BOOKS: Wires crossed at Reuters

BOOKS: Wires crossed at Reuters - Two ex-employees think they know who to blame for the catastrophic decline of the company. Roy Greenslade remembers the scoops.

by Roy Greenslade, media commentator for the Guardian
Last Updated: 31 Aug 2010

Two ex-employees think they know who to blame for the catastrophic decline of the company. Roy Greenslade remembers the scoops.

The motto of Reuters news agency from its pigeon-post beginnings in the 1860s was 'Follow the cable'. By the 1980s, it was espousing a less romantic, hard-edged slogan: 'Follow the money'. The philosophy underlying both was the importance of turning a profit by transmitting news across the world.

But there is a distinction. For 120 years, Reuters didn't worry about making money, because its reputation, along with some shrewd exploitation of subsidies, ensured its pre-eminence.

Then came the electronic global marketplace - paradoxically pioneered by Reuters itself - which pitched the agency into an environment in which the market leader suddenly found itself hanging on by the tail. In the eyes of its executives, its news division was relatively unimportant, as it made so little money: they chased the super-profits by concentrating on selling financial information to fuel the world's money markets.

So swift was Reuters' fall from grace that its share price, which stood at pounds 16.17 in March 2000, sank to below pounds 1 in just three years. Its market value dived from pounds 23 billion to pounds 1.4 billion.

This story of our times unfolds in Breaking News at a sometimes breathless pace. Barry Simpson and Brian Mooney are ex-Reuters employees who clearly feel any number of mistakes could have been avoided. Yet I couldn't help wondering whether the directors who guided Reuters towards financial disaster had been guilty of bad luck rather than poor judgment.

As the authors take us through a series of technological twists and turns, lamenting this failed hardware project and that outdated software initiative, I had more than a little sympathy with the chiefs they berate.

With the speed of change in the financial world generating ever-increasing new demands for screen-based information, Reuters spent millions trying to build systems to satisfy their customers. Many of these didn't work, or work well enough.

Simpson and Mooney see the main culprit as Sir Peter Job, chief executive for the 10 years from 1984, the year Reuters became a public company.

Though they concentrate on technology rather than human beings - which often makes it hard going for the reader - their portrait of Job is that of a workaholic too interested in details and strategically blind. And they accuse Sir Christopher Hogg, chairman for 18 years, of complacency.

They acknowledge, however, that these men and their senior executives faced the problem that haunts public corporations: the need to satisfy shareholders seeking short-term profits. They claim that innovative ideas that would surely have benefited Reuters in the long run were shelved because they 'did not offer high enough returns'.

Having made a number of questionable technological decisions, Reuters lost a slice of its business to a competitor it regarded as an upstart: Michael Bloomberg, whose company proved to be a successful rival.

By the time Tom Glocer, the present CEO, was appointed, the Reuters edifice was crumbling. By April this year, when he announced a loss for the previous year of pounds 500 million, he had already instituted a painful cost-cutting exercise, with hundreds being made redundant.

Meanwhile, the firm's core activity - reporting news events from every country around the world - continued to be regarded as the best of its kind. There, surely, is the real irony. What we don't learn from this book is the list of scoops: the assassination of Afghan vice-president Haji Qadir; the WorldCom bankruptcy; Hugo Chavez's return to Venezuela; and the spectacular revelation of North Korea's nuclear weapons programme.

These exclusives may not be as profitable as the transmission of stock prices and foreign exchange dealings, but they have added immensely to Reuters' prestige. Should the company not follow the cable once more?

Breaking News; by Barry Simpson and Brian Mooney, Capstone, pounds 12.99; MT price pounds 10.50.

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