Media Channel

It is a century-old, family-controlled media company facing a transformational deal with another global peer.

Dow Jones & Co.?

No. Thomson Corp.

Thomson once had a large newspaper business that included 130 local newspapers across North America, as well as London’s Times and Toronto’s Globe and Mail. But Thomson, which is 70% owned by the Canadian Thomson family, shed those assets over the past couple of decades and transformed itself into an electronic publisher supplying data to professionals in finance, law and health care.

With its agreement last month to buy rival Reuters Group PLC for £8.7 billion ($17.1 billion), Thomson is moving further into the business of selling financial data with monthly subscription fees — a steadier revenue stream than newspapers, which depend on advertising that can fluctuate widely.

That change has placed Thomson, of Stamford, Conn., squarely in competition with a formidable set of new rivals. They range from Bloomberg LP, the current industry leader in supplying data and analytics tools to financial professionals, to a large number of smaller new competitors such as London-based Markit Group.

The question for Thomson is whether the changes will be enough. The deal gives the company some services, like Reuters’s news service, that competitors offer and that it currently lacks. But Tom Glocer, Reuters’s chief executive and the combined company’s CEO after the deal, faces a quickly changing world in which customers are increasingly demanding more sophisticated data, and at a faster rate.

The combination is designed to help Thomson’s financial unit, which provides data on companies, takeovers and the financial markets, to broaden its reach. Thomson relies on the U.S. for about 80% of its sales. With Reuters’s footprint in Europe and Asia, “this will allow us to be more global,” says Thomson Chief Executive Richard Harrington, 60 years old, who will retire upon deal completion.

In terms of products, Reuters is strong in news, real-time data and foreign-exchange trading while Thomson is strong in historical data and has a presence in bond trading, says Mr. Glocer, 47. By market share, the combined company would likely match or even exceed Bloomberg’s market share, depending on how the market is defined.

In terms of products, “what makes the combination with Reuters so attractive is that there is very little overlap, it’s very complementary,” says Mr. Glocer. He will have to knit together the two companies’ software, internally and also for customers. The deal is expected to face a lengthy antitrust review.

Thomson’s evolution shows how a family-controlled company can adapt to changing times, a process that has proved challenging for Dow Jones, publisher of The Wall Street Journal and target of an unsolicited $5 billion bid from News Corp. One difference is the family’s direct role — David Thomson, the founder’s grandson, is Thomson’s chairman. Thomson also has benefited from tapping professional managers for the family’s holding company, Woodbridge Co., which will own 53% of the combined company after the deal.

Thomson’s transformation over the years could offer a clue on how well it can adapt. The company dates to 1934 when Roy Thomson, a barber’s son from Toronto, bought his first newspaper in Ontario. Over the following decades, he added other newspapers and expanded his empire to include a stake in North Sea oil wells, among other businesses. His son shifted direction during the 1980s and 1990s to add professional publishing while shedding other assets, including some newspapers.

The transformation accelerated under Mr. Harrington, who took over as chief executive in 1997. Mr. Harrington saw two potential threats looming for his former unit: the disappearance of its traditional small retailer advertisers across the U.S., which were being gobbled up by large store chains, and the loss of classified-advertising revenue to the Internet.

Mr. Harrington sold off about $15 billion in assets, which led to the dismantling of its stable of North American newspapers, including the Globe and Mail. (The Thomson family remains involved in newspapers via a stake in the Globe and Mail’s parent.)

Mr. Harrington, meanwhile, embarked on a roughly $30 billion acquisition spree. For the financial division, that included buying up companies to bolster its analyst-estimate offering and improve its appeal to bond traders. The underlying characteristic of most of the purchases: They provided information that affluent professionals were willing to pay a premium for at a time when it was increasingly free online.

Today, Thomson generates about $6.6 billion in annual revenue, excluding its soon-to-be-shed education business, and has a market value of $26.9 billion. Its biggest division is the legal unit, followed by the financial business, which accounts for 30% of sales.

– By Cassell Bryan-Low