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Thomson to Buy Dialog
by and
Posted On March 22, 2000
Sources at Thomson Corp. ( have confirmed to Information Today that the giant electronic and print publisher will complete purchase of the Dialog Corp.'s Information Services Division—the "real Dialog" to generations of professional searchers—within the next few weeks. As of March 22, Dialog had not yet made an official announcement of Thomson as the "third-party purchaser," but, because of investor and media pressure, it had been forced to issue a statement that it was "in advanced discussions." Dialog has struggled with debt problems since the 1997 takeover of Knight-Ridder Information by MAID. The purchase will cover all debt obligations, currently amounting to about $260 million, and will also involve some strategic licensing agreements.

The U.K.-based Dialog Corp. ( will concede the name of Dialog to Thomson and restructure the remaining portions of the company into a new company called BrightStation ( BrightStation will contain the Net-oriented, high-tech portions of the company now encompassed by the Web Solutions Division, the E-Commerce Division, and a newly formed Internet Ventures Division. DataStar and MAID's Profound are the other two search services in the Information Services Division (ISD) and are to be sold along with the Dialog service. According to company financials, the ISD generates 97.5 percent of the company's revenues, so the sale of the ISD will leave very little of the original company intact.

After completing the acquisition, Thomson will have to locate Dialog—and DataStar and Profound—somewhere within its vast array of subsdiaries. At press time, rumors suggested that Thomson would transfer the Dialog search service to Thomson Legal and Regulatory Group, headed by Brian Hall. TLRG, one of Thomson's largest and best revenue-generating subsidiaries, presides over the West Group, headed by Michael Wilens, and West Online, headed by Andrew Prozes. The selection of the legal online connection with its substantial technological and financial resources would help Thomson recover the costs of the acquisition as quickly and painlessly as possible. However, arguments could be made for closer alliances with reference publishing operations like Gale Group that contribute substantially to Dialog's current revenue.

The move from status as a content aggregator that owns no content back to ownership by a substantial content publisher should put Dialog in a stronger position in dealing with competition. For example, Dialog established a gateway service a decade ago (while still Knight-Ridder Information) that merges a significant portion of its data into Westlaw. At present, the Westlaw gateway shares content with Dialog and Factiva's Dow Jones Interactive. Since so much of the full-text data of interest to business and legal users overlaps between Dialog's full-text files and Factiva's Publications Library, it would seem that Factiva might find itself challenged by the development. Besides overlapping full-text coverage, Thomson and Dialog also have substantial synergy in the provision of company directories, patent and trademark, and financial files, as well as scientific and technical information sources.

While Factiva/Dow Jones Reuters may feel some strain, Westlaw's traditional foe—LEXIS-NEXIS—may actually feel less threat. Thomson has a long-standing policy, still well in place, to diversify outlets for its products. In fact, the acquisition of Dialog could well represent an example of that policy in action, since they did not want to see a major outlet for their products fail. Thomson's data generates an estimated 40 percent of Dialog's revenues. With the Dialog connection in place, Thomson could find itself able to design more diversified products and expand its interaction with other publishers. Searchers could even begin to see new data going into Dialog, something that has not occurred significantly under the former MAID management.

What steps the new owner may take remain to be seen. However, some of the first issues on the table will probably concern the location of the Dialog service, e.g., whether to continue the Cary, North Carolina, operation; and technical management, e.g., whether to continue the Fujitsu administration of the technical center in Palo Alto, California.

In any case, reactions of members of the professional searcher community to the mere rumors of Thomson's takeover that circulated over the last few weeks seem to portend a very positive market reaction to the new management. The restoration of a tradition of strong customer relations, loyalty, and support may have already begun.

Barbara Quint was senior editor of Online Searcher, co-editor of The Information Advisor’s Guide to Internet Research, and a columnist for Information Today.

Paula J. Hane is a freelance writer and editor covering the library and information industries. She was formerly Information Today, Inc.’s news bureau chief and editor of NewsBreaks.

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