Breaking News remembered

Brian Mooney, remembering his book Breaking News, is right in his assessment of the failings of Reuters. He is far from alone. The same might now be said of Thomson Reuters, and is being said.

His observation that Reuters’ dominance in foreign exchange bred a top-down approach to markets, as distinct from Bloomberg’s bottom-up product offering, is spot on. The results are indisputable.

In terms of market share, Bloomberg started a long way behind Reuters and, if the terminal count Mooney uses of 325,000 to Bloomberg and 210,000 to TR is accurate, has not merely caught up but forged ahead. That gap - a far more important indicator than revenue or earnings growth, or operating margin - continues to widen. Shareholders should be concerned by that, if nothing else in the financial statements.

Mooney cites a variety of reasons why Reuters fell behind but to me the most compelling is what he calls a ‘poverty of ambition’. Reuters had once reached the commanding heights of the financial data business, leaving all its rivals at base camp. What did management do, peering over the edge of its lofty peak, pockets bulging with cash? It suffered an attack of vertigo. Some might call it by another name.

Whatever it was, the company has never recovered.

Reuters ought to have led the Internet revolution. It actually bought a stake in Yahoo! Other promising acquisitions were made through the device of a greenhouse fund, encouraging the idea that management had finally seen the light. The trouble is that the chief executive apparently had not, or at least not with enthusiasm, and his chairman seemed more concerned with conserving cash than expending energy.

Appointing a mergers and acquisitions lawyer to the senior executive post may have been an innovation in the context of Reuters’ history of promoting journalists, but it was not what the company needed - unless the board had already given up on growth and wanted something else. This act could only lead to one result, as proved to be the case.

The powers-that-be at Thomson have a reputation for running tight ships, but pointing them in the right direction may not be their strong suit. Management is obviously committed to improving the bottom line and consolidating the company’s disparate operating elements but I see no real signs of a commitment to bold innovation. TR is still Mooney’s ill-fated top-down model.

Shareholders should also worry about the quality of Reuters news, the glue that keeps the financial products together. Word from the newsroom floor is that the division is aimless and racked with dissent, much of it silent for reasons of self-preservation. Again, the missing element seems to be purpose. What is the news for? Not, I submit, the winning of Pulitzer prizes. Bloomberg, by contrast, seems to have its news ducks in a row.

One hesitates to write off Thomson Reuters as a genuine force in the information business, least of all in financial markets, but there are few signs that management is driven by such a mission.

Brian Mooney may yet get to write a sequel. ■