees. In 1982, despite the alarming financial situation, Geissler approved a 20% raise in journalist salaries over a period of three years. Quite an inconsistent gesture considering the fact that the owners had just received a report commissioned to International Management Consultants which recommended “UPI to immediately layoff 400 employees among the writing staff in order to save money.” The recommendations of the firm were rejected, “an additional indication of the absence of a realistic strategy to put UPI back on track.”
In the middle of 1983, Rob Small and Cordell Overgaard (two minority shareholders) met with Ruhe and Geissler and told them about the disastrous financial situation at UPI : the company needed between 6 and 15 million dollars to be bailed out. “Doug Ruhe didn’t agree. He did not listen to me. He just shook his head. We can’t say there was a dialogue” , declares Rob Small. He resigned in the days following, along with Overgaard. A few days later, UPI signed a strategic alliance with the Spanish news agency EFE. But it was a bit late.
1984 was also catastrophic in terms of managing the company’s finances. Here are some examples :
- UPI is no longer able to pay for the delivery of its newspapers to its various offices;
- the telephones of some offices are cut-off because of unpaid bills;
- the travel expenses of journalists are no longer reimbursed;
- unpaid freelance journalists join the ranks of AP, AFP and Reuters;
- the American Express credit cards of executives and office directors are cancelled;
- foreign subscribers no longer receive photographic paper;
- the White House refuses to let UPI journalists accompany Ronald Reagan to Europe unless
the agency pays the travel and lodging expenses upfront and cash;
- UPI pays two economists $350 000 to write columns;
- Ruhe and Geissler’s Focus company drains between $ 150 000 and 200 000 per month.

While still in 1984, UPI realized that it did not have enough money to cover the next employee payroll and to reimburse its principal creditor, Foothill Capital Corporation. In a panic, UPI sold its world renowned photo service to Reuters. It was valued at twenty million dollars and sold for the sum of $5.75 million! In the transaction, it also lost its photographic library which contained nearly 11.5 million photographs, some of them dating to before the American Civil War. “In hindsight, this operation is considered to be one of the most absurd of all the transactions concluded while Ruhe and Geissler were at the helm. The photos represented the sector where the aggressive and instinctual style of UPI seemed to work the best.”
For others, this transaction was a purely irresponsible gesture which irredeemably undermined the vitality and value of UPI. “This is the most stupid operation ever concluded”, declared Mike Hughes, former director and vice-president of the UPI international service. “We gave them a gift on a silver platter. I would say that, reasonably, we gave them five year advance and twenty million dollars.”
The saga was far from over. Ruhe and Geissler began selling UPI piece by piece, without the knowledge of the rest of the corporation. They abandoned the 50% UPI stake in UNICOM, a global economic news service in partnership with Knight-Ridder; they let go of their interests (33%) in the powerful global image broadcaster UPITN (today called WTN) and sold them to ABC News. They also let go of “photo archives, databases, and of their rights, titles and interests in their electronic transmission system which supplied information to televisions and to personal computers by cable.” A veritable garage sale! “UPI was sinking into debt, swamped by its staggering communication burden, by the costs of the moves, and by costly joint-venture deals.” In early 1985, United Press Canada (a joint-venture between UPI and several Canadian newspapers) closed down. Fifty journalists were laid-off. “It was a piece of news ladened with distress”.”
This saga reached its peak when a bankruptcy statement was presented by UPI in April 1985. Also in 1985, UPI lost a lot of credibility when it reported that the Tchernobyl explosion in Ukraine had killed tens of thousands of people. Other than that, UPI had liabilities of $45 million, major embezzlements by Ruhe and Geissler were made public : employee health insurance and union premiums, money from foreign customers and a transfer of over 3 million dollars toward their own management firm which supervised the operations of their television stations (Focus Inc.) and toward friends acting as consultants. Ruhe and Geissler have always denied these “allegations”. They were “brought down” by a “coup d’etat” a few months later by Luis Nogales, nominated general director during the summer of 1984.
The inheritance of Ruhe and Geissler shows to what extent their management was dubious.
“There was no single reason for UPI’s plunge from robust competitor to cowering dwarf. But if the wire service indeed had any chances against these outside forces, they were squandered repeatedly by owners and managers either inept, ill-suited or unwilling to rise to the challenge. Scripps and UPI’s own top managers has been ponderously unresponsive to the opportunities of the information age, and then Scripps committed an even greater transgression : dumping the news agency on two entrepreneurs deficient in skills, temperament, news industry background, and business experience.”
Things do not get much better under Nogales. He laid-off 80 employees one day before UPI went bankrupt; he closed 11 offices; the agency was losing 20 subscribers per week and he voted himself a 90% raise. The anger of the employees was extreme. Nogales fought the union and asked a court to cancel the contract which bound the agency to the union. “The layoffs left scores of veteran UPI employees hunting for new jobs at just the time the industry was retrenching because of stagnant readership, plummeting advertising revenues, and soaring newsprint costs.”
Nogales would step down later in 1986. It is at that point that the agency was bought by a Mexican businessman, Mario Vasquez Rana. American newspapers were shocked : the global news agency was going to be controlled by a Third World news group. The New York Times and The Wall Street Journal cancelled their subscriptions and other influential daily newspapers expressed the intention of doing the same.
In 1987, under Rana’s direction, UPI decided to broadcast American government press releases. For a $2.5 million contract, UPI would distribute Washington’s official declarations abroad, in order to finance its own operations. The reputation of the agency was badly tarnished. Its credibility was questioned even further when American newspapers revealed the details of what had come to be known as “the UPI scandal”. The foreign press reported on this “affair” and the agency was accused of being “biased” when covering events, and of being the privileged messenger of the American government. This scandal deserves a particular mention, especially after what the American media and journalists had to say about AFP “dependency” on the French State!
The frustration of Vasquez Rana with regards to the financial distress of the agency and its credibility problems obliged him to step down in 1988. “In less than two years, Vasquez’s UPI adventure had cost him upwards of $70 million.” UPI was re-purchased for approximately US$55 Million, this time by American interests. WNW Group Inc., an affiliate of Infotechnology Inc., wanted to use UPI in a synergistic manner with some of its other affiliates, FNN (Financial News Network) and Data Broadcasting Corporation. The WNW management failure was confirmed in the fall of 1991 when the agency again went before the American bankruptcy court with liabilities of $60 million US.
In the spring of 1992, the televangelist Pat Robertson made a formal buyout proposal to purchase UPI (the sale would be authorized by the court). The media still subscribing to UPI, the employees, columnists and national news agencies (with Kyodo at the top of the list) announced that they were opposed to the agency becoming “an army of fundamentalist Christians.” The journalistic philosophy of Robertson and his team inspired much apprehension.
The agreement between UPI, the bankruptcy court and Pat Robertson crumbled and the outcome was that Saudi Arabia’s Middle East Broadcasting Centre (MEBC) purchased the agency early in the summer of 1992. There are still concerns about the fact that the agency is Arab-owned.
The management has undoubtedly improved since the departure of Ruhe and Geissler in 1985, but the successive sales of the agency to various economic interests (1982, 1986, 1987, and 1992), the purchase attempt by Reuters in 1981, combined with the mismanagement of Ruhe and Geissler had created a feeling of instability and unrest in both customers and employees. The latter have had to live with the unfortunate experience of the UPI confidence gap.
Repeated layoffs of executives, journalists, chief editors and shareholders from UPI have created an unavoidable sentiment of crisis within the agency itself. Mistrust, continuous changes in editorial priorities and the bad relationship between the heads of the agency and its trade union did nothing to help managing the company. The off-hand manner in which UPI cancelled raises, laid people off, asked for concessions, and conducted itself within the framework of work relations was not always exemplary. UPI employees have been and still are quite demoralized by all this.
5.2.2 The Difficult American Market
“The absurd management and the wanderings of UPI during the last four years have supplied the editors of American newspapers with a good excuse to think that they can very well manage without one of these two sources.”
Médiaspouvoirs, December 1996
With regards to news agencies, American newspapers have always been more loyal to AP than to UPI. In fact, throughout its history, UPI has never managed to surpass its rival AP, even though the style of United Press International dispatches has a reputation for being more colourful and less dull.
The phenomenon of diminishing competition between newspapers reigns in the American market of the 1980s and 1990s. This phenomenon is linked to the recession and to the downsizing and concentrating trend in news corporations. One hundred newspapers disappeared in the United States between 1980 and 1992. “As television proved it could deliver hot-breaking news faster and stole away advertising dollars. At the same time, newspapers continued to fold or merge in competitive markets.”
Michael Palmer, a news agency specialist, also claims that the American media market has been undergoing upheavals since 1980. “A decline in the number of dailies, a loss of audience for the three main television networks (ABC, CBS, NBC) a rise of cable networks, especially CNN; the creation of a new television network (Fox). In such a crisis context, the American market, even though it is still one the most important in the world, does not allow for the survival of two information agencies with performing technologies.”
Steve Geimann, former executive director at UPI, also maintains that the incessant increase of production costs for American daily newspapers discourages the customers of the agencies in the United States. “The increasing costs to produce newspapers has killed off a number of premier publications and could threaten other well-known title publications in the West.”
Therefore, the decline of UPI, which began in the 1970s, stems from the fact that there is virtually no more competition between the newspapers of many American cities, especially because of the concentration of news corporations and of the development of press-groups (which in 1989 owned 9 out of 10 newspapers in the USA). “No longer worrying about being scooped, it became easy for papers in monopoly markets to comfortably drop one of the major wire services, almost always UPI.”

Meanwhile, The Los Angeles Times, The Chicago Tribune, Knight-Ridder, Scripps-Howard and The Washington Post were creating a credible and less costly news network. UPI started being replaced by other news services. One needs only remember the fact that The New York Times News Service (NYTNS) went from 50 to 500 subscribers between 1960 and 1980. This clearly illustrates the prevailing situation in the United States : these supplemental news services went from 710 customers in 1975 to 1134 in 1985 and their contracts with newspapers increased by 197% between 1960 and 1985.
The media subscribing to UPI, fully aware of the crisis, cancelled their subscriptions en masse and went over to AP and various other supplemental news wires. For example, the agency lost 287 subscriptions in 1981. It lost The New York Times in 1985, which is perceived as a catastrophe. Its subscriptions shrank, particularly during the first quarter of 1985. “AP took advantage of UPI’s problems. Indeed, it recorded an unusual increase of at least fifty newspapers in the first three months of 1985.” AP capitalized on the disarray of the sales department of its competitor. UPI lost 20 subscribers a week for the rest of 1985 and only managed to keep 30% of its contracts.
The problems of UPI, and other previously mentioned reasons, brought American media to question the usefulness of two national news agencies. For UPI in the United States the figures are devastating.
UPI Subscriptions AP Subscriptions
1960 52% (917) 68% (1186)
1970 49% (860) 67% (1176)
1980 46% (790) 71% (1227)
1985 37% (615) 73% (1230)
1990 16% (256) 7% (1413)
1994 11% (190) 94% (1549)
Source : SCHARZLOSE, Richard, The AP and UPI, 1992, p. 148

UPI had to fight with AP. Since AP was a cooperative, it was always able to claim higher rates, to invest more in its manpower and to refuse cooperation with UPI. The price war fought by AP was fatal to United Press International.

“AP reaped so much more revenue from newspapers it could engage in never-ending price wars to woo away UPI broadcast clients. UPI, once dominant in the audio network area it had pioneered in 1952, saw its clientele plunge from 1,000 to 350; now it was AP that had 1,000 audio customers.”
UPI has always been obsessed by beating its rival AP to the finish line, but it has forgotten that the race was impossible to win. With regards to rates, for example, UPI was never able to require payments equivalent to those AP charged its clients.
The nature of the crisis at United Press International was, above all, a management crisis, but it was also technical and economic:
1) The technological innovations required massive expenditures for computers, terminals, and satellite networks, with the consequence of creating a major financial imbalance and a harder line in customer relations;
2) The aggressive coverage of news by broadcasters (radio and television) and by cable news networks such as CNN have detracted the attention of newspapers from the agency and forced it to reevaluate the attention it gives to breaking news;
3) The decline in the number of American daily newspapers and the corresponding loss of revenue, central to UPI, has forced it to seek new revenue sources.

Financial losses have seriously affected the agency’s standing vis-a-vis its workforce, its coverage and its available resources. “The wire service had fallen victim not only to its own internal failures but also to radical industry transformations over which it had far less control.” The market rules could not be ignored by UPI. Its “international” profile almost disappeared with the exception of Latin America and Japan. The 1993 restructuring plan illustrates that UPI is in an unfortunate position and that sooner or later, it will have to stop its operations. The fall of UPI truly upsets the balance of the global news market. The structural difference between the two American agencies was a disadvantage to UPI, and it is paying the price. UPI can no longer count on traditions and monopolies established decades ago by American newspapers in order to survive. Besides, there are only 1,533 American newspapers left.

*****
CHAPTER 6

Chapter VI
Reuters : Exception Proves the Rule
“With due allowance Reuters could be a little like the IBM of financial and economic information” Henri Pigeat, former AFP president, Le nouveau désordre mondial de l’information, 1987

6.1 The Reuters Case
Reuters was founded in London in 1851 by Paul Julius Reuter, a German-born British businessman. Reuters was originally a telegraph company which dispatched financial news to businesses in London and elsewhere.
The company changed names and status several times :
1865: Reuter’s Telegram Company (a listed open company)
1916: Reuters Limited (private corporation)
1941: Reuters Trust (owned by PA, NPA, publishers’ association)
1984: Reuters Holdings Plc (listed private corporation)
1998: Reuters Group Plc

In 1859, following the agreement with Havas and Wolff which leads to the creation of the European news agency cartel, Reuters “provided the rest of the world with londonian financial information.” In 1865, it was the first news agency to report the death of U.S. president Abraham Lincoln. A few years later, in 1868, the British newspapers created a cooperative-style national news agency : The Press Association (PA). PA gathered national news and offered it to Reuters in exchange for its financial and foreign news service.
Because of both British imperialism and powerful status of Europe at the close of the XIXth century, London (the headquarters of the agency) “dominates by far all other agencies because of the strategic position of Great-Britain throughout the world.” London was the financial capital of the world and Paul Julius Reuter’s leitmotif was “follow the cable!”, which meant to continue to extend the world wide communications network of the agency. The economic power of London and of England were favourable to Reuters and made it indispensable :
- AP whose news was sorted and distributed in London by Reuters
- Wolff and Havas who received British news from PA (Press Association)
- the British Empire, the territory which received its services.
From 1859 to 1914, Reuters dominated the cartel with Havas. From 1914 to 1945, Reuters lost a part of its dominant position : AP withdrew from the cartel, while UPI and TASS fought against it. In 1934, the cartel imploded. During the interval between the two wars, the agency lost some credibility by “identifying too closely with the interests of the British government.” Economic difficulties, as well as the astounding development of AP and UPI at the end of the 39-45 war, did nothing to advance the position of Reuters. The result was that it became a second-rate agency until the beginning of the 1960s.
The agency was reborn under the leadership of Gerald Long. Chief executive officer from 1963 to 1981, Long noticed that the news service was unprofitable. In 1964, he decided to computerize the agency and to specialise in the distribution of financial alphanumeric data. Long introduced “modern processing and transmission techniques : satellites, telematics, microprocessors, terminals, keyboards, consoles, etc.”
Reuters has undergone strong economic growth since the beginning of the 1980s. Today, Reuters is a global information group that derives 96% of its sales from its services to stock exchanges, banks, businesses, brokerage firms and other organisations involved in financial markets. It rapidly converted to computers starting in 1964. It therefore became an enterprise with activities beyond the scope of journalism. The Reuters news agency is a small segment of the Reuters Group as a whole. Reuters estimates that the media market is quite static but that there is good outlook for growth in other segments.

Reuters
Reuters is a group that also broadcasts financial information and international news of general interest in 22 languages. The corporation, publicly listed since 1984, has regional directorates in Washington and Singapore. The regional headquarters offices in Nicosia and Hong Kong were closed in 1997, following an administrative restructuring. About 2,100 journalists (including 100 photographers and 180 cameramen) work full-time for the agency. In addition, some 4,600 journalists and photographers freelance on a regular basis with the wire service. In 1998, the Reuters news agency had revenues of 127 million pounds (about US$330 million), operated 182 editorial offices in 96 countries and supplied news to more than 4,000 media customers in 157 countries. The Reuters Group as a whole had revenues of 3.03 billion pounds (about US$ 5 billion), 17,000 employees, over 135 sales offices and about 58,000 customers. The CEO is Peter Job. Reuters has offices in 218 cities and 96 countries. It offers services to banks, corporations, brokerage firms, financial markets, investors, Internet sites and media.
The revenue sources of Reuters is about the following :
1) Media products : 4,4%
2) Financial information: 64%
3) Financial transactions: 29%
4) Corporate Products: 2,6%

Reuters has nearly 500,000 user accesses (computer terminals) in operation which allow brokers, traders and investors to carry out their financial transactions. News is the most well-known business of the Reuters organisation. About 267 markets are reported in real time and more than 5,000 organisations contribute data to Reuters.

The Reuters news agency, part of the company's Corporate and Media Information business, provides different services :
1) Reuters Television 900 subscribing television networks in 81 countries
2) Reuters World Service A wire service carrying 2 million words per day
3) Reuters News Picture Service Hundreds of photos a day
4) Reuters News Graphics Service English, French, German, Spanish
5) Reuters Business Report Business News, North America, Europe, Asia
6) Reuters Business Briefing (RBB) News data bank shared with Dow Jones
7) Reuters New Media News for online services and the Internet

In certain countries, Reuters offers its worldwide news service to national news agencies. They then translate the dispatches into various languages for subsequent rebroadcasting.
Reuters offers the media news, graphics, photos and television images. Its customers are newspapers, magazines and broadcasters (radio and television) and Internet providers.
The Reuters news service is considerably less centralised than it used to be but operates with a global budget. The Washington and Singapore offices operate somewhat independently from the London headquarters with regards to editorial content but coordination is strong. London essentially covers Europe, Africa and the Middle East; Washington is in charge of North, Central and South America and Singapore is responsible of news coverage for Asia and the Pacific. There are three regioinal branches within Reuters :
1) Reuters Europe, Middle East and Africa (REMA)
2) Reuters Asia and Pacific (RA)
3) Reuters Americas (RAM)

These divisions themselves are then subdivided. For example, Reuters America includes Reuters North America which itself is comprised of Reuters Canada and Reuters America. Reuters incorporates itself as a local company in the majority of countries where it is possible to do so. Reuters America is incorporated as an American company. The same is true for Reuters Canada. In this way, about 50% of the news on the Reuters wire originates in the region where its subscribers are located, while the other half comes from the Reuters world wide service. All the media of the world have access to the same news in a 50-50 proportion.
For North American Reuters media subscribers, nearly half of the news relates to Canada and the United States. The North American division of Reuters, Reuters North America (RNA) is profitable but faces intense competition from Bloomberg, Bridge Information Systems and AP in the American market.
Founded more than 145 years ago, Reuters has fiercely preserved its independence, an independence that is ensured by the Reuters Trust Principles, a charter signed by the company in 1984 and which prevents it from falling under the control or influence of any interest group. No shareholder can own more than 15% of the Reuters Group Plc ordinary shares and 30% of voting shares. The owners of Reuters Group Plc are therefore shareholders (employees, directors, trustees, individuals, various companies, etc.).
For its part, Reuters Group Plc, the parent company, offers four electronic financial transaction services (Dealing 2000, Instinet, Teknekron and Quotron) and 35 economic information services and products. Through its services and software, Reuters’ customers have access to real-time information on foreign currencies, stocks, stock transactions, commodities, global commerce and financial instruments in general. Reuters offers an economic information service in Chinese, English, Japanese (REUTERSCOOP) and French (Reuter Vidéo Financier). Reuters gathers information from 267 stock exchanges and markets around the world. It must face fierce competition from its main competitors, financial news agencies such as Bloomberg and Bridge Information who compete to attract Reuters customers (particularly business newspapers, banks, trading and brokerage firms). The biggest challenge facing Reuters will be to succeed in surpassing its competitors in the new millennium.
The financial services of the Reuters news agency still dominate the quasi-totality of market niches, especially on the foreign exchange markets and exchange quotations, according to Market Data Industry.
However, Reuters (www.reuters.com) is losing ground with 41% of the world wide real-time financial information in 1995, compared to the 48% it had in 1993. The number two, the American Telerate (formerly Dow Jones Markets), saw its market share increase from 14% to 16%, but the most impressive gains were accomplished by the number three, Bloomberg, which holds 13.5% of the market, compared with only nine percent in 1993. The fourth in importance in this market is the Japanese Quick (Nikkei) which lost one percentage point from 1993 to 1995, going down from nine percent to eight percent.

6.2 The Reuters Miracle : Economic Diversification and R&D
On some levels, the crisis of news agencies is not being felt at Reuters, and this is for several reasons. Reuters holds comparative advantages :
- it switched to computers in the 1960s (ten years before AP and AFP);
- 7% of its annual income is reinvested in research and development;
- its investments in the development of new technologies are more than substantial;
- its financial and economic market niche corresponds to the trends of the 1990s: increasing interest in the economy;
- it made an early transition to and sustained diversification (computer terminals for customers, photo and graphics services, Reuters Television, databanks).

Reuters has become sort of a “privileged auxiliary of financial markets.” Some 4,982 subscribers from the marketplace supply data directly to Reuters.

6.1.1 Economic Diversification
The success of Reuters is due mainly to the economic diversification initiative and to massive investments in technology undertaken between 1963 and 1981 by Gerald Long who was the CEO during that period.
Long, who was quite a visionary. He noticed two things when he arrived at the head of the agency : it had a deficit and it was second-rate compared to AP and UPI. In 1964, Long established a strategy that is still adhered to today : economic diversification and R&D investments.
In this chapter, we will see to what extent the core of Reuters development from 1963 to the present. Long’s decision in 1964 to diversify the agency towards financial information was indeed meant as a long term commitment. It began showing signs of success in the early 1980s. The accomplishments of Reuters since 1960 are manifold. Gerald Long succeeded in eliminating the deficit and in catapulting it to the forefront of financial information.
In 1962, Reuters began transmitting data via satellite. As early as 1964, the computerisation of the agency was undertaken and Stockmaster was launched. It was the first international computer system which allowed access to stock exchange information. Later, in 1967, Reuters broke its agreement with AP and directly broadcast its own news in America. In 1973, Reuters North America was created in order to supply news to Canada and the United States. It was then, also, that Reuters Monitor Service was born. It made it possible to broadcast money rates via computer to stock exchanges of the world.
In 1981, the Reuters Monitor Dealing Service was launched : brokers could now complete their transactions on the screen.
Then, in 1984, Reuters ceased being the property of national agencies from England (PA), Australia (AAP), and New Zealand (NZAP). It became a listed corporation on Nasdaq and the London Stock Exchange.
In fact, 1984 was also the year of another great leap forward for the Reuters agency with the purchase of the UPI international photo service and the signature of a ten year (1985-1995) exchange of services agreement for UPI photos from the United States.
In 1985, Reuters acquired 51% of the shares in the international TV picture agency Visnews, while NBC News acquired the rest.
In 1987, the acquisition of Instinet, a computer system, allowed equity dealers to complete transactions.
Dealing 2000, an artificial intelligence system for brokers in the financial markets, was launched in 1989.
1992 was the year of the launching of the GLOBEX@ computer system which made it possible to carry out financial options and foreign currency operations. That system was however shut down in 1998.
That same year, Reuters also acquired 100% of Visnews Television, the largest agency of television images in the world; Visnews became Reuters Television on January 1, 1993. Reuters TV allows the corporation to compete with others such as CNN, Associated Press TV on the television market. Still in 1993, Reuters associated with the Telemundo group for the production of Spanish language news bulletins for the United States. Reuters also associated with the BBC and Telemundo to launch a round-the-clock Spanish news network for broadcasting in Latin America, Spain and the United States.
Reuters also acquired an electronic exchange software named Teknekron Software Systems. In the following months, it purchased 18% of the shares in Britain’s ITN (Independent Television News), one of the largest private televised news service in the world. In 1995, ITN had revenues of £89 million (about $135.5 million US). Reuters has now 20% of ITN shares.
In August 1993, Reuters made a request to Britain’s Radio Authority for permission to operate a radio news service in London (this service was partly sold in the summer of 1996). In mid-March 1994, Reuters bought the American company Quotron which had designed a quotation system on stock prices. It then launched Reuters Financial Television (RFTV), a service broadcasting live images of the day’s important financial events. Quotron supplies the financial networks of the world with images and news through television cable and computer screen for subscribers of Reuters. Based in London, New York and Tokyo, RFTV, now part of Reuters Television, also offers morning and late afternoon coverage. Reports cover only the major exchanges and financial events of the day. They are dispatched directly to so-called Reuters Terminals and to TV screens around the world. Reuters Television's financial news have about 25,000 viewers worldwide. Users can now watch pictures and hear reports on their computer screens in real-time. Reuters TV covers the American, European and Asian markets. RFTV changed its name to Reuters Television in April 1998, integrating the TV arm of Reuters.
The group experimented with video on demand along with Bell Atlantic, NYNEX, US West and America OnLine , besides offering corporative video services to Hughes Network Systems for Hughes DirectPC Service, an American distributor of satellite television. Reuters also supplies information to corporations by delivering important financial data and information on the world of insurance through the Windows and Lotus Notes computer operating systems. Financial information is also offered to professionals through an emergency system for subscribers of the SkyTel and Motorola EMBARC mobile phone services. Finally, since 1996, Reuters offers medical news to hospitals, laboratories and research centres throughout the world via the Internet.
These decisions show that Reuters has become mainly a supplier of financial information for the business market. Reuters has also been increasingly diversifying its activities into multimedia.
As for the news agency as such, it is clear that the diversification has been successfully accomplished. The 1964 computerisation was definitively a pioneering move. In 1980, Reuters was only broadcasting general and financial news in English, French, German and Spanish. Today, its news service is also broadcast 25 languages including in Arabic, Russian, Japanese and Chinese. Reuters also has the largest television network in the world, Reuters Television. It has opened up an entirely new market : 900 television networks in over 80 countries. Moreover, Reuters has a worldwide photo service, which gives even more strength to its news wire. Finally, its graphics service, launched in the late 1980s, allows newspapers to illustrate the day’s news. Each day, graphics are published in four languages.
The acquisition of Visnews in 1992, of 18% in ITN in 1993 (and 20% in the fall of 1997), of the UPI photo service in 1984, and the 1993 association with Telemundo to launch an all-day news network are good examples of the Reuters diversification plan. “The growth-by-acquisition scheme is very important to us” said Daniel Fogel, former director of Reuters France.
By also developing its own products for the financial markets, Reuters fulfils the increasing needs for fast-breaking, real-time news. The success of these products and the profits they generate make it possible to keep on top of new technologies.
According to Fogel, this explains why other media have not succeeded in modernising as efficiently as Reuters has :
“I do not want to judge our competitors. For Reuters, the answer is simple : good management and good market anticipation; added to this rule is the fact that we always use state-of-the-art technology, whatever the price. Today, we are almost victims of our own success since we must constantly increase the capacity of our networks.”
Since the beginning of the 1980s, the diversification of the Reuters news agency allowed it to develop new markets. Parts of the media market are still growing, with more publications and more television channels in many countries, especially in eastern Europe. The market requires more advanced digital transmission technologies, in which Reuters has been investing.” Since 1990, Reuters has intensified its expansion into Russia and the Commonwealth of Independent States (CIS) where it now counts hundreds of customers. In 1993, Reuters inaugurated an international centre in Moscow in which its news, financial and television services are grouped under the same roof. The same goes for Washington D.C. Reuters also gained access to Albania (in 1988), Japan (with its Japanese service and its acceptance into the select “kisha” press club), China (1992, Chinese service), Vietnam (1993, offices in Hanoi and Ho Chi Minh City), the Middle East (1992, Arabic service), Ukraine (new office opened in Kiev in 1992), Slovenia (1994) and Croatia (new office in Zagreb). In 1992, Reuters also successfully supplanted the national agencies of South Korea and India, where it now broadcasts its news directly. Moreover, thanks to Reuters Television, the agency has a crucial comparative advantage : personalities are more inclined to give interviews to Reuters television crews than to journalists of AFP (AP has its own TV arm since 1994. “Since his arrival to Gaza, Yasser Arafat has given two exclusive interviews to Reuters and not one to AFP. With more crews on the spot, the British are less likely to miss an event.” Reuters Television has also signed an agreement with the Russian television broadcaster Ostankino 1. The public affairs program “Do E Postile”, airing on Saturdays now uses Reuters TV features and uses the resources of the TV agency. This program has 100 million viewers.
Reuters reorganised its European activities in 1989 (executive offices in Geneva), and in the United States in 1993 (Reuters America Media Business Unit). In 1999, it applied a global restructuring (Reuters Information Division, Reuters Trading Systems Division, Instinet, Global Sales and Operations, Corporate and Media Information). Reuters is pursuing its growth strategy : opening offices to meet the increasing demand for news from all regions of the world.
This might explain why Reuters has moved from 10 subscribing newspapers in 1970 to over more than 600 in 1999 in the United States alone according to the American Journalism Review. That would be a rise of about 40 percent. Reuters now has 28 offices in North America, including two new ones opened in 1994 in Charlotte, North Carolina, and Cleveland, Ohio, in Winnipeg, Canada in February 1995 and in Quebec City, Canada in May 1997, where it launched a popular French-Canadian news service. In September 1993, it launched a television news service for local television broadcasters in the United States (Reuters Reports). Reuters also operates a financial and economic news service specifically for the financial sections of newspapers and the media in general. Since September 1995, Reuters offers news from major corporations from all 50 American States. Customers receive fresh information from the 6,000 corporations based in the United States. The information is classified by State. Reuters has also signed an agreement with the ABC News radio networks (ABC Radio Networks) for the supply of financial news to their round-the-clock news service, ABC NewsWire.

