Bad news for Reuters

As far as its customers are concerned, the value of the agency's services is diminishing

New York

It is 161 years since Paul Julius Reuter, a German-born entrepreneur whose first venture in the news business was sending carrier pigeons across Europe, installed himself in the London Stock Exchange, called himself the Reuter's Telegram Company and started selling the latest market-moving information from around the world to the City's share traders. His company has never since questioned the value of being first with the news. Perhaps until now.

Reuters was the agency that broke the news of President Abraham Lincoln's assassination in 1865, hours before its competition in Europe, as it has never tired of repeating.

Today, 2,800 journalists globally feed information back for sale to the descendants of those Victorian traders, through news and data software on the desktops of bankers and fund managers. Except that the relative value of breaking news is diminishing, Reuters' financial customers are retrenching and, thanks to a string of operational mis-steps since the company was taken over five years ago by Canada's Thomson Group, the historic business is facing an unprecedented identity crisis.

As far as Thomson goes, the £8.7bn acquisition has been a disaster, with the Reuters financial data and news business still dragging down otherwise decent results from the company's other (smaller) units, which sell legal and intellectual property databases and accounting software. The Canadians initially ceded the top jobs to Reuters executives but, since ousting chief executive Tom Glocer last autumn, the controlling Thomson family has finally asserted itself. With shareholders expressing impatience, and the Thomson team in charge, under new boss James Smith, many aspects of the old Reuters are up for review. What happens next?

"There is no question that the Thomson culture and the Thomson business sense is running the group now," says Douglas Taylor, who has previously worked as a director of product marketing at both Thomson's old financial division and Reuters and who now runs Burton-Taylor International Consulting. "Thomson makes smart, unemotional decisions. If Thomson stays in the news business, it is because it is a smart business decision, not a political or agenda-driven decision. What is relevant to Thomson is the future of the company and the question of how shareholders are going to be satisfied."

Right now, satisfied, they ain't. "I've been covering this stock since 1992 and sentiment has never been as bad as it has over the past year," said Tim Casey, an analyst at BMO Capital Markets in Toronto. "Nobody likes this name."

Thomson shares are bumping along at levels not far from the nadir of the credit crisis, after an annus horribilis in 2011. The company attempted to make a big leap forward last year, promising to shift its customers from a hodge-podge of different software platform from the old Thomson Financial and from Reuters, onto a single, new kind of terminal called Eikon, which promised to put all the latest financial news and data at financiers' fingertips. But the take-up not only failed to live up to the hype, the product was so buggy it actually hurt Reuters' reputation – driving customers further into the arms of arch-rival Bloomberg.

In its 2011 results released this February, Thomson Reuters wrote down the value of the Reuters business by $3bn, but even that line in the sand has been washed away. Less than two weeks ago it warned it would have to jack up spending on customer service to fend off the Bloomberg challenge.

BMO's Mr Casey goes on: "Though quantifying market share is very hard, there is no doubt that Bloomberg has the momentum. The most obvious way you can tell that is by listening to customers bitch about their Reuters terminals. The buy side loves Bloomberg; you would have to pry their Bloomberg terminals out of hedge fund managers' cold, dead hands. That forces the sell side [brokers] on the platform, too, because their customers are on there."

The Thomson Reuters market news and data division – now renamed the Financial & Risk division – is trying to regain its footing at a time when its Wall Street customers are searching for cost cuts to replace money lost because of post-credit crisis regulation and financial turmoil in Europe. The company said this month Eikon is making slow and steady progress, and that it was also working on a new generation of products, too – though Mr Smith added "one lesson we have learned from the past is that we're not going to be trumpeting new products before we know that they're scalable and they're ready to be released on the market".

The news operation is facing questions of its own now it has lost its champion in Mr Glocer who steeped himself in its history and traditions. Stephen Adler, who was appointed editor-in-chief last year, set out his philosophy after two months on the job: "We must be second-to-none in speed, accuracy, relevance, and fairness, but also – and crucially – in enterprise, insight, analysis and originality."

Mr Adler has set Reuters to compete for other consumers of news beyond the confines of the feeds into financiers' desktops, and engaged in what Mr Taylor called a "byline arms race" with Bloomberg, hiring commentators such as Anatole Kaletsky from The Times.

Mr Taylor said: "It is the perennial debate within Reuters, how important is the news operation to the value of the financial data business... Now Twitter and other places on the web serve as a place where events are announced, and you are as likely to hear about an earthquake somewhere else before Reuters or Bloomberg."

Meanwhile, as news is being re-evaluated in the context of the Financial & Risk business, that division is being re-evaluated in the context of the wider Thomson Reuters group.

Mr Casey asks: "Is the financial business going to have more capital allocated to it, or will they take capital out of it? My guess is that it will be a relatively smaller part of the business."

Start your day with The Independent, sign up for daily news emails
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tvPoldark episode 8, review
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
Arts and Entertainment
Ramsay Bolton in Game of Thrones
tvSeries 5, Episode 3 review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence