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Then There Were Two: Thomson and
Reuters Plan a Power Play for Business Information |
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14 May 2007 |
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As Thomson prepares to subsume the assets of Reuters many
eyes are on the impact to financial content markets from
this historic merger. But with Reuters CEO Tom Glocer
expected to take the overall helm at Thomson the more
important impact might come from the lessons that Glocer is
prepared to apply to Thomson's other divisions. With
decades of experience in both real-time and media markets
Glocer may have the opportunity to transform Thomson into a
far more agile player in global markets for business
information. |
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Business information deals
don't come much larger than this. If regulators play nice - and
with a Commonwealth and a British concern positioning
themselves against U.S. based Bloomberg it's probably a go -
Reuters will be subsumed into the Thomson global empire of
business information services, with Web-savvy Reuters CEO Tom
Glocer taking the helm and the Reuters brand taking the lead
for the Financial division. Although this is indeed a huge
move, it's also one that comes as much out of necessity as out
of desire. For in trying to meet the challenges looming on the
horizon for business information services neither the Thomson
nor the Reuters approach on their own was likely to meet the
challenges ahead.
While Reuters under Glocer's tutelage has made amazing
progress in stabilizing its revenues and expanding its media
presence in fair truth it's been treading water on its overall
presence in financial services. Low-latency market data feeds
have enabled Reuters to hang on to its support of automated
trading services at major investment banks, but by definition
there's little place to go with these services beyond their
current footprint: machines talking to machines makes for a
rather limited upsell. On the other side Reuters' high-end
analytics services have been successful but finding fewer
positions in which to well as global financial institutions
continue to consume one another. In the middle of these
extremes are the market conversations that drive transaction
revenues - still the meat of Bloomberg's market appeal across
all markets through its ubiquitous messaging capabilities.
Thomson Financial on the other hand found itself with useful
but limited footprints in specific market niches that it was
unable to sew together into a strong argument for fuller
penetration of its accounts. Low-latency feeds were making a
start at market penetration but were up against lesson number
one in market data: never be the third feed in the door. A
growing news product held out promise but was up against the
daunting task of establishing a global brand for financial news
in an era in which financial news no longer triggers trades
through eyeballs as it has in years past. Its promising
online bond trading services were making inroads but needing
additional transaction types to build up the argument of
Thomson being a major player in online execution. In the midst
of all this was the Thomson One platform, an all-purpose
framework for financial content aimed at...what? There is no
middle market for financial information services any more:
Bloombergs exist because they have been there for decades, and
no one is likely to replace this artifact from a previous
generation of content services en masse any time soon.
In the midst of the erstwhile three-way battle for financial
information supremacy is the strength of the financial
institutions themselves, empowered by platforms from Sungard,
Bloomberg and other vendors to manage the full cycle of trade
execution services for their operations and empowered by a
growing range of independent technology vendors to build their
own content services for themselves and their clients. When the
Web and your own networks are the source of much of the
information that moves markets these days, why wait for a
financial information vendor to package the Web's insights when
you can do it yourself more quickly and cost-effectively?
Institutions empowered as publishers are perhaps the largest
threat of all to established business information providers.
This plays out, of course, into market sectors beyond
finance - including the realms of legal, scientific and
healthcare markets that are the current focus of Thomson. What
are the lessons from the Reuters/Thomson experience in
financial markets that are likely to benefit from Glocer's
leadership? Here are a few quick takes on what might happen:
- It's real-time or it's nothing. The pace of change
in global legal, scientific and healthcare is accelerating
rapidly, with a premium being placed on being able to build
insights into competitive products, market drivers and needed
services as rapidly as possible. While it's doubtful that the
sub-millisecond timeliness required for today's automated
financial trade information will be a benchmark for these
other markets any time soon building real-time insights
across markets and across collaborative teams is needed in
today's industrial giants as much as in today's financial
institutions.
- It's integrated the way clients want it. With
fewer financial giants to cater to the Reuters experience in
integrating content into global organizations will be
well-leveraged in other markets. Thomson has strong content
assets but it lags behind LexisNexis and others in its
ability to provide a wide array of content integration
services. Expect Reuters insights to help accelerate
Thomson's ability to provide content beyond stand-alone
subscription portals more effectively.
- It's not just about subscription services. Perhaps
the most promising aspect of Reuters' return to health has
been the growth in its media arm, providing ad-supported
content through its own portal and through partner
properties. Having spun off most of its ad-supported media
assets years ago Thomson will benefit from a brand that is in
the center of today's global online media picture. With B2B
media companies sharpening their knives to carve out their
own pieces of enterprise content markets and "prosumer" uses
of professional content in media properties becoming an
important bridge to revenues in broader markets large
business information companies need the power to compete on
many levels.
Add in the capabilities of their technology-enabled clients
and it becomes a yet-trickier marketplace for any major
supplier to conquer with business information services. Yes,
conquering Bloomberg would be a nice thing as well, but Thomson
has many other fish to fry in its business information
portfolio. In all of these markets the Thomson/Reuters family
will do well to bear in mind that the content company that owns
the conversations in a marketplace tends to own that market.
Expect the emerging generation of enterprise-ready social media
services to present a new range of challenges to business
information providers - and some interesting opportunities for
growth. Yes, it's down to a few majors at one level, but at
another level it's up to thousands who can provide business
information consumers with market-leading value every day.
-
John Blossom
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