Reuters and R&D

It has always been the policy at Reuters to reinvest more than five percent of its annual revenues in research and development (R&D). Its is now of eight percent and is quite substantial as compared to the average rate of other major corporations. The investments of Reuters in this domain have facilitated the creation of new information technology products designed for financial markets as well as the development of the most important private telecommunications network in the world. Over 900 people work for Reuters’ R&D department in the following cities : London, Long Island, Chicago, Hong Kong, Tokyo, Singapore and Toronto. Reuters has invested £78.8 million in 1992 (US$135 million), yet only £2.5 million were actually devoted to media products. “Development expenditures grew by 17% in 1992, compared to 9% in 1991. In each of the past five years development expenditures totalled approximately 5% of the annual revenue.” The increase in R&D expenditures was of 44% in 1994 and 21% in 1995.
Since 1992, R&D expenditures have been surprising to say the least. They have increased by leaps and bounds, as the most of the following statistics illustrate
(£1 = US$1.55 = CAN$2.5) :

1982 £6.2 million
1983 £9.6 million
1984 £12.0 million
1985 £17.0 million
1986 £23.3 million
1987 £47.8 million
1988 £55.3 million
1989 £59.7 million
1990 £61.8 million
1991 £67.3 million
1992 £78.5 million
1993 £91.0 million
1994 £110 million
1995 £191 million
1996 £202 million
1997 £235 million
1998 £200 million
1999 available in Feb. 2000

These numbers clearly prove that investments have been increasing substantially year after year, except for 1998 where R&D expenditures decreased by some 15%.

The level of investments now remains at about seven percent. The increase in actual numbers is proportional to the increase of revenues at Reuters.
R&D is at the very core of what is now commonly referred to as the Reuters financial miracle. “Our development expenditures are one of the biggest of the major UK companies and we intend that it should remain so.”

6.1.2 Financial Success
This success is absolutely real. The situation at the Reuters agency during the 1960s was, in effect, quite precarious according to Donald Read, the author of an official study of the agency. “How long could the old Reuters have survived after 1963? Money was the key. A modest annual working surplus could never have financed a successful transformation of Reuters. For that, millions of pounds in long-term investments were needed, and needed quickly.”
Reuters cumulated losses of £57,000 (US$97,000 in current dollars) in 1964 and was in deficit again in 1967. In comparison, AP made profits of £186,792 (US$318,000 current) in 1964. In 1968, Reuters had a deficit of £100,000 (US$170,000 current) and even ten years later, in 1978, it had losses of £7 million (US$11.9 million current). This can be compared to the UPI deficit in 1978, which was US$5.3 million; that of AFP was also around the US$5 million level.
British newspapers, who were major partners of the agency, were also experiencing hardships. Television was ferociously competing with newspapers for advertising revenues and the amounts spent by the agency’s owners (Newspaper Proprietors Association — NPA, Press Association — PA, Australian Associated Press — AAP, and New Zealand Associated Press — NZPA) were rapidly diminishing. About 70% of Reuters revenues originated from outside of England (its national market), in sharp contrast to AP, AFP and UPI.
Observers such as Pigeat, Read, Huteau, Ullmann and Cohen all agree on the fact that its was discriminating judgement, calculated risk-taking and long-term vision of Gerald Long that has accounted for the financial success of Reuters since the early 1980s. “Long quickly decided that Reuters must invest urgently in projects and equipment for the economic services. This was a crucial decision for Reuters.” Long also quickly realised the necessity of controlling costs, modernising the company and putting in writing a work relations policy. He believed that the survival of Reuters depended on economic information. He believed that the future was in data transmission. Henri Pigeat of AFP wrote : “The genius of Gerald Long was to understand that media techniques, especially those of agencies, were going to be completely reversed. He knew that general information would never be enough to ensure the financial stability at Reuters.”
In a 1971 address Long described the objectives of the company :
“Reuters’ central purpose is to achieve the highest standards of excellence in the provision of news services, and information and communications systems to subscribers throughout the world. To maintain this purpose Reuters must be profitable, since profit is the condition of Reuters existence and the touchstone of Reuters efficiency. The use of profit is to develop Reuters services and to benefit Reuters shareholders and staff.”
Major investments began in 1972. At that time, 50% of the total budget of the agency was devoted to the payroll. Reuters went from 1,352 to 2,036 employees between 1964 and 1976.
In the middle of the 1970s, the diversification strategy launched in 1963 began to show profits. The Stockmaster, Videomaster, Reuters Ultronic Report and Reuter Monitor systems have become the norm in Europe and the United States and their success has brought a certain prosperity to the Reuters group. Reuters made a profit of £1.3 million in 1973 and of £2.7 million in 1974. The collapse of the Bretton Woods International Monetary System in 1974 led to the devaluation of all world currencies and revolutionised financial markets and the demand for information in this area. The new currency and interest rate fluctuation made it indispensable to provide real-time, around-the-clock information everywhere in the world. It is especially since 1976 that, under the initiative of deputy managing director Glen Renfrew, Reuters has become seriously interested in the new technologies and in the major development opportunities they represent.
Financial success was not far behind : “In the first five years, up to June 1978, the Reuter Monitor generated gross revenue of well over £30 million and operating profit over £11.5 million. By 1983, operating profit after ten years totalled £100 million. Here was a remarkable success, which transformed the face and fortune of Reuters. Company turnover in 1983 was fourteen times that of 1973.” In 1979, Reuters’ sales were equivalent to one third of Dow Jones, its main competitor. In 1987, Reuters’ sales surpassed Dow Jones by several million US dollars.
It took more time than this to turn a profit at the Reuters agency. The agency was considered to be a “cost center” rather than a “profit center”. Reuters North America, which has existed since 1973, announced its first profit (£2.04 million) in 1981. Reuters Overseas made its first profit in 1982 while Reuters Europe and Reuters Asia did so in 1980. Despite this, the news agency of Reuters has always been relatively unprofitable. Its losses were of £5.4 million in 1977 and £12 million in 1983 according to Donald Read.
In spite of this, by the time Gerald Long left in March of 1981, the success of Reuters had been confirmed. “Yet, by the time of Long’s resignation in 1981, the success of the new Reuters was apparent to all. The quadrupling of profits in that year, and their more than doubling in 1982, signalled a novel prosperity.”
The 1984 idea of changing the company’s structure also proved to be financially beneficial. That year, the Reuters Group Limited (a cooperative of national news agencies) became a public holding listed at the London Stock Exchange. The issuing of shares brought the new Reuters Holdings Plc entity the sum of 52 million pounds in fresh capital. The decision of Reuters to become a public company is explained by the rapid growth of its profits starting in 1980. “Why did Reuters not go public sooner? What changed the situation in the eyes of the Reuters owners was the dramatic growth in Reuter profits during the early 1980s. First, these quadrupled between 1980 and 1981, and then they more than doubled again in 1982. Reuters even began to declare dividends : £1.9 million in 1981, £5.8 million in 1982.” The dividends paid in 1981 were the first since 1941. In 1998, Reuters Holdings Plc became Reuters Group Plc after the distribution of £1.5 billion to shareholders and a capital reorganisation.

Reuters
The evolution of Reuters’ financial results since 1960 are clear indications of its success. In 1960, the revenues of Reuters were 2.5 million British pounds (£1 = US$1.50). In 1970, these revenues climbed to £10.5 million. In 1980, they again climbed to £90.1 million. Between 1980 and 1985, the revenues of Reuters went from £90 million to £434 million (an increase of 186%). One can plainly see that Reuters literally exploded in the early 1980s. In 1989, Reuters revenues were close to £1.2 billion. In 1992, they were in the vicinity of £1.6 billion. The most recent data is dated from February 1999 and shows that in 1998, Reuters had revenues of over US$5 billion (£3.03 billion), or an increase of five percent, and a decline of seven percent in pre-tax profits, blamed on the sterling's strength and the Asian crisis. These were the first falls since 1984. It must be noted that the core of this growth is due to the sale of equipment (the News 3000, a new system that offers historical analysis of data), electronic commerce (thanks to the Instinet system which increased its revenues by 46% in 1996) and products such as TIBCO, formerly known as Teknekron (revenue increase of 37 % in 1997 to $135 million, and to about $165 million in 1998).
The profits accumulated since the beginning of the 1980s are also an illustration of the group’s financial health. Today, Reuters is the 174th most important company in the world and the 96th biggest quoted companies listed on the London Stock Exchange. A poll published in the Financial Times in the fall of 1997 showed that Reuters was the most admired company in the UK.
Pre-tax profits % increase ordecrease

1998 £580 million -7%
1997 £626 million - 4%
1996 £652 million 17%
1995 US$928 million 17%
1994 US$790.5 million 16%
1993 US$647.7 million 15%
1992 £383.2 million 12.6%
1991 £340.3 million 6.3%
1990 £320.1 million 13.1%
1989 £283.1 million 31.4%
1988 £215.4 million 20.5%
1987 £178.8 million 37.4%
1986 £130.1 million 39.0%
1985 £93.6 million 26%
1984 £74.3 million 4.4%
1983 £55.2 million 50.4%
1982 £36.7 million 120.2%
1981 £16.7 million 392.3%
1980 £3.9 million 10.6%

For 1994 and 1995, Reuters had forecast profit increases of more than 10% (Business Week forecast 20%). The financial results of 1998 showed that Reuters’ pre-tax profits were of £580 million (some $975 million), a decrease of 7% over 1997, which was already down 4% from 1996. It must also be noted that fluctuations of exchange rates significantly affect these figures. Earnings per share were at 26.7 pence for 1998, an increase of 11%. It is interesting to note that Reuters is always successful in limiting the growth of its expenses to a rate inferior to the growth of its profits. For the third quarter of1999, Reuters reported disppointing revenues of 764 million pounds (US$1.27 billion), up three percent on actual exchange rates but flat on an underlying basis. Revenues were hit by falling trading systems sales and flat U.S. revenues at Instinet, the electronic broking unit. Analysts expected the1999 profit to top 600 million pounds.
Reuters must continually develop new products because the financial and media markets are close to the saturation point. The creation of a new media division (Reuters NewMedia) and of a technology venture (Reuters Ventures) is a good start. Reuters is also making allies in the fields of advertising (AdValue Media Technologies and Aim 21 Inc. of New York), education (with inGENIUS and Liberty Media Corporation from Denver). The analysis of the situation at Reuters shows that the increase of its sales numbers and profits is linked mainly to the development of Reuters affiliates (financial services such as Instinet and Teknekron, now named TIBCO) who are in no way associated with the Reuters news agency. For example, in 1995, the revenues of Instinet increased by 31% to reach US$376 million (and $735 million in 1998) and those of TIBCO increased by 113% to reach a total of US$120 million ($165 million in 1998). In 1990, one third of foreign currency transactions throughout the world were completed on Reuters computer terminals.

