Thomson-Reuters Deal Would Create Financial News Juggernaut

By Kevin Sweeney
May 9, 2007 05:25 PM

As news of Thomson Corporation's $17.6 billion offer for Reuters broke, reporters from the United States to Canada to Great Britain found themselves at the center of yet another potential mega media merger.

According to research from Inside Market Data, the two companies combined would control 34 percent of the financial information and news market, barely eclipsing Bloomberg's 33 percent share. In addition, the Thomson family stands to hold 53 percent control of the company if the deal goes through.

This news comes on the heels of the recent $5 billion News Corporation bid for Dow Jones. According to Ian Austen, who writes for Business Day for The New York Times in Canada, the timing of the Thomson-Reuters announcement is pure happenstance.

"I think it's more coincidence that this has become public just as the News Corp. bid was announced," Austen says. "There's just a lot of private equity money floating around.

"Thomson, which is 70 percent family-controlled, would have worked very long and hard on this deal. But retrospectively, it's not out of line with Thomson's past behavior. They've never been shy about taking on large new adventures."

Austen says both companies have remained quiet when it comes to divulging further news to the business press. He has been mainly talking to third parties for his early coverage of this deal.

"The challenge is there is a wall of silence from the two principal companies," he notes. "The Thomson Corporation is not famously talkative."

The deal would have to go through standard anti-regulatory trust issues prior to approval. Austen notes there seems to be some sensitivity about the deal in England, with Reuters based in London.

"Thomson, whose publishing interests span law, tax and scientific research, has been building its financial data business as it looks to tap into booming global markets," wrote Mark Potter for Reuters. "A deal would add Reuters strength in sales and trading to Thomson's base with money managers and investment bankers."

Thomson is headquartered in Toronto but has a large employee base in Stamford, Conn.

Austen says one area to pay particular attention to is how the news operations of Reuters come into play.

"Thomson's not primarily interested in Reuters based on their general news operation," he says. "The fact they've committed to signing onto the Reuters principles indicates they will preserve them initially."

But Thomson could very well reassess any new operations under its control once a deal goes through. Reporters will have to pay very close attention to this potential blockbuster deal and how it may play out in the near and long term.

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Copyright © 2008 Donald W. Reynolds National Center for Business Journalism