Breaking News: How the Wheels Came Off at Reuters

Breaking News: How the Wheels Came Off at Reuters

Breaking News: How the Wheels Came Off at Reuters

Barry Simpson and Brian MooneyCapstoneISBN: 1 841 12545 8£12.99

The motto of Reuters news agency from its humble beginnings in the 1860s was “Follow the cable”. In the modern era, this was replaced by the harder-edged “Follow the money”. This reflects that in its earlier days, Reuters was pre-eminent; it didn’t have to work hard to make a profit – its reputation ensured its dominance.

Over time, new entrants and new technologies entered the marketplace. Reuters had to work harder. In the eyes of its senior executives, its news division was relatively unimportant, as it made so little money: they chased the real profits that came from selling financial information into the world’s money markets.

However, this strategy saw the share price, which stood at £16.17 in March 2000, sink to below £1 in just three years. Its market value crashed from £23 billion to £1.4 billion.

Barry Simpson and Brian Mooney are ex-Reuters employees who clearly feel that this fall from grace resulted from a number of mistakes.

They take us through a series of failed technology projects that seemed to be amazingly and consistently unsuccessful. The financial world continued to generate ever-increasing demands for new online, real-time information and Reuters spent million of pounds trying to meet this demand from its customers. Most of the projects seemed to have failed completely or failed to deliver the expected results.

According to Simpson and Mooney, much of the blame lies at the feet of Sir Peter Job who was chief executive for the ten years from 1984, the year Reuters became a public company. Through their journey through the technology changes they paint Job as a workaholic who looks after the detail but forgets the overarching strategy. At the same time, they suggests that Sir Christopher Hogg, chairman for 18 years, was simply complacent.

They recognise that that these men faced the demands of their own shareholders for short-term profits and that a more patient, longer-term view could have paid off.

Just as they were reeling from the technological disasters Reuters lost much of its business to an upstart competitor – Michael Bloomberg – and by the time Tom Glocer, the present CEO, was appointed, the business was fading fast

By April 2003, when he announced a loss for the previous year of £500 million, he had already instituted a painful cost-cutting exercise, with hundreds being made redundant.

Meanwhile, the core activity – reporting news from around the globe – continued to be regarded as the best of its kind. This is the irony. The reputation as a news agency is intact. The reputation as a business is lost.