6.2 Reuters, still a news agency?
In the early 1990s, rationalised its media budget, limited the use of freelancers, and made cuts to its photo coverage. A policy of stringency had made it possible to counterbalance the costs represented by the massive investments in technology. Staff was cut by five percent a year from 1990 to 1992. Reuters had 10,731 employees in 1990, 10,243 in 1991, and 10,159 on December 31, 1992. Since then, things have changed. In 1994, the number of personnel increased by 20% and grew another 6% in 1995 to reach some14,348 full-time employees. In 1999, Reuters had over 17,000 employees and among them, 2,100 journalists. The number of journalists is growing each year by about 100.
The Reuters Group requires most of its journalists to concentrate partly on general news and mainly on business news.
Some analysts said the Reuters news division went through a tough time in the 1970s, 1980s and early 1990s.
“Disgust with the increasing subordination of the Reuters news operations to financial services has been given as one reason why a number of senior Reuters journalists resigned from the organization in recent years, some of them going to set up the new London newspaper The Independent in 1986.”
Already in 1973, the resignation of the Reuters worldwide editor-in-chief created quite a shock. “The resignation of Horton as editor-in-chief of the General News Division at the end of 1973 was a clear sign that the general news side had lost the initiative within Reuters. Having ceased to be the top dogs, many general-news journalists began to fear that they were becoming the underdogs.” Horton’s successor resigned in September 1977 for the same reasons.
Thus, even though the Reuters company is in an exceptionally good shape and although the Reuters brand is increasingly popular in the media, the “news agency” division is barely profitable. It is however an absolute necessity for the Reuters Group. For some journalists, “the editorial aspect of Reuters’ work gives it a distinction and an authority which sets it apart from its competitors who offer information technology services that depend solely on technology.”
The offices of Reuters, which used to be staffed uniquely with journalists, are now overrun with technicians, managers, accountants, camera operators, television journalists, photographers and television directors.
“The news agency correspondent, as it used to be and still is, has had to adapt, in the last three years, to audiovisual equipment. The offices, which are now filled with editing tables, VCRs and TV monitors, bear a closer resemblance to TV studios than newsrooms. (…) By continuously extending the scope of its activities, Reuters has transformed its bureau chiefs into mad zappers.” Reuters has merged all its offices with Visnews, which is now known as Reuters TV.
Reuters may have won the development race and it may be the most powerful multinational information corporation in the world, but the revenues of the its news service are smaller than that of AP (but higher than AFP).
Reuters is no longer a traditional news agency per se. But it still provides all the services of a traditional wire service.
“The concept of a news agency, as we have come to accept it, is obsolete and outdated," wrote Daniel Fogel, former director of Reuters France. "In principle, it is regulated by guidelines that date back to 1945 and for which the only medium was paper. Things are not like that anymore. As for Reuters, it is a group with diversified activities. Among those, the Reuters news agency covers information in all its forms in a more specific way. We make tremendous investments in the media sector. It is not a marginal sector for us, it mobilises all our attention.”
French media analyst Catherine Conso contradicts them in her strategic and financial analysis. “One will note that if the total staff is increasing, thereby following the group tendency, the number of journalists is diminishing in relative terms of importance, in conformity to the “news agency” activities which are increasingly marginal. In 1988, there was an increase of 62.2% in technical and commercial staff at the expense of editorial staff.” According to 1998 statistics, 2,100 of the 17,000 employees at Reuters were journalists, photographers or camera operators, which is 12,2% of the total staff.
In 1962, the general news service represented 68.6% of Reuters revenues and the economic service already accounted for 31.4%. By 1970, the tendency had already been reversed : 66% of revenues came from the economic service and 34% from the news agency. In 1998, 93% of Reuters revenues were from the financial sector and 4,4% come from so-called “media products”.
Several spectacular subscriptions terminations exemplify the fact that some media felt Reuters news was too financially oriented. That was the case of Far Eastern Economic Review (a Dow Jones unit) , Australian Broadcasting Corporation, The Daily Telegraph, The Independent. The Independent and the Daily Telegraph have since taken Reuters back.
The “news agency” activities at Reuters are now called “Media and Professional Products”. If one accounts for the fact that United Press International is no longer an international news agency, that Agence France-Presse has sales of over 1.3 billion French francs (US$200 million), and that AP has sales of US$420 million, media sales of Reuters (£127 million or about US$210 million) are inferior to AP but still slightly higher to AFP.

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CHAPTER 7

Chapter VII
The CNN Village?
News agencies do not evolve in a self-contained environment. They interact with the international media system and this system has experienced major shifts in the last fifteen years. For example, nearly 80% of readers in Occident now obtain their news exclusively from television. On the international level, audiovisual mediums have surpassed the written media and this has stirred written agencies. The decrease in readership in the Western world is emphasized by the recent success of round-the-clock news channels such as CNN and BBC World. Moreover, global news agencies must face the unrelenting competition of well-established financial news agencies like Dow Jones, Bloomberg and Bridge News and regional news agencies such as DPA, ANSA and EFE, which want to access the international platform too.
Faced nowadays with the triple challenge of technology, economy and politics, AP, AFP, UPI and Reuters have no choice but to adapt to the new environment. This new environment is both geopolitical and economic. Geopolitical because the face of the world changed dramatically in the late 1980s with the collapse of the Berlin Wall and of the communist regimes of the USSR and of its Eastern Block satellite countries. Economic because market globalization inevitably leads to ultra-rapid technological development, which entails increased demand for news originating from news agencies.
Other broad factors also explain the crisis affecting the global news agencies. These deserve a certain attention.
7.1 A MUTATING INTERNATIONAL MEDIA SYSTEM
7.1.1 The Rise of Audiovisual as the Primary Source of International Information
The rise of audiovisual techniques as the primary source of international news is the outstanding development of the 1980s and 1990s. A slight decrease in the influence of news agencies combined with the multiplication of television channels devoted solely to news has been noticed. Some think (i.e. Lionel Fleury) that since uninterrupted news channels also need the agencies, they are more useful than a prejudicial.
CNN is the most striking example of the crisis affecting the written word in the Western world over the last eighteen years.
The news agencies crisis is directly epitomised in the decline of written media, especially in the West. The United States have seen the number of daily newspapers shrink from 1,748 to 1,533 between 1970 and 1996. Advertising revenues keep deteriorating and the 40% increase in the cost of paper in 1995 was another factor in this crisis. A ton of paper cost US$800 in early 1996, but fell to US$515 in the fall of 1999. In fact, the crisis struck at the same time as the crumbling of the written press values and institutions. During the World Congress of the International Federation of Dailies held in Berlin in late May of 1993, the global trend of decreasing readership and advertising placement was observed by the participants. “In 1992, for example, the decrease of printing runs got worse in all industrialized countries : -2.6% in the United States, -1.2% in Japan and -9.5% in Australia.”
The decrease in readership was also noticeable in Canada and England. In Canada, the 105 daily newspapers witnessed an average decline of 2.3%. Montréal’s La Presse and The Ottawa Citizen have each lost 6.8% of their readers. “The print media are now running scared. Study after study indicates that the public increasingly relies on television, not newspapers, for its information.” In Russia, readership has plummeted by 68% since 1989. In the United States, daily newspaper sales have decreased 506,158 in 1994 and 1.11 million in 1995. Newspapers have shut down in cities like Houston, Baltimore, Milwaukee and New York. The negative trend of newspapers print run has slowed down since the beginning of 1996. The figures of the Audit Board of Circulation show that thirteen of the largest daily newspapers in the US have observed smaller reductions of their print runs between October 1, 1995, and March 31, 1996 over the preceding year. The New York Times lost 2.7 percent of its print run during that period and The Los Angeles Times lost 4.7 percent. However, The Wall Street Journal, USA Today and the New York News have increased their print run of one, three and 4.5 percent respectively. In September 1999, The New York Times raised its newstand price by 15 cents to 75 cents.
Television channels could soon draw on newspaper advertising markets if new services to be available on the cable yield the expected results.
Increasing printing costs, which account for 20% of the total costs of a daily newspaper, have translated in a drop of the total weekly circulation of seven of the ten most important newspapers in the United States during the first semester of 1995. Excluding The Chicago Tribune, The Houston Chronicle and The Dallas Morning News, all other newspapers have witnessed a decrease. Such is the case for The New York Times, The Los Angeles Times and the Washington Post. The Wall Street Journal’s print run decreased by one percent to 1.76 million, while that of USA Today increased by 3.9% to 1.52 million copies. These figures were provided by the Newspaper Association of America and published by Associated Press in late October 1995.
The decrease of readership remains a surprising occurrence. It is an unexpected phenomenon indeed, given that populations are increasing and are more educated than before. Studies do not show if this trend also affects magazines and books, but several solutions are being considered : a-la-carte newspapers, newspapers on computer screens, etc. One thing is for sure, the consumption of newspapers in the Western world keeps decreasing despite an increase in the number of potential readers. For a highly perishable item such as daily international information, consumers rely, in a proportion of 80%, on television (which gets its information directly from agencies). In this context, the rise of CNN is easily explained. A study by Goldman Sachs made public during the summer of 1995 shows that the average penetration level of newspapers in the 73 countries surveyed is no more than 154 newspapers for 1,000 adults. Bear in mind that 137 countries were surveyed by this study.
However, there are various options available to news agencies and the print media in general, according to the Goldman Sachs study.
Print news empires must conduct “new concentration offensives in order to reduce their production costs, to develop more efficiently the assets of the newsrooms and enhance their ability to offer potential consumers to their advertisers.”
Goldman Sachs also notes that the financial performance of information disseminating agents (news broadcasters) are higher than those yielded by newspapers. The study identifies diversification products that bear the most promising potential :
1) audiotex (information delivered over the telephone rather than on paper)
2) alliances with television networks for the production of information programs
3) online services
4) developing specialised niches
The study maintains that attempts at computer-delivered news where the reader (the consumer) selects the information and the use of fax machines for the development of a few specialized services “puzzle some publishers…and are actually disappointing in terms of profitability.”
“To ensure their long-term survival, print news conglomerates will have to enter into alliances with other media and offer derived information products”, concludes the study.

7.1.2 This Is CNN.
“We are taken too seriously” says the Vice-President of CNN, Eason Jordan. “Nobody cared about CNN back then” declared Petter Jennings, the star anchor of ABC News. What a contrast.
Cable News Network (CNN) is an American news channel broadcasting 24 hours a day from Atlanta, Georgia. Established in 1980 by billionaire Ted Turner, CNN has become, for the elites of the world, the source of international information. Through eight tele-broadcasting satellites, CNN reaches over 110 million “discriminating” viewers in over 140 countries and territories throughout the world. The images of CNN and CNN International are rebroadcast by local cable broadcasters. In 1999, the revenues of CNN were of about US$800 million.
CNN subscribes to Reuters Television, Associated Press TV, Eurovision, Intervision and to the Asian Broadcasting Union. It has image exchange agreements with 150 television networks throughout the world, like the Canadian Broadcasting Corporation (CBC). CNN is part of the Turner Broadcasting System Inc. (TBS), a US$8.5 billion media empire which merged with Time Warner Inc. in September 1996, now the largest entertainment company in the world. The merger of Time Warner—Turner Broadcasting created a giant with annual revenues of about US$19.8 billion.
For the first time in history, governments and citizens of the whole planet have access to a round-the-clock global news network. CNN broadcasts over the cable in the United States and Canada and mainly via satellite elsewhere. The largest part of its audience is either at work (journalists, politicians, business people, lobbyists, etc.), at home and in hotels (tourists, business people, etc.). CNN has 31 newsrooms throughout the world, including one in Sarajevo established in 1992 and which has cost the company over US$5 million and one in Havana in 1997. By comparison, the Gulf War in 1990 cost the company US$25 million (300 people were involved in the coverage). CNN has nine news bureaux in the United States and 22 abroad. Atlanta generates most of the programming, but segments are also produced in London, Miami and Hong Kong. In 1999, CNN could be heard in English, German, Russian, Chinese and Spanish.
In addition to its round-the-clock programming, CNN offers the following services :
- CNN which broadcasts in Canada and the United States;
- CNN International which broadcasts in more than 140 countries;
- CNN Internacional which broadcasts in Spanish around the world;
- CNN Headline News, a headlines channel;
- Noticiero CNN for the Spanish audience;
- CNN Radio (500 subscribers in 8 countries);
- CNN Television (transmission of images to 350 television stations in 125 countries);
- CNN at Work (televised informations onto PCs);
- CNN on Line (information transmitted by modem);
- CNNfn (a financial news channel airing 12 hours a day);
- CNN-SI (a sports news channel launched in collaboration with the Sports Illustrated magazine);
- CNN Interactive (a Web site located at http://cnn.com)

