LONDON (AFP) -Thomson Corp.’s takeover of British media giant Reuters marks the latest twist in the rapidly consolidating global media landscape, according to industry experts.
In a deal to create the world’s biggest provider of financial information, Canadian group Thomson last week bought Reuters for 8.7 billion pounds (12.8 billion euros, 17.2 billion dollars), subject to regulatory and shareholder approval.
US rival Bloomberg is presently the sector’s leading player.
“We are watching across the whole media sector — newspaper, TV and the Internet — vast changes, and there are continuing changes … as we see a move away from traditional media,” Roy Greenslade, pundit for The Guardian newspaper in London, told AFP.
He cited News Corp.’s 5.0-billion-dollar bid for Reuters’ US rival Dow Jones, which owns the Wall Street Journal, and the recent sale of US media giant Tribune, owner of the Chicago Tribune and Los Angeles Times.
Added to the picture, US software giant Microsoft and web portal Yahoo were reported earlier this month to be exploring a potential tie-up.
Greenslade argued that Thomson and Reuters embraced “the digital age” — as seen through their early adoption of online data provision — and were therefore a “good combination.”
Traditional media companies are struggling with the loss of advertising revenue and audiences owing partly to rising competition from the Internet, experts contend.
Jeremy Warner, commentator for The Independent newspaper in London, agreed that such organisations were seeking to consolidate amid the ongoing hi-tech revolution.
“Consolidation is the name of the game across the media sector right now,” Warner wrote in a recent editorial.
“Rupert Murdoch’s bid for Dow Jones is indicative of the way the media sector is heading, with traditional media players taking the view that having lots of different products to bundle together and sell collectively to consumers and information users is the best way to beat the revolution going on in their industry.”
In Britain, media companies are bidding to win customers with bundled services.
Satellite TV giant BSkyB and its cable rival Virgin Media sell mobile and fixed line telephone services, plus broadband Internet alongside their traditional television packages. Murdoch’s News Corp. owns 39 percent of BSkyB.
The creation of Thomson-Reuters has, meanwhile, raised eyebrows because of competition concerns.
However, Greenslade forecast that the creation of Thomson-Reuters would have a limited effect on competition owing to the different nature of the businesses.
“I don’t think it’s bad news,” he said. “They fit like a glove, these two companies, and in their different ways they will complement each other. So in that sense it’s not a problem at all.”
The tie-up would combine Thomson’s strong presence in the United States with Reuters’s popularity in Britain and continental Europe.
The news was a boon for investors, according to international credit ratings agency Fitch, which last week upgraded its outlook on Reuters stock to ‘positive’ from ‘stable.’
“The combination of Reuters with Thomson should improve the overall business risk profile by creating a global leader in electronic information services, trading systems and news,” Fitch said in a research note to clients.
“The new group’s financial platform will be complemented by Thomson’s legal, regulatory and scientific business, resulting in a group that is well diversified by geography and product line.”
Greenslade agreed, adding: “Reuters were successful in one area, Thomson in another, and in that sense they weren’t really rivals in many ways.”
Although Reuters is best known as a global news agency, the lion’s share of its revenues derive from selling financial market data to clients such as investment banks and brokerages around the world.
Thomson-Reuters will have 34 percent of the financial information and data market compared with Bloomberg’s 33 percent at present. Reuters currently controls 23 percent and Thomson 11 percent.