Latest Business 2.0 Column: Tom Glocer, Reuters

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Reuters CEO Tom Glocer wants to build an online broadcast network. Can the venerable newswire take on Fox and CNN?

By John Battelle, January/February 2005 Issue

During its formative days, Reuters was a relentlessly innovative company, using the best tech it could get its hands on to carry the news. Before the telegraph came along, it beat competitors by using carrier pigeons to send information about stock trades. But back in the 1980s, Reuters decided to wholesale its newsfeeds to Ted Turner -- and watched CNN become a billion-dollar business. As broadband video blossoms on the Web, Reuters CEO Tom Glocer doesn't want his London-based company to make the same mistake twice.

In 2003, 10 years after joining Reuters's U.S. law department, Glocer worked his way to the corner office -- the first American and first nonjournalist to helm the venerable company. He immediately restructured it into four customer-focused divisions, a move that's saving a billion dollars over five years and has sent the stock price up nearly 50 percent in the past year. What's more, he's managed to pull this off while sending hundreds of journalists to Iraq and losing some in the line of fire.

Now Glocer is shaking up Reuters's highly respected newswire business. Think of the newswire as wholesale; Glocer, in essence, is using the disruptive power of the Internet to get into retail. The move would have been unthinkable 20 years ago for reasons of both cost and culture. But Glocer has learned the hard way that you don't make much money selling your content to others. Successful media companies, he says, make their money either by creating branded products or by controlling distribution. Glocer recently sat down with Business 2.0 to explain how he plans to do both.

Despite the costs of the ongoing conflict in Iraq, your stock went on a tear in 2004.

The market sees Reuters as a classic recovery story. By the end of 2006, we will have taken $1.7 billion out of our costs since we started restructuring in 2000. Our core subscription revenues are still declining, but the Street is increasingly confident that we can return these to growth next year.

Last summer you pulled your news off Yahoo. Why?

For 153 years Reuters has run a wholesale media strategy. We produce raw text, video, and pictures and make it available to the world's publishers, who in turn slap their brand on it, develop brand loyalty, and aggregate an audience. Go back to 1980 and ask yourself, as I often do: Between Reuters and CNN, who had the greater assets and likelihood to launch an international news network?

Did Reuters consider competing with CNN back then?

I don't know. I wasn't there. But I do know that Ted Turner has said that they kept looking over their shoulder because they couldn't believe their luck. When they were starting out, they really were the Chicken Noodle Network. Reuters had bureaus in 200 places and a hell of a brand name. Who had ever heard of CNN? More recently, Reuters repeated the mistake -- we were the wholesaler to Yahoo and others.

But this time you pulled out.

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