Integration phase over, Thomson Reuters built to last - Tom Glocer

But he is not ready to pack up his New York Times Square office quite yet, the Financial Times said in a report. “I promised the Thomsons I would stay to complete a job. My reckoning is that job isn’t completed, although we laid a really good foundation,” he said.

Glocer, who became CEO of the combined group on completion of the takeover three years ago, said: “I think we have what may become the defining corporate structure of the best institutions for the next 20 years.” He hailed the continuity provided by a large family stake – Canada’s Thomson family holds 55 per cent of the group’s shares through its investment company Woodbridge – and a public quote in New York and Toronto that keeps management on its toes. “Without the discipline of the market you can become so long-term, it’s perpetual mañana,” he said.

Investors are asking what comes next, the FT said. The group originally promised annualised savings worth $750 million but has steadily raised that forecast to $1.7 billion by the end of 2011. It has spent almost $500 million each year to achieve those savings, and some analysts worry that the group is returning to a pattern from Reuters’ history of repeated waves of investment and restructuring, but Glocer notes that integration expenses will fall to just $200 million in 2011.

Within months of the takeover deal closing in April 2008, a whirlwind blew through the financial hubs on which the group’s $7.5 billion markets division depends, emptying many traders’ desks from Wall Street to the City of London, the FT said.

The damage to Thomson Reuters was limited, however, by cost savings that were larger than expected, big product launches, the $5.4 billion professional information division that balances out the markets business and the group’s decision to abandon a listing in London, where investors were more bearish on its markets division.

Glocer is an acquisitions lawyer who has studied the history of failed deals, concluding that cultural rifts were usually their downfall, the FT said. He decided from the start not to sugar-coat the message to his Reuters colleagues: this was not a merger; Thomson was taking them over.

“When I hear the words ‘merger of equals’, ‘best of both’ or ‘two plus two equals five’ I think that’s a big short,” he says: “It’s a Thomson team complemented where necessary by people with a Reuters skillset.”

The group spent $900 million on 30-40 small acquisitions last year, but Glocer says his focus is on reviving top line growth largely organically, improving margins and converting 100 per cent of operating income into free cash flow.

“The longer-term goals have always been to deliver mid to high single-digit [revenue] growth, operating margins in the mid-20s and free cash flow somewhere north of $3bn. That’s work that’s still to be done and it won’t all be done this year either,” he says. Some of that growth will come from using Reuters’ international presence to expand the Thomson legal, tax, accounting, scientific and regulatory businesses from Latin America to the Gulf.

In a sidebar, the FT said grinding pressure on advertising and circulation revenues at US newspapers and magazines was turning the newswires owned by Thomson Reuters and Bloomberg from training grounds for young reporters into refuges for senior print journalists.

Referring to last week’s editorial restructuring in which four experienced recruits who had held senior positions at The Wall Street Journal, Time, Dow Jones and the South China Morning Post joined the company, it quoted editor-in-chief Stephen Adler as saying steady revenue from subscriptions to data services was a selling point.

Growing competition for instant news has forced wires to expand from their just-the-facts origins, and Adler said his restructuring would emphasise explanation and insight, the FT added.

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