CNN’s success is characterised by the live broadcasting of important events, by means of the tele-broadcasting satellite technology. Among such events, CNN made its name with the live-broadcast of the 1981 assassination attempt on American President Ronald Reagan. It was also live when the Challenger space shuttle exploded just after lift-off in 1985. The power of CNN was particularly outlined during the 1991 Gulf War. CNN had descrambled its airwaves so that the whole planet could watch the War unfold before its eyes. Robert Weiner’s book En Direct de Bagdad (Robert Laffont, 1992) details the efforts deployed by CNN during that war and takes the reader on a behind-the-scenes tour of the organization. Other events which captured the attention of the public that were aired live include the October 1987 stock market collapse, the 1989 Romanian crisis, the collapse of the Berlin Wall, the aborted coup d’etat against Gorbatchev in 1991, the public hearing to nominate Judge Clarence Thomas, the Waco massacre in Texas, the World Trade Center explosion in New York, the O.J. Simpson trial, the Lorena Bobbit trial, the Oklahoma City federal building explosion, the assassination of Israel’s President Rabin, the crash of a TWA flight 800 in New York in July 1996 or the debates on the North American Free Trade Agreement (NAFTA) in the late 1980s.
"The CNN village" has accomplished major breakthroughs since 1990. In India, for example, where the government has allowed access to cable channels in May 1992. In Russia, where CNN airs two hours a day from Moscow on Ostankino Television. CNN now covers all of Germany after acquiring, in November 1992, 27.5% of the NTV shares, the most important German information channel. In France, CNN is now broadcast by the Astra satellite. CNN also broadcasts in former Czechoslovakia since 1990, in Romania since the summer of 1993 (through Channel 31) and in Vietnam through VTV since 1989. Since January 1, 1996, CNN also airs continuously in Spanish (CNN Internacional) thanks to dozens of Spanish language correspondents around the world. It has also made attempts to further penetrate financial markets by launching a financial and economic news service called CNNfn which was launched on January 1, 1996, and is aired 12 hours a day by satellite, cable and modem (CNN Interactive on the Internet and through the AT&T network).
For many observers, CNN has become the world-leader in real-time information, especially in times of crisis and during large-scale events. Because of its financial and organizational clout, the CNN network glorifies information. Its efficient use of satellites largely explains its influence on Western media. CNN is the triumph of images and television over news agencies, especially when it comes to speed.
One thing is certain, if the introduction and the development of picture TV agencies and all-news channels did not make national news agencies disappear, as some had hastily predicted, they have nonetheless changed their meaning. Agencies like AP, AFP, UPI and Reuters are increasingly dependent on channels like CNN and BBC World, quoting them abundantly, most of the time without confirming the news. Indeed, the reporters of the four agencies increasingly monitor such TV news channels as their source, whether it is CBC Newsworld or RDI in Canada, Sky News, ITN or BBC News in Britain, Euronews in Europe or Telemundo in Latin America. A careful study of the agencies’ news wires is convincing. To some extent, the agencies have become the transmission belts of audiovisual media who provide live information. Agencies now constantly quote CNN. They even pay full-time journalists just to monitor CNN and other networks.
Former AFP president Claude Moisy reminded L’Express magazine how it had vehemently criticised his agency during the first days of the Gulf War. Customers of AFP accused it of being too wary of CNN’s information compared to that of Reuters, for example. “We would sometimes try to obtain confirmation. Sometimes we were wrong to wait, other times we were quite glad to have waited. This is part of the trade. Direct use of continuous information media is a facility we have to use with caution, always quoting the source.”
However, one must bear in mind that “none of the news channels could live without the news agencies. In this sense, this is not a new type of competition.” Even though agencies are consumers of CNN or BBC World, “there is a technical aspect from the onset. Rather than being in the press room of the White House to hear a press conference by the President, it can be followed on CNN from a Washington’s newsroom which allows to transmit “bulletins” and “urgents” much more rapidly. If one is stuck in the press room at the White House, one cannot get out. In this sense, agencies and other media also depend on the live coverage of another audiovisual media.”
According to Robert Fisk, a correspondent for The Independent in the Middle East, the live television coverage of events has replaced the work of print news agencies. He told the newspaper El Pais how he brutally understood this phenomenon at the beginning of the Gulf War.
“What could I tell my paper of the first minutes of the War once the beginning of the hostilities had already been aired live on CNN? I remember a strong, almost physical feeling when I understood the good old days of print news were over.”
The success of CNN and other television networks is explained by the fact that TV has two advantages over the press in general :
1) it is the media best suited to convey emotions
2) the transmission of these emotions is immediate
Americans call this the “television syndrome”. “Television poses enormous problems for rational government decision-making. CNN is faster than any intelligence we got” declared Brent Scowcroft, a former National Security Adviser (NSA) in the United States. “Images are what decides the public opinion” adds Everett Dennis of the Freedom Forum for Media Studies of Columbia University.
It must be noted, however, that CNN has limited impact on the general public. Whereas the agencies have close to one billion readers on the planet, CNN only has 110 million viewers throughout the world, and a majority are in the US (67 million). The best ratings CNN ever obtained in the United States since the Gulf War in 1991 was only 13.6 million viewers (during the 90 minutes debate on NAFTA between Ross Perot and Al Gore on November 10, 1993). In fact, 58% of American households may access CNN, but few watch it. Viewership is quite high during major events like the O.J. Simpson trial, but on a regular basis, one can contend that CNN does not draw much attention. Indeed, the television audience of CNN collapsed by 80% in the week following the O.J. Simpson trial verdict. These figures are quoted from a study published by the DDB Needham agency.
Outside the United States, CNN’s viewership is composed mainly of journalists, politicians, the military, business people, professionals and diplomatic staff of governments. It truly is world elites, rather than Joe Everybody, who watch this channel. Moreover, CNN is considered to be much too ethnocentric, too oriented on events that concern Americans. This might explain the increase of CNN’s viewership by 50% in 1995 with the O.J. Simpson trial and the Oklahoma City federal building explosion. Some accuse CNN of being the transmission belt of America’s foreign policy. “CNN would therefore be an image agency and could not be considered a television broadcaster” believes Dominique Wolton of France. Unlike news agencies, CNN would not even offer global information, but rather American information on the world. This partly explains the backlash felt at CNN since 1992 : the decision of the Fox network to terminate its contract with CNN in November 1992 and the massive withdrawal of European hotels (since the arrival of BBC World on the air).
However, CNN is aware of this problem and plans on bringing the percentage of American news to less than 30% by regionalising its services. It is important to note that the Fox network has signed, in January 1995, an agreement with Reuters to develop a national news service in the United States that will be distinct from ABC, CBS and NBC. Fox affiliates now have access to all the images of Reuters Television from the around the world, and in exchange, Reuters gains access to images from the United States. These images are provided by Fox’s affiliate stations, which make up the fourth most important television network.
Despite those promises, harsh criticism is often addressed to this American network. In fact, its power is disquieting.
“The power of CNN to dictate the North American agenda is disturbing. In the past few years, at least since the Persian Gulf War, it seems to have become an arm of the Pentagon, a player in world affairs such as no other network has never been. During the war against Saddam Hussein, it achieved enormous prominence, despite the fact that it rarely showed much news gathering initiative and was content chiefly to parrot Pentagon spokesperson. Sometimes it seems as if world events, whether in Washington or doomed little sinkholes such as Haiti, are operating on CNN’s timetable. But what is more disturbing in all this is simply that when CNN decides that Haiti is the story, it seems as if there’s no other news. Every other North American news outlet slavishly follows. Thus viewers are subjected to wall-to-wall coverage.”
One does remember the arrival on the beaches of Somalia, under cover of the night, of American soldiers…with CNN’s cameras waiting for them.
7.1.3 BBC World (British Broadcasting Corporation)
BBC World, formerly known as the BBC World Service Television, is another player that must be watched in the competition for the circulation of international news. Its global ratings are better than those of CNN.
Money-losing BBC World has been broadcasting from London since March 1991. It is a news channel. The BBC news service currently broadcasts on four continents (America, Asia, Africa and Europe), 200 countries, and reaches 2.7 billion people, 80% of the world’s entire population. The 250 correspondents and the 50 news offices of BBC throughout the world as well as the 100 journalists in its London newsroom are put to contribution for supplying BBC World with news. The BBC is developing itself in function of tele-broadcasting satellites. It broadcasts in English and Arabic. From September 1993 to April 17, 1994, the BBC also broadcast in Japanese and Chinese in South East Asia, but the service was dismantled due to lack of commercial viability. The BBC launched news channels in the United States, Europe and Asia in partnership with Pearson Plc. The parent company BBC employs 25,000 persons, 3,000 of them exclusively in the news division.
The BBC features a tradition of unbiased coverage of world news. Recognised for its famous BBC World Service radio service (133 million listeners), the BBC has 20 more newsrooms than CNN worldwide. Its service is quite successful at capturing parts of the markets formerly held by CNN : hotels, South East Asia, Canada, etc. In 1993, the BBC entered alliances with ABC News in the United States, CBC Newsworld in Canada and Nissho Iwai in Japan. They are strategic alliances by which the networks agree to share their news, offices, operation costs and their correspondents. The BBC also plans to expand into China, South East Asia and Ouzbekistan. Basically, the BBC intends to develop its World Service Television, especially in Asia and Europe, where it is in direct competition with CNN. For example, at the end of 1993, BBC World joined with the French TF1 and Europe 1 networks in order to launch a “French CNN”.
The budget cuts imposed on the BBC since 1995 by the members of the British Parliament loom over this institution. The budget of the BBC World Service (radio) was reduced by US$20 million in April 1996. The BBC's revenues come from a annual tax paid by owners of TV sets.
In late 1999, the BBC trimmed staff and shook up the BBC World TV service. Some 33 journalists and 17 resources staffers lost their jobs but the BBC said it would offer them other BBC jobs. In 1998, it reported a loss of US$35 million.
Beginning in April 2000, the BBC World TV service was expected to put a stronger emphasis on hourly newscasts and drop some political analysis programming. It would favour half-hour news bulletin every hour on weekdays and news bulletins and summaries on weekends.

7.1.4 The Explosion of News Channels and Pictures Agencies
The popularity of the rising news channels and the constant development of international image agencies like Reuters Television (formerly Visnews) and Associated Press Television (APTV), indicate that a new information circulation system is emerging. Audiovisual has become a 290 billion dollars market worldwide.
Every day, the same images of major international events, generated by agencies specialised in the sale of images such as Reuters TV and APTV, are shown everywhere. These landmark names mean little to the man on the street, yet the broadcasters are engaged in ferocious competition. Image-makers supply televisions around the globe with two or three minutes of raw footage concerning major international events accompanied with summary explanatory material. The battleground of competition changes with the events, but Sarajevo is probably the most striking example. For more than five years, agencies have had offices there in order to satisfy the demand of tele-broadcasters from around the world for fresh images. TV broadcasters want some bang for their bucks.
Worldwide Television News (WTN) was the eldest of such image agencies. Established in 1953, it is based in London and supplied thousands of television networks in 85 countries (including CBC, CNN, TF1), twelve times a day with images from its 119 offices located in 102 countries. WTN, bought by The Associated Press for $US 50 million in June 1998, was 80% controlled by ABC News and was also in business with ITN of London and Nine Network of Australia.
Since the late 1980s, WTN had declined because it couldn’t meet the increasing demand of its exacting clients. However, it had always had the advantage of offering its members the possibility of renting out its crews abroad. It was nonetheless still popular. In the field, any foreign television network subscribing to WTN could require that some filming be done on its behalf in any country. The fact remains that WTN had lost a few clients (such as CTV in Canada) in the beginning of the 1990s.
Reuters Television, by far the most popular image agency, also has the advantage of tradition. Reuters Television is but the new moniker of Visnews, a renowned television agency over several decades which was acquired by Reuters in 1993. Visnews became Reuters Television. Strategically, the arrival of television at Reuters means greater visibility for the agency : 900 television networks in 80 countries. Reuters Television also operates from London with three “super-offices” in Moscow, New York and Washington. Reuters Television has seven television studios in the United States and it oversees the activities of 180 camera crews in 70 offices. Reuters Television supplies television stations around the world and round-the-clock, seven days a week. It offers tailor-made services and material by the parent agency’s journalists (Reuters News Scripts) so that writers and anchorpersons can properly describe the images being aired. Reuters Television is no doubt the most respected image agency in the world. Its archives date back to 1896. Reuters images are used every day by the giants of the world such as CNN, NBC, CNBC, Fox and BBC World Service Television. About 15,000 reports are supplied to television networks each year. Reuters also has agreements with Ostankino 1 in Russia and with Sky News. The latter British news network broadcasts in 40 countries, and Reuters produces a-la-carte programs and feeds its international images to the Sky newsroom. Reuters also broadcasts some Sky News reports. This explain why one has seen Sky reports showing up on the airwaves of the CBC and CTV News, in Canada, since 1995.
Associated Press Television (APTV) has decided implement in London, a city considered to be the center of the telecommunications universe. Its President is Stephen Claypole. APTV has been officially operating since the fall of 1994 and it already as many clients including majors such as CNN, TVA, RAI-TV, ARD-TV, ITN and PBS’s McNeil-Lehrer News Hour. 74 of AP's 93 foreign offices use Betacam and Super 8 cameras, allowing to obtain images rapidly. Various image releases occur every day.
It was difficult to predict the success of Associated Press given the fierce competition it faced from Reuters TV and WTN but the buying of WTN constituted a major victory for AP. AP’s market studies, conducted over a three-year period, show that there was room for a third television agency. AP had more than 210 clients before buying WTN and had 330 subscribers by late 1999. Reuters TV is well established, so is APTV now. After text, photos, graphics and radio, AP is now addressing television. Its arrival on the market has intensified competition. APTV is now the first player and stops at nothing to lure customers away from Reuters Television. “APTV has a very aggressive sales policy and it did not invest in this sector to be second. We want to be number one”, said its president, Stephen Claypole, in an interview with Radio-Canada in June 1996.
With the collapse of the communist ideological barrier in 1989, television networks are broadcasting in regions of the world that were traditionally inaccessible. The astounding explosion of international agency activity has led to increased revenues for Reuters and AP and to noticeable improvement in event coverage by news agencies. Due to the prominence of television, some ten new players have entered the scene since 1980. In addition to CNN, TV5 and BBC World, there are now several new 24-hour news channels and major global networks :
- Euronews (Europe)
- CBC Newsworld and RDI (Canada)
- CTV News Net and Le Canal Nouvelles (Canada)
- NTV (Germany)
- Sky News, BBC 24 Hour News (Britain)
- Star Television (Asia)
- Telemundo (Latin America)
- Globo News Television (Brazil)
- LCI (France)
- ECO Television (Latin America)
- ABC News (United States; postponed due to high costs)
- MSNBC (United States; Microsoft and NBC News)
- Murdoch News Corporation (United States)
- Dow Jones-CNBC (Europe; a financial network with 60 million cable
suscribers
- Fox News (United States; Rupert Murdoch’s News Corporation)

The importance of channels specialising in news will increase after the year 2000 and the expected “500 television channel” universe will fundamentally affect the way news agencies operate. In short, while news agencies are weaving webs as wide as the planet, they are also confronted with new competition in the shape and form of local and international news channels.

