The Thomsons, Woodbridge and Reuters observed
Tuesday 4 December 2012
What can the Thomson family, majority owners of Thomson Reuters, do about Reuters? One view, aired on Forbes magazine's website, is this: "Stick it out and make cuts to get it profitable again".
The opinion appeared on Monday in a commentary by Eric Jackson, founder of hedge fund Ironfire Capital, in which he posed the question “What Was Behind Geoff Beattie’s Departure from Thomson Family’s Woodbridge Last Week?”
Woodbridge is the family’s private holding company, through which the Thomsons own 55 per cent of Thomson Reuters. Geoffrey Beattie, a long-time Thomson insider, ran it but on Thursday the family moved him aside to make way for the company’s chief operating officer, David Binet.
Jackson offered this analysis: “Thomson Reuters has been suffering of late. Bloomberg, it turns out, is a pretty tough competitor in the data space. And journalism is hard to make money from...
“There have been signs for the last year that the Thomson family has been disappointed/irritated with Reuters’ performance since it acquired it. Since the ‘merger’ on May 17, 2007, its stock is down 33.5%, while the S&P 500 is down 6.36%. The index has also substantially outperformed Thomson Reuters (TRI) in the last 18 months.
“Last December, Thomson Reuters CEO, Tom Glocer, was fired and replaced. The move was widely seen as a sign of the Thomson family’s impatience with the turnaround at Reuters.
“Now, with last week’s announcement, we have Geoff Beattie leaving the top job at Woodbridge and being replaced by Woodbridge COO, David Binet. Beattie is on the board of Thomson Reuters and was widely seen as the executive at Woodbridge tied to making the Thomson Reuters merger work. In the press release announcing Beattie’s departure from Woodbridge – after 15 years – it was stressed that he was going to stay on the Thomson Reuters board and continue working on that company’s operational issues.
“I spoke to a contact that has had dealings with Beattie and others at Woodbridge over the last couple of years. On the condition of anonymity, he spoke with me on his observations of Beattie, David Thomson, and others at Woodbridge. Of course, this is just one contact’s perceptions, so please apply all necessary caveats.
- “On Beattie. ‘It’s no secret that the Thomson family was frustrated with the pace of the turnaround at Reuters and Beattie was the guy who owned that. Beattie was sort of seen by many as a ditherer. He took a long time to make decisions. Also, he was seen as a high-level strategy guy who wouldn’t always dive into the minutiae of the details. I have no idea if he left on his own or was pushed, but I think the family was frustrated with him and with Reuters.
- “On the Thomson family. ‘They’re penny pinchers. That’s been their reputation forever and it’s still true today. There’s nothing wrong with that. If something’s losing money, they’re [sic] reaction is: ‘cut costs until it makes money.’ I don’t think they understood why that was so hard for Reuters to implement.’
- “On David Thomson. ‘He’s really the face of the Thomson family to Woodbridge and for all its investments. However, he’s let Beattie handle Reuters to this point. He’s seemed more interested in the Globe and Mail. I mean, Beattie was in his role in the first place because it wasn’t one that David wanted. I think David’s also had to deal with different points of view of how Thomson Reuters should be run from other members of the Thomson family.’
- “On new Woodbridge head David Binet. ‘He’s a Thomson family loyalist. He’s also tight with money like them, so they like that and trust him because of that. When he and the family saw recently the plans from Globe & Mail management about how they were going to spend a huge amount of money on a new headquarters at the corner of Front & Spadina in Toronto, they just killed it. They said, ‘this is madness’.”
- “On the Globe & Mail’s future. ‘I don’t know. They’ve owned it for so long. I think they have a soft spot for it. But it’s not going to make any money for them any time soon. They just put up a paywall, but I’m not sure they’re really enforcing it and they certainly haven’t publicized how it’s led to any financial success for them since launch. I don’t think they could sell it now.’
- “On what the Thomson family will do with Reuters. ‘Again, I’m not sure they can do anything with it now except stick it out and make cuts to get it profitable again.”