Reuters is captured
For more than 150 years, has been one of the great independent news organisations. No longer. This morning it has for £8.7bn by of Canada.
The reason for the deal is that both businesses are world leaders in providing information services to banks and investors: they believe that within four years they'll generate at last £250m per annum of incremental profit from getting together.
However the takeover is controversial because of Reuters’ other more famous - though smaller - business: a newsagency providing images and copy to media groups all over the world.
Its work in war-zones such as Iraq has been particularly valuable.
Reuters’ editorial principles of integrity, independence and freedom from bias are world renowned. Those principles are guaranteed by the structure of the business - which prohibits any individual from owning 15 per cent or more of the company. That prohibition is being waved for the Thomson family, which will end up owning 53 per cent of the enlarged business.
The guardians of the editorial principles are 18 eminences who are directors of , a special vehicle which has the power to repel all boarders. Why have they caved? Well the Thomson family insists it will honour Reuters’ editorial principles.
Reuters’ journalists are unhappy. There will be concerns that over time Reuters’ general news operations will become marginalised within an outfit that sees its future as supplying intelligence and tools to those who operate in global financial markets.
But don't expect many newspapers to campaign against the possible, long term threat to news standards and editorial impartiality. Among the British national press, the number of newspaper groups not controlled by individuals or dynasties can be counted on precisely three fingers.
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Robert,
You make the point that the newswire business might become marginalised over time at Reuters. But in fact, Reuters has long been a software company selling tools, solutions and news to the financial community. The news business has represented a fraction of Reuters revenues for years. In fact, when Glocer arrived in 2001 and Reuters was struggling, it's been said that it was saved by its profitable stronghold of the FX market.
Of course, the newswire has remained the visible part of the business - certainly to consumers. But like the proverbial iceberg, it's only a small part of the business. In addition, new technologies and "free" information have meant that newswires have struggled to charge extra for their services. With Reuters merging with Thomson, who recently launched a financial newswire in the US and acquired AFX, that ought to give the remaining competitors more bargaining power. That said, with the center of the world economy moving to Asia, that brings new challenges, as Reuters recent spat with Xinhua of China demonstrates.
Now in terms of editorial independence under the Thomson family ownership, I don't think Reuters journalists should worry too much. The Thomsons have owned Canada's globe and mail for years and there haven't been reports of interference.
Finally, it's much easier to maintain editorial independance and adequate funding in the successful and profitable organisation than in a struggling one. If the new Thomson-Reuters is a success, I think that will shine through the news side.
As an ex-Reuters employee, I never thought I'd see the day when Reuters would be bought by someone else. It was never supposed to happen. On a broader note, are there any large companies left in the UK that are 100% UK owned?
But which are those three papers, Robert? I know that one is the Guardian, but what are the other two? Do these papers have visibly better editorial independence compared to the rest?
ps. a mathematician would be able to count to 7 on three fingers (20 if you can have fingers "half up").
I trust that the ³ÉÈË¿ìÊÖ does not count itself as impartial?, your blog shows just how biased you are to certain left-leaning papers such as the 'Guardian'.
Hopefully this takeover will stop the left-leaning excesses of some of the Reuter reports and photos.
This takeover is a brilliant result for impartial reporting, and hopefully another nail in the coffin of the left-wing dominated media.
I believe that it will not be long before Reuters ethics are put under threat.
One way out is for Thompson to seperate out the news company and either sell it or make it truly independent under its current charter.
If things go bad I suggest that all the Founder Share members be placed under public interview and scrutiny. At least they should each be interviewed on their decision now.
Rgds, Colin.
Some of us remember when the Sunday Times and the Times were Thompson owned. It was a sad day when Thompson sold out to Murdoch.
As to the three fingers - I assume you are referring to Guardian Media Group, Pearson (Financial Times) and Trinity Mirror - but perhaps you could confirm?
Nicholas
I was sad but guarded about this until I heard that Wenig was to take over the Reuters operation. The man is unloved and unlikely to have the respect of the workforce or customer base.
Thomson, not Thompson.
Joseph - you're funny.
Peter Stephens asks if there any UK owned companies left.
The answer is yes but then again the Govt and the City haven't quite completed their mission of 100% deindustrialising the UK yet. It may take another couple of years yet but expect more announcements as the year goes on. My bet is on BAe Systems.. Any takers?
Richard Lambert - the Director General of the CBI - said recently "In today's rapidly changing economic world order, we must create more global enterprises if we want the UK to remain in the top tier of world economies. Yet in the past 20 years the number we have built from scratch has been low."
