Thomson family behind forced Thomson Reuters restructure - WSJ

With Glocer now directly overseeing the markets division, which contributes almost 60 per cent of group revenue, the newspaper said the chief executive is in the line of fire if results do not improve. Markets includes Reuters news agency.

The Journal quoted people familiar with the company saying it is not unusual for officials of Woodbridge, the Thomson family’s investment company, to have a say in setting strategy at Thomson Reuters, where they hold a 55 per cent controlling interest.

But the family’s move to flex its muscle spotlights the uncertain payoff from the $17 billion deal that united Thomson Corp and Reuters Group, it said. Since the day after the merger closed in April 2008, the combined company’s US-listed shares have risen just 0.7 per cent.

“Thomson Reuters is scheduled to release second-quarter financial results on Thursday, which will be a crucial day for Mr Glocer,” the Journal said. Investors have said publicly that they are looking for an explanation of Devin Wenig’s departure as chief executive of the markets division and more details about the division’s results. Wenig was a close associate of Glocer, who brought him into Reuters 17 years ago. The Journal said many investors and company executives had considered him to be a possible successor. Both men were former US mergers and acquisitions lawyers.

The Journal said: “People familiar with the company said Woodbridge has methodically set financial goals for the Thomson family’s businesses, and then expects executives to meet them, or face losing their jobs.”

Quoting informed sources, the Journal said that after discussions between Thomson Reuters management in New York and Woodbridge officials in Toronto, Wenig declined to go along with a broad overhaul.

“It was left to Mr Glocer to push through a more drastic proposal that consolidated the division, and wiped away layers of what the company called duplicative executive positions.”

The Journal said that, partly due to the weak economic recovery, Thomson Reuters and Glocer have been grappling with slow sales of products for investment banks, fund managers and other finance professionals.

“But the investment industry also has been slow to embrace Eikon, a revamped financial-data product that Thomson Reuters spent heavily on to develop.”

Eikon was launched last September as a next-generation desktop product for financial professionals incorporating social media features like Twitter. It brings together dozens of Reuters and Thomson legacy products. The company said at the launch that Eikon was intended to win customers from Bloomberg and other competitors. Clients were expected to take it up quickly, but that has not happened. The company has migrated only about 24,500 of the roughly 500,000 users of its legacy products to Eikon and it has brought in only 3,500 new users.

Largely because of spending to develop the new product as well as other new offerings, Thomson Reuters posted a seven per cent decline in underlying operating profit last year. The payoff was supposed to come this year, company executives told the Journal. ■