7.2 Development Business News Agencies : The Case of Bloomberg, Bridge News and Dow Jones

Blooomberg
Bloomberg (www.bloomberg.com) has definitely become a serious competitor for Reuters. Headed by Michael Bloomberg, the New York-based agency delivers real-time economic information to 200 newspapers and 57,000 computer terminals used by nearly 140,000 finance professionals in 62 countries. Bloomberg operates 65 offices in 91 countries throughout the world and employs 400 journalists out of 3,000 employees. It supplies its own terminals to customers and, in 1996, signed agreements with AFP for the broadcasting of its news and vice-versa. AFP dispatches are displayed in English, French, Spanish, German and Japanese via so-called "Bloomberg screens". Since July 1996, Bloomberg Television broadcasts an information channel on the French cable with the help of AFP. Bloomberg’s financial and economic news, as well as AFP’s weather, national and international news can be seen on the TV screen in many countries on cable television. Bloomberg also allows its customers to complete transactions with terminals of Tradepoint Financial Networks Plc, a British firm specialised in electronic commerce. Bloomberg Information Television, a financial television channel, broadcasts in England and the United States.

Bloomberg (www.bloomberg.com) had revenues of $1.25 billion in 1997, an increase of 36 % from 1996 and saw a rise of 30 % of its sales in the first half of 1998, according to Waters Information Services. It is currently third among financial new and data companies, behind Bridge Information Systems and Reuters. Bloomberg repeated it had no interest in taking the company public, saying there was no reason to do so since it had good cash flow and access to capital. In the U.S., Bloomberg says it has more than 1,000 media suscribers.

Dow Jones
Dow Jones & Company (www.dowjones.com) is another story. The business and financial information group used to be strong competitor to Reuters, Bridge and Bloomberg but has recently been in financial trouble. It lost $US70 million in 1997 but made a net income of $US 8.3 million in 1998. In the first three quarters of1999, it made a net income of US$211.5 million. Dow Jones signed a strategic alliance with Castlenet in 1997 for analytic tools for deritavives to compete Bloomberg. Its high-profile but money-losing division Dow Jones Markets, formerly known as Telerate, was sold to Bridge Information Systems in March 1998 for US$510 million. The new service is now called Bridge-Telerate, and absorbed 3,500 employees from Dow Jones. Ironically, Dow Jones news wires can also now be seen on Reuters terminals and the Reuters Business Briefing data bank part of a joint agreement, which shows how different the business has evolved since 1990.
Owner of the 11-million copies strong Wall Street Journal (www.wsj.com), it was founded in 1882 by Charles H. Dow, Ed Jones and Charles Bergstresser. With annual revenues of US$2.15 billion in 1998 and a staff of 8,300 (among them 100 foreign correspondent of The Wall Street Journal), Dow Jones also publishes Barron's, Far Eastern Economic Review, SmartMoney and the Ottaway newspapers, a chain of 19 daily and 15 weekend community newspapers in the United States. It is also well known for the Dow Jones Indexes at the New York Stock Exchange and is co-owner of CNBC financial television.

Bridge Information Systems.
Founded in 1974, financial news and data provider Bridge Information Systems became the world's number two provider of financial information in 1998 after it bought Dow Jones Markets' Telerate, a data feed and also symbol in America. Bridge also bought Knight Ridder Financial, a business news wire, in 1995 and renamed it Bridge News. It bought ADP, a leading information company in the retail market.
With 75,000 users representing 6,500 financial institutions, Bridge offers data, information and news on equities, fixed income, foreign exchange, derivatives and commodities. Headquartered in New York City, Bridge has 600 journalists based in 100 cities and 60 countries.
The company is owned by Welsh, Carson, Andersen & Stowe and its main business lines include network services, trading and transactions services, and financial information and news products. Bridge gets its information from more than 250 exchanges, 450 news and research sources, 23 third party wires and 3,000 banks, dealers and other contributors

The cases of the regional news agencies DPA, EFE and ANSA
Audiovisual media are not the only competition facing news agencies since the early 1980s. Indeed, three regional news agencies have also emerged in a significant way since the late 1970s. Le monde des agences de presse, published in 1978 by the UN's International Commission for the Study of Communication Problems, suggests that the four news agencies (AP, AFP, UPI and Reuters) were in a state of monopoly for the dissemination of international information. However, the study sheds light on five regional news agencies which had potential for international development : Deutsche Press Agentur (DPA) in Germany, Agenzia Nationale de Stampa (ANSA) in Italy, EFE in Spain, TASS in the USSR and TANJUG in the former Yugoslavia.
Jeremy Tunstall wrote, as early as 1981 :
“We may well see an expansion of this category of more-than-national but less-than-international news agencies. These stronger national agencies will, of course, tend to appear in the countries with the strongest national media, where international agencies previously had their best paying clients. This latter is another reason why the revenue of the present four international news agencies may be under increasing threat.”
Today, TANJUG and ITAR-TASS have become marginalised. Only DPA, EFE and ANSA have managed to offer the four international agencies some competition. The three agencies have conquered significant market share since 1980. They have developed their own networks of correspondents around the world, their services, and the quality transmission of their news. All three of them have become international agencies according to Beaudelot’s definition (chapter I).

7.2.1 Deutsche Press Agentur
Deutsche Press Agentur (DPA) is a German agency established in 1949 by local media in that country. Based in Hamburg, it has international ramifications. It operates independently from the German State, political parties and interest groups. 200 German media are shareholders of the agency. In 1978, DPA served 78 countries and had 199 subscribers outside its national boundaries; 80 countries were covered by correspondents or freelance reporters. It broadcast 115,000 words per day and had 800 employees, and DPA’s network of correspondents had 105 people overall.
According to the figures provided by the agency, DPA has over 80 offices throughout the world in 75 countries. In 1999, more than 60 national news agencies traded their information with DPA, who now transmits 335,000 words per day in four languages (German, English, Arabic and Spanish). In the United States and Canada, DPA dispatches are retransmitted by Scripps Howard. For example, Toronto’s prestigious Globe & Mail regularly prints DPA dispatches. In total, DPA employs 2,500 persons in 100 countries. It has customers in Europe, Asia, the Middle East, North and Latin America.
Since 1990, DPA broadcasts its news directly via satellite. It offers 19 German language-only services and six services in four other languages. Its stock capital was worth about 11 million marks in 1993.
“DPA is the leading news agency in Germany and belongs to the group of four major international news agencies. Europe has gained in importance as an area of news coverage since the political changes in the late 80s/early 90s. DPA is located in the heart of Europe and its traditional strength lies in offering extremely reliable East-West coverage.”
Deutsche Press Agentur is undoubtedly best positioned to fill the void left by UPI since the mid-80s. “DPA is expanding in the Northern hemisphere and could become a player on an international scale” admits Steve Geimann, former executive director of UPI. Lionel Fleury, former CEO of AFP, maintains that the rise of the DPA is threatening because it has the advantage, in Europe, of the world’s richest internal news market and it benefits from the important print runs of local newspapers.

7.2.2 Agenzia Nationale Di Stampa (ANSA)
The Agenzia Nationale Di Stampa (ANSA) was established in Rome in 1945. ANSA attempts to find a niche in the select club of international news agencies. ANSA is a cooperative of 46 Italian publishers which produce over 50 daily newspapers in Italy. The editorial independence of ANSA is guaranteed by the Italian Constitution. ANSA has 854 employees around the world according to company figures. ANSA has 18 offices in Italy and 89 abroad, 26 of them in Europe, 15 in Africa, 20 in Asia, 5 in North America, 22 in Latin America and one in Oceania.
ANSA receives dispatches from 52 national news agencies around the world. It broadcasts over 300,000 words per day by means of information technologies, (however, the agency's documentation is contradictory, as it mentions 750,000 words per day elsewhere). News are supplied in four languages (Italian, French, English and Spanish). ANSA offers 15 news services to its 957 subscribers (628 in Italy and 329 abroad). It states it is the fifth largest agency in the world.
In 1978, ANSA covered 69 countries and had 1,600 subscribers. Those countries were covered by correspondents or freelancers. The agency broadcast 300,000 words per day and had 568 employees. The agency had a network of 295 freelancers and 45 correspondents throughout the world. However, it seemed headed more towards a national rather than international expansion.

7.2.3 EFE Agency
Finally, the Spanish agency EFE. There is little information available on this agency. However, according to EFE’s 1992 annual report, the agency had 1,235 customers (663 in the world and 571 in Spain). EFE has 1,000 employees and serves 40 countries, but mostly Spain and Latin America. It is considered the number one agency in Latin America. My personal experience in Mexico and Cuba confirms this state of affair. Even the Miami Herald now subscribes to the English and Spanish services of EFE. Seventy countries in the world are covered by the agency’s correspondents and freelancers. EFE broadcasts approximately 500,000 words per day and it offers its customers television services (EFE-TV), radio services (EFE-RADIO), a graphics service, an economic service (EFECOM) and databanks (EFEDATA).
EFE contends it is one of the five largest news agencies in the world. It claims to reach 300 million information consumers. 22% of the news published in Latin American newspapers bear the EFE mark. Next are AP, Reuters, AFP, UPI, ANSA and DPA.
However, Lionel Fleury, President of AFP until early 1996, thinks that EFE is losing ground :
“EFE does not appear to me as being in the process of becoming an international news agency. It has a lot of financial problems. It has made big coverage efforts, especially in Latin America, for the 500th anniversary of the discovery of the Americas as well as for the Sevilla World Fair. It is common knowledge that there is an important financial crisis within the Spanish agency and that the Spanish government is less inclined to support EFE than it has been in the last two years for example.”
EFE admits that financial results are declining. The causes are :
1) a freeze of subsidies from the Spanish government
2) the global economic crisis
3) the disruption of the international information system.
Steve Geimann, formerly director at UPI, thinks along those lines but also believes that the problem of EFE is its “Spanish” coverage of events. “EFE is well deployed throughout Latin America but its narrow Spanish focus limits its ability to become an international agency.” Indeed, EFE is largely subsidised by Madrid; it has direct links with the Spanish State.
In an interview he granted us in Montreal, media researcher Michael Palmer pertinently maintained that the development of regional news agencies was not a new phenomenon. It might not be novel, but it has significantly evolved since 1980 (especially in the case of DPA). The strength of those three agencies is relative, however, because they have limited resources outside their national territories.

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CHAPTER 8

Chapter VIII
News Agencies in the New Economic and Geopolitical Order
8.1 Technological Development : An Unavoidable Hurdle for News Agencies
Technology has been a major factor in the evolution of news agencies since 1980. Selling news must now be done in the most rapid and reliable manner possible. Consequently, transmission speed has been and remains the main concern of news agencies and it is also a priority for the media.
Since the early 1980s, “satellites and the computerisation of transmissions have multiplied communications capacities and reduced operating costs, following massive investments”. In addition, computers offer agencies with an infinite number of possibilities. Information technologies were the most important factor in changing the life of news agencies in the past years.
In order to survive, to remain competitive and to face the crisis at hand, agencies must meet the technological challenges as well as those of the media market. “Agencies have entered a true technological competition requiring both considerable financial means and an in-depth reflection on their mission which is inevitably affected by those transformations.”
The emergence of new information technologies such as the Internet forces agencies to find new avenues for disseminating their information in the future.
“New techniques, new media. The emergence of telematics, experiments conducted throughout the world, the proliferation of interconnected databanks through ever complex networks (such as the Internet), the daily invention of new services reaching the homes of citizens, all of this also calls for new answers by news agencies.”
International news agencies have set up databases and so-called “online” services making it possible for customers to select only the information they want (often highly specialised). The same is true of newspapers. Formerly “live, fast-breaking news used to be the privilege of journalists in newsrooms equipped with a teletype” , but now the ordinary citizen can, for the first time in history, be informed on the latest developments in international events by connecting to the news wires of agencies via the Internet or commercial services such as Microsoft Network (MSN), Compuserve, Prodigy (a subsidiary of IBM and Sears), or America Online (AOL). All that is required is a computer, a modem and a telephone line. Wall Street brokers and editors-in-chief are no longer the only ones who can access real-time news. This is a new fact of life and could allow agencies and the media to protect their traditional role in providing news and advertisement. Commercial online services should reach one third of American households by the year 2000, about 35.2 million subscribers, according to the Jupiter Communications research firm. In 1995, only 9.6 million people subscribed to such services. The revenues they generated was US$2.2 billion and are expected to increase to US$14.2 billion by the year 2000. America Online alone has attracted two thirds of the new subscribers. However, the figures of the Louis Harris and Associates agency state that there were 41 million users of online networks at the end of September 1996.
There are examples aplenty. CNN is present on the Internet with its CNN Interactive site (http://cnn.com). NBC and Microsoft Corporation have developed MSNBC Online (http://www.msnbc.com), a US$200 million project offering interactive services, text, graphics, images from NBC News, photos and sound clips geared on Microsoft technology. The site has been up since July 15, 1996. The goal of this service is to change the way people interact with news.
United Press International (www.upi.com) offers its news on the Delphi online service as well as on Bill Gates’ Microsoft Network (MSN).
AP (www.ap.org), for its part, is present on the Internet for its newspapers through WIRE, a Web site that allows the retrieval of news, photos, graphics, video images and audio clips 24 hours a day. The site has been made public since the fall of 1996 through the Web sites of the U.S. newspapers members of the Associated Press. AP also grants access to its AP Online and AP en Français services to Compuserve and America Online users. These services carry the important news of the day.
Reuters (www.reuters.com) has set up a subsidiary, Reuters NewMedia Inc., to develop new market niches and ensure its presence online. Reuters information is now available on the commercial servers of Delphi, Compuserve, America Online, Microsoft Network (MSN), AT&T Interchange and on the MCI network. Reuters NewMedia has also developed an Internet service (http://www.yahoo.com) where the ten most important news of the hour in five different fields can be found. The information is updated every hour. Reuters NewMedia also distributes news on the arts and show business, prepared by Reuters specialised journalists. The service named Reuters-Variety Entertainment is an arts information service offered through the personal computers of executives, investors, observers and the media. More and more, Reuters intends to distribute its news through the Internet.
AFP (www.afp.com) distributes its dispatches on the Minitel and Calvacom services in France as well as on commercial services such as Canada’s Informart. Its news can also be found on the Internet sites of Yahoo and Nomade. France-Press Online, the French agency’s Internet site offers the day’s headlines, the most important graphics and best photos. AFP’s telematics service has also begun, in 1995, gathering on a CD-ROM “all the summary documents prepared by its documentation service. Several criteria (keyword, subject, date, etc.) allow to search the information classified in six categories. Available for PC or Macintosh, subscription is annual (FF6800 or US$1,750) and includes an updated disk every three months.” AFP has also issued a CD-ROM on the Atlanta Olympic Games.
For the agencies, these transformations translate into new investments which don’t compare to the fixed costs that were associated with their traditional activities. Such a new infrastructure is costlier to maintain and more volatile. Equipment becomes obsolete more quickly.
The technological development of the recent years has upset the agencies and partly explains the crisis. “The development of information technologies and the major changes in telecommunications have not only fundamentally changed the way agencies operate, but the whole information circulation system.”

8.2 Information as a Prominent Source of Power in the 1990s
Since the 1960s, a process of market globalisation has unfolded. Between 1980 and 1995, the export of goods rose from US$2000 billion to US$4900 billion. World trade has tripled and customs duties have been reduced to less than five percent. Trade is developing at least three times faster than global production. This economic globalisation has facilitated the interdependence of the peoples and of the financial markets of the world while putting communications at the center of the world’s preoccupations.
The explosion of communications and financial exchanges has led to an increased demand for fast-breaking, real-time international and financial news. Businesses, elites, media, financial markets and politicians “all have an increasing need for information simply because managing, deciding, governing means being informed as rapidly and reliably as possible to remain competitive.” Information has become a tradeable asset that everyone wants to control. Information has become the greatest power in our societies, on the same level as money and politics.
For example, the world market of real-time financial information has increased by 28% between 1993 and 1995, with revenues that rose to US$5.3 billion from US$4.1 billion, according to a study by the specialized firm Market Data Industry.
The number of financial information terminals, which is the number of computers accessing such services, rose by six percent over the same period, going from 720,000 to 762,000.
Most suppliers of financial information are betting on a service growth based on the Internet technology. They privilege intranets, private networks that are part of the Internet but protected against intrusions.
This increased demand has led to the creation of new financial news agencies (such as Bloomberg and Bridge News) and of new general and financial wire services by the major daily newspapers and press groups of the world. These services have imposed tough competition on international news agencies.
In parallel, there is also the multiplication of media-based electronic services. One need only to think that 12% of American newspapers (175 dailies) maintain their online presence, double the ratio of 1995 (it must however be noted that only 20% of them are profitable!). In Canada, over 75 daily newspapers were present on the Web in 1999.
Agencies rocked by the crisis for twenty years must now redeploy. They are now faced with a major problem : information overload.

“There is a great mutation going on with the multiplication of channels through which information is conveyed. Information not only flows by the written word, but also through television, fax machines, computers, etc.” Society finds it difficult to properly manage the increasing volume of material coming from the media, databases, and other information suppliers. “We have reached a point where technology has outpaced the individual ability to process and absorb all the information now available.”
The increased demand for information by consumers has created a problem for the agencies. To fulfil this demand, they have had to invest huge amounts of money to open new offices, hire new staff and expand their communication networks and technological tools. The challenge created by this sudden unquenchable thirst for information is mainly economic. Agencies have had to develop increasingly powerful software and to invest in R&D in order to succeed in managing and broadcasting the loads of financial information and data handled every day. Technology investments have been massive in order to meet the demand for the fast transmission of news. This required considerable investments which have particularly dented the financial health of UPI and AFP.
The anarchic and unforeseeable development of the Internet global network also worries the agencies. Are consumers really going to buy their information from this new media? Will it be profitable? Agencies bet that it will. For the first time, AP’s and Reuters’ news are now available almost in real-time on the Internet. AFP also has a dynamic Web site. It is the first time in the agencies’ history that the readers may access whole dispatches, browse through the agencies’ databanks and choose news by keyword, without the filter of traditional media.
8.3 The New Geopolitical Order
International news agencies were deeply affected by the global geopolitical evolution since 1980. The collapse of communist regimes in Eastern Europe and the USSR between 1989 and 1991 has led to the disappearance of the TASS agency as the main supplier of world information in socialist and developing countries.
The decline of the American hegemony in world trade and communications , following the rise of regional economic blocks such as the European Union and South East Asia, set the pace for the decline of UPI (bankruptcy statements in 1985 and 1992) and AP’s fall-back. However, the United States’ power is still very real, and English is propagating everywhere.
“The evolution of English is impressive not only in its results, but also in its parallelism with American economic power and the development of modern communication and means of dissemination. Because of weak communication channels, latin once stopped being the sole language of an Empire that had become too large. The opposite is happening nowadays : satellites, radios and television are promoting the propagation of English.”
The decline of French and of France’s political influence is partly at the origin of the crisis at Agence France-Presse.
As for Reuters, it managed to compensate the decline of British influence by developing an ultra-powerful electronic communications network based in London.
Moreover, the departure of the United States and England from UNESCO, in 1984 and 1985 respectively, halted the New World Information and Communications Order (NWICO) political and ideological debate between Western and developing countries.
The disintegration of the USSR and communist regimes (except in China, Cuba, Vietnam and North Korea) has meant that ideological aspects have all but disappeared from international information, allowing the four agencies to expand into markets that had been so far rather blocked up. In China, however, it is noteworthy that in January 1996, a governmental executive order did forbid Chinese users to obtain their information from foreign financial news services. Reuters, Bloomberg and Dow Jones were funnelled through the Chine-Nouvelles (Xinhua) state news agency who ensures the redistribution of selected news only and determines the subscription rates. Various Web sites of major international media are also segregated by Chinese authorities since September 1996. China is still trying to control the free flow of information but the measures against the financial news services ended in 1997 following American pressures.
The rise of Europe as a strong political and economic entity seems to indicate that the leadership of the club of agencies will most likely be European in the new Millenium. In 1980 American agencies AP and UPI led the international information circuit; it is now, and since 1990, in the hands of Reuters and AFP.
Since 1975, UNESCO economic indicators clearly show that the media and communications field is no longer under the exclusive control of the Americans. The current trend is that the situation in the 1990s is not superimposable to that of the 1970s.
According to Ignacio Ramonet of France's Le Monde diplomatique we have entered in “a massive Triad (United States, Europe and Japan) domination phase, a phenomenon that will be reinforced by the implementation of the Infobahn up to the year 2000.”
The decision of the American Congress to allow mergers between television networks and major communications groups, and a series of crucial alliances between multimedia giants such as the buy-out of Capital Cities/ABC by the Walt Disney Co. for US$19 billion in 1995, that of CBS by Westinghouse, that of Turner Broadcasting by Time-Warner, which was approved in September 1996, are only the tip of this inevitable trend.
Merger and acquisition activity in the media and communications industries in 1998 doubled the transactions of 1997, according to the annual Veronis, Suhler Communications Industry Transaction Report. Merger and acquisition activity for the first half of 1998 has reached more than $73 billion. The year 1999 confirmed that unavoidable trend.

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CHAPTER 9

Chapter IX
The Future is the Net

9.1 The Big Picture
As they stand out from our analysis, different factors have contributed to explain the crisis affecting news agencies.
First there are factors specific to the wire services.
The ownership and/or structure of an agency has a significant influence on the manner in which it was affected by this crisis. For AP, the principal clients are also the owners of the agency, an immense holding corporation composed of 1,530 newspapers which may absorb any losses by the agency. In the case of AFP, 43% of the revenues are direct subsidies from the State, of which 14 % is provided by French public services subscriptions. The “news agency” division of Reuters, commanded only a small proportion of its parent holding’s revenues (US$210 million out of US$5 billion) in 1998. Finally, UPI was the only one of the four agencies to be a for profit organization; no one absorbs its deficit.
The financial problems of the agencies have been serious enough to question the very existence of two of them : UPI, which is now almost bankrupt, and AFP, which is not profitable. Without its diversification and the support of the Reuters Group Plc, the status of the Reuters news agency, the editorial division of Reuters, would be rather precarious today. It is not the case even though it is evolving in austerity and meagre profitability. AP is a cooperative and it is not a bad off as the other three although it has been going through a rationalisation process affecting personnel and budget. In fact, the financial balance is utterly upset in most agencies.
It must also be noted that the individual history of each agency has had a direct bearing on the intensity of the crisis they went through.
At AFP, the high rate of unionisation and the “political” aspect of the agency were a disadvantage and translated into a major internal crisis. At UPI, counterproductive work relations and the incredibly sloppy management of the various owners throughout the 1980s have led to its downfall. At AP, the cooperative structure and the loyalty of American media, as well as its status as a social institution in the United States have all made things easier for the agency. Finally, the transformation of Reuters into a financial and global information group has changed the nature of its news agency.
General factors have also affected all information agencies.
The international debate on the New World Information and Communication Order (1969-1989), an issue that was much more ideological and political than professional, turned global agencies into easy scapegoats. The agencies, as well as the media in general, were fatally put on the block by the various powers, especially the political class. The NWICO debate shows that, in the eyes of agency specialists like Oliver Boyd-Barrett, controlling information remains one of the most important tools toward global domination.
The increase in production costs had quite a devastating effect on certain organisations. Gathering and processing international information in an agency are activities that are conducted by a specialised workforce. The number of employees in the agencies has significantly increased since 1980 at Reuters and AP, while it decreased at UPI and stabilised at AFP. Work conditions for those employees have improved. The development of trade unions during the 1970s and 1980s also led to an increase in the cost of gathering, processing and disseminating the news.
Moreover, the number of potential traditional news agency customers has stagnated, and even decreased, because of the economic hardships that hit the media (worldwide recession in 1981-1982 and between 1991 and 1995). With the shrinking media market, agencies had to react and develop new products for new customers (non-media, financial markets, etc.). Yet, if it is true that the media market has shrunk, one must not forget that the multimedia sector is developing at an astounding pace.
The information market has become more sophisticated, up-beat and complex. The print media market is only one of numerous markets nowadays. The rise of CNN and BBC World is a good example of this market evolution. Print media is a crucial market for politics and prestige, but a market in decline with regard to commercial and financial turnout, wrote Jean-Louis Missika. The ever-complex reality of news agencies has gone through about twenty years of economic and technological upset that deeply affected them. The traditional market of agencies and newspapers is shrinking at the same rate as print runs are decreasing, while press operations are concentrating and bankruptcies take their toll in this sector. Budget cuts in daily newspapers also highlight another symptom of the current evolution : the clear tendency in reducing the number of agencies they subscribe to. Only major national newspapers can now afford to assess simultaneously the information reported by the three main agencies.
The New World Information and Communication Order has given way to a new world information disorder. “Today, disruption has the better of harmony in the organisation of our international information distribution system. This disorder is fuelled by the intense competition in which not only the agencies but all media are engaged in to secure their presence on an upset market, to use new techniques and to stay alive for the future.”
The liberalisation of the economy and the collapse of the Bretton Woods agreement have enabled the explosion of communications and financial exchanges. This phenomenon also led to an increased demand for real-time news transmission. About 1,4 trillion US dollars circulate daily, and almost instantly, over electronic information networks.
The cost of transmitting news has dropped due to the “satellisation” and computerisation of the agencies’ telecommunication networks. Until the 1970s, the news of AP, AFP, UPI and Reuters were conveyed by cables or ground wires and at higher cost than today. The direct transmission of dispatches from the central terminal of news agencies to computers in the media and on the Internet via satellite has led to a dramatic drop in the operating costs of each agency, but this occurred at the expense of massive investments which damaged the financial health of UPI and AFP. Reuters news agency's budget is paid by the Reuters Group, and those of AP by American newspapers, and they both managed to get by rather well. The required technological investments were made to fulfil the rapidly increasing demand for fast-breaking news by the media and other clients.
From a geopolitical standpoint, the dislocation of USSR and its communist empire collapse buried the TASS agency which has been the main source of international information for developing and socialist countries. The decline of the United States’ hegemony in world trade coincided with some withdrawal from the international scene by AP’s and the two bankruptcies of UPI. The renewed influence of Europe drew AFP and Reuters in its wake, making them the new leaders in the 1990s. At the same time, another European agency, Deutsche Press Agentur, has managed to carve itself a comfortable niche.

