Monday, August 21, 2006

TES Takes Uneducated Approach

The Guardian excoriates the TES strategy this morning. It appears that double the number of required volunteers have put their hands up for redundancy and there are rumblings of an advertiser revolt.

The only think that is surprisiing about all this is that anyone is surprised. The Guardian reports that copy sales are falling at the TES. Well, show me a business or trade mag where that isn't true. It reports that the TES is seeing its recruitment model being disintermediated by the internet. This too is an ubiquitous experience for business publishers. The Guardian also tell us that the journalists don't like it. No journalist I have ever met welcomes editorial cost cutting.

There were many investors who glanced at the TES opportunity when it was put up for sale by Murdoch last year and most walked away. The only do-able strategy was cost cutting, and this, although no doubt necessary cannot provide long term growth. The problem that Bernard Gray and his team are no doubt realising is that although cost cuts will improve margin they do no necessarily increase the vlaue of the asset. The shareholders of TES are private equity folk. They will expect a handsome and quick return on their investment. TES are going to have to find some revenue growth as well as some cost fat if that is ever to be delivered. There will be tears before going home time.

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