It could have been the Financial Times. More after the jump.
From Barron's, April 27/29:
“Before Google was in the search business, we were in the search business,” CEO Steve Hasker told Barron’s.
You may think that Thomson Reuters is in the news business, and that’s true as far as it goes—but it doesn’t go nearly far enough.
News, i.e., the Reuters part of this Canadian company, accounts for only some 10% of the company’s revenue. The other 90% comes from data businesses like Westlaw, UltraTax, and ONESOURCE, which is fortuitous, because, as British mathematician Clive Humby famously opined in 2006, “data is the new oil.” In that case, perhaps it’s understandable that Thomson Reuters has been on a remarkable—though somewhat under-the-radar—run, with its stock far outpacing the market over the past decade.
Just please don’t call Thomson Reuters a media company.
“We’re a tech stock, not a media stock,” Thomson Reuters CEO Steve Hasker says quickly when I suggest the latter. “The distinctions have been pretty clear in terms of performance. We take unique and proprietary content, add [artificial intelligence] and machine learning, and we deliver it through best-of-breed software.”
In fact, some of Thomson Reuters’ financials and market action of its stock seem to back Hasker up. Thomson Reuters did $6.8 billion in revenue last year and has a $69 billion market capitalization. Its stock has gained 26% in the past six months, versus 21% for the market. The share price hovers around $154, and BMO analyst Tim Casey rates the stock Outperform with a $165 price target. Shares trade for 43.6 times Casey’s 2024 earnings per share estimate of $3.53—very much a tech valuation, no?
“Thomson Reuters offers a compelling mix of organic growth and free cash flow conversion with a demonstrated track record of returning capital to shareholders,” Casey wrote to me in an email. “Its core businesses have high barriers to entry, and AI represents an attractive growth opportunity.”
One key reason why data is becoming ever more valuable is that the corporate world is becoming ever more complex. Banking on that trend, —an underpinning of Thomson Reuters’ strategy—has turned out to be a damned good business. “This idea of the complexity associated with compliance, [gives us] a very significant tailwind,” says Hasker, an affable Aussie and recovered McKinsey consultant who also ran Hollywood talent agency CAA and was a top executive at measurement company Nielsen Holdings.
“The number of laws, tax and accounting regulations, the complexity of audits, entirely new forms of regulation and governance around [environmental, social, and governance concerns], and climate, this is something that just gets ever more complex,” Hasker says. “It’s not a realistic or scalable option for companies to just add more headcount to navigate that environment. They have to rely on technology.”
A bit of intricacy comes with the territory at Thomson Reuters itself, which is the product of Thomson, a family-owned Canadian newspaper empire founded in Timmins, Ontario, in 1934, and the London-based wire service Reuters, which German-British entrepreneur Paul Reuter established in 1851.
(Some Reuters trivia: Paul Reuter employed carrier pigeons and later was an early adopter of the telegraph, allowing his company to become the first news source in Europe to report Abraham Lincoln’s assassination in 1865. Paul Reuter’s granddaughter-in-law—Marguerite, Baroness de Reuter—died in 2009 at the age of 96 as the last member of the the Reuter family.)
Reuters, which remains a global bastion of trustworthy, non-partisan news, was bought by Thomson in 2008. The Thomson family, Canada’s richest, owns just under 70% of Thomson Reuters via its investment company Woodbridge. The remaining balance is traded on the New York and Toronto stock exchanges.
And then there’s this slightly complex transaction: In 2018, Thomson Reuters sold 55% of its financial and risk analysis business, which competes with Bloomberg and FactSet, to Blackstone for $20 billion in cash, renaming it Refinitiv along the way. Three years later, Blackstone and Thomson Reuters sold Refinitiv, whose name has since been retired, to the London Stock Exchange Group for $27 billion in LSEG stock. Since then, Thomson Reuters and Blackstone have been selling down their stakes in LSEG....
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As recounted by FT Alphaville's founder and first editor, accompanied by Bryce Elder playing the straightest straight man since vaudeville.
For our younger readers, here's Mr. Subliminal on Donald Trump cheating on his wife Ivana in 1990:
Comedian
And here's FT Alphaville's editor, Paul Murphy,
on former FT Alphaville owner Pearson and its stock, Dec. 1, the day the Financial Times was handed over to Nikkei, while appearing to be having a normal conversation with Alphavillein Bryce Elder:
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