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Relx publishing concerns have been overdone

University students walking through Duke University campus
Shares in media giant Relx fell 7% on the day that the University of California announced it would be cancelling its subscription to its academic publications. Read on to find out why we think investors have over-reacted even though the division contributes 40% of Relx’s operating profits.

Modern society expects a lot for nothing. That’s particularly true in the media industry where Facebook, Twitter and Snapchat provide us with endless streams of news almost in real time for no financial cost (we pay with our data). It’s a shift which is hurting many traditional media groups: why subscribe to a newspaper when there is so much news free online?

Academic research is one of the last remaining realms of the media industry which has managed to maintain its commitment to the traditional subscription model. Scientific studies are specialist, essential publications which require careful editing and evaluation – work which costs.

But some are still reluctant to pay up.

In 2017, a consortium of German institutions attempted to negotiate lower fees with the world’s biggest academic publisher, Elsevier, one branch of British media giant (and Investor’s Champion portfolio constituent) Relx (LON: REL). Having failed to come to an agreement, the institutions decided to cut their subscription.

In February, the…

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