Thoughts on the deal
Wednesday 31 January 2018
Some initial thoughts on the Thomson Reuters-Blackstone deal.
1. The Thomsons are not selling a stake in Thomson Reuters because they see a brilliant future for it, but because they fear an uncertain one. Investment firms everywhere are cutting data expenses, including (reluctantly) spending on Bloomberg terminals. Even so, Thomson Reuters loses market share to Bloomberg, bit by bit, year on year - a trend which the new group will somehow have to reverse. The business climate will not be helpful - unless Blackstone is fronting an international banking conspiracy to put Michael in his place. The share price reaction - down seven per cent at writing - does not suggest a celebration.
2. What does Blackstone know about running such a business, any business, other than cutting costs and teeing it up for sale or break-up? Very little, I would say, which probably means yet another transaction, or transactions, a few years hence. Meanwhile, the short-term operating outlook will depend on who runs the show. He will have to be very, very good to keep the new business in the hunt.
3. The news service remains under Thomson, with an annuity of $325 pa from the new group. I have no idea whether that figure is adequate or less than, but I also have to ask: Adequate enough for what? The same kind of news or something of a different kind? And who will decide which, the provider or the client?
4. The Trust Principles seem to have acquired a remarkable flexibility. The phrase “consequential modifications” (mentioned in the press release) sounds like a sinister euphemism. In that respect it joins “alternative facts” and “fake news”. What I think it means is "show us the deal and we'll amend the rules to accommodate it”.
5. In summary, it is hard to avoid the feeling that Reuters has taken another step on a rickety staircase to nowhere. Perhaps additional facts will emerge to prove me wrong - but I am not hopeful. ■