9.2 There is Still a Future for News Agencies
There was a crisis in the traditional activities of agencies, particularly in the dissemination of international information. Agencies have had to redefine their role as “news wholesalers”. This crisis of news agencies occurs at the same time as that which is disrupting societal values and institutions in general.
One can also note that the traditional concept of a news agency has become obsolete. Those agencies, whose primary role was to broadcast general news are now forced to distribute “information” in the broadest sense. To survive financially, agencies had to diversify their products and widen their customer-base. We are now compelled to speak of information providers rather than news agencies.
The conclusion is that, in the late 1990s, there are only three genuine international news agencies : Associated Press, Agence France-Presse and Reuters. United Press International has turned into a dead dinosaur following its financial distress (which goes to prove that such corporations can die). The gap left by UPI could eventually be filled by the German agency DPA. AP is the first "news agency" in the world followed closely by Reuters and AFP, but Reuters is in a category of its own.
It is possible to say that :
1) UPI no longer deserves the status of international news agency and is now a national agency.
2) In some aspects, the Reuters news agency is no longer one due to the marginalisation of its activities within the Reuters Group. It however still provides all the services of a general news service.
3) AFP and AP remain the only two traditional international news agencies in the sense that their main goal is the gathering and distributing foreign news to the media.

The following table compares the major news agencies in 1999.
Agency Subscribers Offices Employees Countries Budget Words/Day
AP 16,335 240 3,500 112 US$420M 20 million
AFP 12,500 95 2,000 165 US$220M 2 million
UPI 500 35 400 50 US$20M n/a
REUTERS 498,500 218 17,000 157 US$5MM 2 million
DPA 2,500 80 n/a 75 n/a 335,000
ANSA 957 107 854 60 n/a 300,000
EFE 1,235 50 1,000 70 n/a 500,000
BLOOMBERG 140,000 70 3,000 91 1.7 MM n.a.
DOW JONES 106,000 100 8,500 80 2.3 MM n.a.
BRIDGE 165,000 100 4,500 60 1.3 MM n.a.

Sources : Agencies' annual reports, Patrick White, Henri Pigeat, Catherine Conso

The figures given by AP are explained by the fact that many news stories are published on various news services in English and other languages. This does artificially inflate the number of words transmitted per day.
Finally, it is important to express the limits of this analysis. The crisis of news agencies is limited. It has mostly rocked two agencies (UPI and AFP), financially and in the redefinition of their mission. AP was not profoundly affected even though the American market is declining, which forced it to reduce the scope of its correspondent's network. There have been major changes at Reuters, but its “news agencies” activities are still undergoing an expansion process and the economic miracle of the Reuters Group ensures reliable financial support.
Each of the agencies was therefore affected differently by the upheavals of the last fifteen years. Reuters and AP navigated through quite well, and AFP came to its senses just in time to avoid closure in the mid-1980s.
The agencies had to face economic and technological challenges by transforming themselves and adapting to the evolution of technologies and that of the media. They will have to keep doing so.

Despite the appeal of audiovisual and of new information technologies, the information agencies that AP, Reuters and AFP have remained at the center of the information system which supplies the international readership and they evolve in a global, competitive market. One thing is clear : they will stay alive.
They will remain for various reasons. Agencies now play a complementary, analytical and explanatory role, whereas they previously had a dominant role in the international communications system. Radio and television cannot fulfil the latter for lack of time and means. Agencies are utterly useful to the other media. The example of recent civil wars in Rwanda and the former Yugoslavia are striking. Most of the images released from these countries, with exception to European and US media, were images of Reuters Television, APTV and WTN. Television networks were only non-commenting end-broadcasters of the same images : bodies floating in the river connecting Rwanda and Tanzania; shots from remote mortars falling in the heart of Sarajevo, etc. In such cases, agencies are and will always be a gravy train for the media. In the case of extremely important news, agencies will always play their role in alerting media throughout the world. Other journalists simply cannot work without them.
There is a future for AP, AFP and Reuters. They must, however, move into open spaces and become aware of the advantage they have over television : analysis and explanation.
The other solution, to preserve and develop an international status, is for information agencies to pursue their investment in research and development and focus more on financial and business news. The future of agencies is intimately linked to economic diversification, whether it is in their products or customers.
The future can be bright for them insofar as they are fully aware that other phenomenon are already emerging from within the international communications system :
1) The Infobahn, more precisely the Internet
2) Artificial intelligence
3) Multimedia
Agencies must begin exploring in artificial intelligence (which is the case for Associated Press ) and Reuters in order to maximise the commercial potential in the bulk of information available to them. This information could be sold in newsletters to businesses, or as à-la-carte (personalised) news sent directly to the email adress of private citizens.
The information highway phenomenon, which is no longer a vague concept today, will set a true revolution in motion. According to the President of Hewlett Packard during an interview on NBC Nightly News with Tom Brokaw on December 29, 1993, 50% of American households will have direct access to news agencies, newspapers and magazines via modem in the year 2000. This phenomenon has already started to happen for Time Magazine and Newsweek as well as for outlets such as AP, Reuters, Dow Jones, The New York Times and Wall Street Journal. (330,000 paying subscribers).
Today, “12% of American newspapers have a presence on the World Wide Web.” In fact, over 2,500 newspapers around the world already have their own site on the Web. Online services are also increasingly popular. Compuserve for instance has more than 14 million suscribers and so is AOL.
The infobahn, if it is properly used by the news agencies, could turn out to be a gold mine : the market is huge and could potentially draw hundreds of millions of dollars on the North American market alone. Half of Reuters media revenues in North America come from the sale of online news to Web sites. The Internet site of The New York Times, where the daily’s headlines can be found, gets between 300,000 and 400,000 hits per day, and CNN’s site over three million. It is also interesting to note that average Net surfers are hungrier news readers than the public in general. A study by the Pew Research Center for the Press and the People found that 55% of Net users had read the previous day’s paper, compared to 50% in the general public. It is also estimated that more than 100 million people got some news from the Internet in late 1999, compared to just 11 million in 1996. News users on the Net are also better educated, and more affluent than the population as a whole. The research concluded that many people use the Internet for news on a typical day as print magazines.
Finally, the multimedia sector (sound, image, voice, text and cable all rolled into a single computer) will enable workers to see and share data with a colleague halfway around the world while consumers will order their movies and CD-ROMs by telephone, do virtual shopping or browse databanks in their homes. In this regard, agencies must develop new services and market their photographic archives, for example, and their information (over the Internet or on CD-ROM as does CNN) so that people at home or at work can benefit from the realm of multimedia. To those who say that the multimedia revolution could lead to anarchy, I simply oppose that this revolution is unavoidable. The network of networks, Internet, with 350 million users worldwide, has become the Real McCoy in terms of communication. Internet has transformed into a new kind of hybrid media, on equal foot with print media, radio and television all at once. Half a billion people are expected to use the Net in the year 2000 and about a billion in 2003. In the United States, 75 million adults already had access to it by the end of September 1999. Associated Press was the first to carry out an experiment when it decided, in May of 1995, to offer its news service on the Net. The news were updated every five minutes. It discontinued its experiments due to hacking and copyright violation. It now offers this service strictly through its member newspapers' Web site and www.ap.org. AFP and Reuters are also experimenting with the Web since early 1996. AFP offers a summary of the day’s headlines and a news selection service to Net users. The netizen chooses various keywords and AFP articles (www.afp.com) on those subjects are e-mailed for a monthly fee. Reuters (www.reuters.com) presents the headlines of the day on its own site and through popular sites such as Yahoo! (www.yahoo.com) and online services like Compuserve and AOL.
It only takes a minute of reflexion : security problems and property rights are only emerging bumps on the pavement of the electronic highway. A UNESCO committee has studied the question at the end of December 1996 and two new international copyright treaties were voted. From now on, consulting documents on the Internet, and especially the Web, and their eventual download to a personal computer will no longer constitute a violation of copyright law.
Forecasts say that it will take 10 years until 40% of consumers really become aware of the Internet’s true potential. Today it only reaches about 20% of American households, and 7% of European households. The media hype hides the fact that the Internet is not mass media. Technical problems on the network are commonplace. The World Wide Web has started being dubbed the “World Wide Wait”.
Continuing this reflexion on new technologies and economic diversification are clearly the wave of the future for AP, AFP, and Reuters. The potential they can tap into is astoundingly promising. The Internet is far from having reached its full potential and it is excluded that the communication means we know today will disappear. We will always need newspapers, we will always need television and radio, and we will become even bigger electronic consumers. Today’s youth already is. Are we going to have a virtual generation gap? One thing is sure, we overestimate the impact of technology in the long-term but we underestimate it in the short-term.

BIBLIOGRAPHY

1. On the news agencies and the world information system

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About communications in general

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2. History and study of the news agencies

AFP :

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CHAPELIER, Vincent and SALORD, Hugues, “L’AFP : l’actualité mondiale en temps réel”, Label France, n° 16, July 1994, p. 32-33.

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Associated Press

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Reuters :

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UPI :

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THE ASSOCIATED PRESS, Craft-UPI, Rutland (Vermont), 12 May 1992.

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DROST, Harry, The World's News Media : A Comprehensive Reference Guide, London, Longman Current Affairs, 1991.

DUNNETT, Peter, J.S., The World Television Industry : An Economic Analysis, London-New York, Routledge, 1990, 246 p.

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EUDES, Yves, "La guerre des chaînes d'information", Le Monde diplomatique, n° 452, November 1991, p. 21.

FÉDÉRATION INTERNATIONALE DES ÉDITEURS DE JOURNAUX, World Press Trends, Paris, 1992, 157 p.

FLOURNOY, Don M.., "The Developing Story of CNN," in L.J. Martin et al., Current Issues In International Communication, p.160-161

FLOURNOY, Don M., CNN World Report : Ted Turner's International News Coup, London, John Libbey, 1992, 101 p.

FLOURNOY, Don, STEWART, Robert, CNN: Making News in the Global Market, Luton (England), University of Luton Press, 1997

FRIEDLAND, Lewis A., Covering the World : International Television News Service, New York, 20th Century Fund Press, 1992, 61 p.

FROIDEFOND, Antoine (AFP), "Internet va bouleverser la presse", publié dans Le Devoir (Montréal), Oct. 22, 1999, p. B-10

GONZALEZ-MONET, E., Informatics and Society : the News Challenge, Ablex, New Jersey, 1992, 201 p.

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GRANTHAM, B., Mean, "Moody, and Back in Charge (Ted Turner)", Television Business International, April 1988, p. 18-23.

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GUILLOU, B., "Europe des images : la diversité plus forte que l'unité", Mediaspouvoirs, November 1988, p. 64-81.

HACHTEN, William A., The World News Prism : Changing Media of International Communication, Ames (Iowa), Iowa State University Press, 1992, ix-xx; p. 10-169.

HALIMI, Serge, "Élitisme et démagogie : la presse américaine", Le Monde diplomatique, vol. 462, September 1992, p. 8-9.

HASLETT CUFF, John, "Dancing to CNN's Tune", The Globe and Mail (Toronto), 20 September 1994.

HORNIK, Richard, "A New Murrow", Media Studies Journal, Spring-Summer 1999, pp-82-83

JOUSSE, Thierry, "La guerre est en nous", Cahiers du cinéma, n° 441, March 1991, p. 56-58.

KATZ, J., "Collateral Damage to Network News", Columbia Journalism Review, Vol. 29, March-April 1991, p. 29.

KATZ, J., "Say Good Night, Dan : the Decline of Network News", Rolling Stone, 27 June 1991, p. 81-84.

KING, Larry and STENCEL, Mark, On the Line : The New Road to the White House, New York, Harcourt Brace, 1993, 200 p.

KOLBERT, Elizabeth, “ As Ratings Languish, CNN Faces Identity Crisis”, The New York Times, August 22 1995, p. D-1.

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KPATINDÉ, Francis, "CNN superstar", Jeune Afrique plus, n° 11, March-April 1991, p. 52-59.

LABAUME, Arthur and RÉMY, Jean-Philippe, "CNN en direct", Science & vie junior, n° 25, April 1991, p. 14-19.

LEVIN, A., "CNN vs Israël : The Israeli Connection", Commentary, n° 92, July 1991, p. 48-51.

LIEBERMAN, D., "With its Desert Stand, CNN Charts the Course for TV News Future", TV Guide, Vol. 39, 9-15 February 1991, p.14-16.

MATUSOW, Barbara, "Wired!", Washingtonian, Vol. 26, March 1991, p. 74-77.

MAYER, Martin, Making News, Boston, Harvard Business School Press, 1993, 345 p.

McDONNELL, James, Public Service Broadcasting : A Reader, London, Routledge, 1991, 127 p.

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1998 and 2008 @ COPYRIGHT. BY PATRICK WHITE (QUEBEC CITY, CANADA) . CANNOT BE USED FOR RESEARCH, PUBLIC DISPLAY, PRINTING OR ANY OTHER MEANS WITHOUT THE AUTHOR'S APPROVAL.

Translated by Jean-Sébastien Chicoine. @ 1998