Reuters CEO Tells CNBC: Thomson Deal Will Help Firms Compete
Reuters Chief Executive Tom Glocer told CNBC that the planned $17.23 billion merger with Thomson of Canada would help both companies compete in a vastly changed media environment.
“We’re seeing a pattern of experimenting with different media models,” Glocer said. “The advertising model, of course, has worked best in monetizing on the Web.”
The interview came after Thomson, a Canadian financial data provider, announced it will buy Reuters, a financial and general news group, for cash and stock. The new company will be called Thomson-Reuters, with Glocer becoming chief executive of the combined business.
Glocer said that combination will not only generate synergy in financial services, but will "leverage" both firms’ talent “all across the board, legal, sciences, health care, taxes and corporate” information markets.
Bigger Than Bloomberg
According to industry data, the combined company would have about 34% of market share in the financial data arena, topping Bloomberg, which has bout 33% of the market.
Earlier, Thomson President and CEO Dick Harrington downplayed any antitrust concerns, telling "Squawk Box Europe" that "there's plenty of room for all of us" and that the companies would get through the regulatory process in a timely fashion.
Glocer said he has not yet met with regulatory authorities, and the “consultation process is beginning now.” But the Reuters chief also had no doubts that the merger will be approved.
“The financial services market has evolved over the last five years. Technology has taken away many barriers to entry” for smaller players, Glocer explained.
He also pointed to data “consortia among our large clients,” which he defined as “the Goldman Sachses and Morgan Stanleys of the world.” He said today's media environment contains “lots of competition from new entrants and big players,” naming Moody's and the combination of McGraw-Hill and Standard & Poor's.
Backing of Major Shareholders
The takeover has the backing of the two companys' major shareholders, Woodbridge, the holding company owned by the Thomson family which controls about 70% of the company, and the Reuters Founders Share Company, which controls a special share in Reuters and could have blocked the takeover.
The move is part of Thomson's strategy to concentrate on financial information. The company sold its education unit for $7.75 billion last week.
The new firm would also be strengthened against Dow Jones, which received a $5 billion takeover offer from Rupert Murdoch's News Corp. on May 1.
Glocer praised Dow Jones as "the only major organization which has made a subscription model work” -- because it understands the value of strong financial content. But, he said, Reuters has always believed in such content, too.