On February 11, we posted an announcement of a strong rumor that Thomson Corp. was in the process of purchasing a substantial interest in The Dialog Corp. We promised to report back on the rumor soon no matter how it turned out. Well, so far, both companies have officially declined to comment on the rumor. Thomson's Pat Tierney told us simply, "It is the policy at Thomson to never comment on acquisitions or divestitures."
Thomson did announce one major strategic alteration last week, however. With one exception, the multinational publisher is getting out of the newspaper business. Thomson has announced it will sell 130 of its daily and weekly newspapers, retaining only the flagship Globe and Mail in Toronto. The sale of the 55 daily and 75 non-daily papers should garner the company somewhere in the neighborhood of $2.6 billion, according to analysts. The combined circulation of the newspapers now for sale is around 1.3 million a day. In the U.S., many of Thomson's dailies serve small communities in Alabama, Georgia, Indiana, Ohio, and Wisconsin.
Thomson has set its future strategy around Internet and electronic distribution of data. "We have decided to sell these newspapers in order to more sharply focus on technology-driven information and solutions for businesses and professionals which have global potential," said Richard Harrington, president of Thomson Corp. The company plans to gather 80 percent of its revenue from electronic services within the next 5 years. The newspapers scheduled for sale had an estimated revenue of $810 million in 1999, much of that generated by electronic services. Thomson has an annual revenue of $6 billion.
With the money acquired in the sale, which the company hopes to complete by midyear, Thomson plans to reduce debt, invest in current business, and make acquisitions.
In an unrelated development, the Mail in Britain has reported that The Dialog Corp. is still struggling with refinancing its debt. Institutional investors, in particular, are disappointed that the refinancing has not been completed, particularly in a boom market for technology companies. Some have requested major management changes at Dialog, according to the report.