The secret sauce of The Economist (and the BBC): Globalisation

As news publishers look for a remedy to their current ills, many look enviously to The Economist, and I have heard a few newspaper editors ask how they can become more like it. At the risk of sounding a bit brusque and I will admit in engaging in an imperfect analogy, national newspaper editors in the UK envying the success of The Economist is a lot like a local car mechanic coveting the business of Porsche. Both are in completely different businesses, serving completely different clientele. Porsche is the most profitable car company in the world. It enjoys 20.5% profit margins on its vehicles, selling exclusive luxury to well heeled buyers around the world. Newspaper groups used to enjoy profit margins like Porsche, but that’s largely a thing of the past.

However, it’s still worth considering why The Economist has navigated the challenges facing the media as well as it has. In a conversation with my former colleague Roy Greenslade, Andrew Rashbass, the chief executive of The Economist group, puts a lot down to luck, which I think is a bit of false modesty. The Economist’s circulation is up 3% against the backdrop of high single or low double digit circulation annual declines for national newspapers here in the UK (although monthly circulation declines for the quality dailies in the UK can be even worse). Listing a number of fortunate decisions and developments, Rashbass lists one that stands out to me: Globalisation.

Why is The Economist unique? It is one of the few publications that speaks intelligently about globalisation and helps its readers make sense of it. It also explains the appeal of the BBC in its international incarnation. I remember when I joined the BBC in 1998, and as a young reporter I could tell how broad, how global the perspective was of the people I was working with. Yes, The BBC had a British perspective, just as The Economist does, but while the accent was British, the experience and point of view was international. Speaking to a global audience intelligently and helping people make cross-border connections is something that few publications or broadcasters have achieved. Exposing people to international events isn’t enough, which is what most broadcasters and publishers do. What both the BBC and The Economist do is help put those events in an international context. Reading The Economist is like being shown a foreign city by someone who lives there.

Can a national newspaper do this? Maybe. However, it’s quite a pivot for a national newspaper, and I’m not entirely sure any national newspaper has the resources for it. Moreover, most UK national newspapers still don’t feel international to me. They still feel British in the way that CNN International still feels so very American to this American. To be honest, British newspaper coverage of Europe (apart from the FT) is laughably parochial and riddled with continental stereotypes and standard issue British Euro-sceptism. Beyond Europe, there are spots of brightness with the occasional good correspondent, but the coverage is not cohesive or coherent in the way The Economist is as an editorial package. The Economist’s success is definitely something to envy, but I think when it comes to a model for national UK newspapers to emulate, there are lessons and some opportunities. However, there is more that is different than is similar and applicable.

What to take away from Rashbass’ comments? He has a canny view of the differences between digital and print, which he characterises as lean forward and lean back. He also understands business. Greenslade ends his interview with Rashbass with this key business insight:

You always have to equate your model to the value you can extract compared to the cost of creating that value.

It’s not enough to believe you’re creating value, whether social or financial, you also have to have a way to extract value from it. That’s the challenge we’re facing in the news business now. The business model is broken, and the key innovation deficit is finding a way to extract enough value from what we create to support the cost of creating that value.