That's entirely correct but then if the City's priority is to sell off what we have now or just change their ownership via PE deals then the likelihood of any real effort going into creating new global enterprises remains low.
It's of course also much easier to dispose of something than to create something new. That requires imagination and foresight. I don't see many in the City or indeed many amongst our so called captains of industry who have those qualities.
"Reuters boss Tom Glocer will head the enlarged firm" - as Glocer has overseen a 70% decline in the share value of Reuters this doesn't say much for the prospects of the new company.
"Reuters’ editorial principles of integrity, independence and freedom from bias are world renowned."
Yes, world renowned. Perhaps you've heard of Adnan Hajj?
Look it up.
Perhaps Reuters can keep Newswire business in house and can sell rest i.e. Market Research and Intelligence business of the business. That will also help them to maintain their brand and integrity - which they had earned in the last 150 years but must accept - this is end of an era.
Just to clarify my point, I was being sarcastic as 'reckless monkey' had identified.
For me the ³ÉÈË¿ìÊÖ is of course the most impartial and trustworthy media organisation outside of the White House.
Anyone who says anything different is a Daily Mail reader.
The proposed acquisition by Thomson seems to bring us full circle. Reuters started as a provider of financial information. Baron Julius de Reuter started the organization in 1851 using the newly opened Dover-Calais telegraph to transmit financial and economic news between London and Paris. The UK press barons showed a similar reaction then. It took Reuter another seven years to persuade the Morning Chronicle to take his service on a free trial basis. The Times refused to be convinced until cost pressures made it inevitable. Sound familiar?
One can argue endlessly about "independence". Anyone who agrees with you is obviously independent, anyone who challenges you isn't.
I do know that their technology and science reports seem to be the only ones actually written by people who understand the words they are using. Between that, "Oddly Enough" and the shares listings, www.reuters.com is always my first (and last) stop of the day. bbc.co.uk usually has to wait until my third cup of coffee....
@Ian
I think the point here is that independence is defined as not being owned by a single interest and, after this deal, Reuters will be 53% owned by the Thomson family. However hands-off the Thomsons are, the fact will be that they control one of three global news agencies (the other two being AP and AFP) that do most of the reporting that even great institutions like the ³ÉÈË¿ìÊÖ rely on.
Check out the (unanswered?) letter the UK, US, and Canadian unions wrote to the trustees and, specifically, these questions:
"1) Reuters constitution requires that no person may hold 15 percent or more of Reuters shares. How then can the Thomson family hold a 53 percent stake?
2) The first Trust principle says "that Reuters shall at no time pass into the hands of any one interest, group or faction." The use of the words "at no time" suggests this principle is inviolable and cannot be waived under any circumstances. If it is now to be breached for the Thomson family, why should anyone in the future pay attention to the remaining Trust Principles?
3) If this takeover were to go ahead, what guarantees are there that the Thomson family would not in turn sell its 53 percent stake in Reuters to another group at a future date? We note that Thomson sold The Times and the Sunday Times to Rupert Murdoch."
Not Waving
Robert - its 'waived'
I just wanted to say that its a shame the Reuters Trust have allowed this takeover. I think the thomson family owning 50% of the firm has breached an important part of the principle and means they have neglected to do their duty.
As for the Adnan Hajj incident that Jamie N mentions....this guy didn't even work for reuters...and was removed from his approved status as soon as his 'work' was discovered! If thats all u can critise the Reuters news service on then its pretty good going - get a life.
THE DEATH OF "REUTERS" BASIC VALUES AND THE PRINCIPLES OF "REUTERS" - AND THE FREE PRESS - IS NOW A FACT. - WITH IMPLICATIONS THAT HAS IMPACT WORLDWIDE. !!
THE takeover of "REUTERS" is a DISASTER / DEATH OF THE FREE PRESS.!!
As of November 17th 2007
( today) "REUTER" IT IS NO LONGER POSSIBLE TO GET THE UNBIASED NEWS COVERAGE AND INTEGRETY THAT "REUTERS" HAVE PROVIDED FOR 150 YEARS.
ANY BAD PUBLICITY OF AMERICAN / US INTEREST ARE NOW SUPPRESSED.
WHAT A DISATER TO HUMANITY WORLD WIDE.!!!!!!!!!!
Reuters Trust Principles is not valuable commidity due to lost its independence.
43 % premium to Reuters stock holders will be exchanged with 500 millions USD vested executives stock options.