Reuters' $1.5 Billion Bonanza

By Janice Castro

A plan to go public generates potential fortunes--and problems Diana Parsons was skiing in Switzerland with her family when a stranger called from London with the news. The British farmwife, 44, could be a multimillionaire, thanks to a distant relative named Dundas who had bought some stocks three generations ago. As a shareholder in a company that is a part owner of Reuters Ltd., the London-based news agency, Parsons could gain some $4 million. All over Britain, would-be millionaires are racing to lay claim to part of the estimated $1.5 billion that Reuters may be worth if it offers its shares to the public as expected later this year.

Cinderella stories are rare on Fleet Street. Up until 1981, Reuters had not paid out a pence in dividends for 41 years. But in the past three years, profits at the 132-year-old news agency have soared. The company paid $84 per share in 1982, and is expected to pay about $135 per share for 1983. Once the company goes public, each of those shares, once considered almost valueless, may be worth as much as $14,000.

The secret of Reuters' success is an early move into computerized business data. In 1973, the agency introduced the Reuter Monitor, a 24-hour currency-information service providing international exchange rates to traders. A smash hit, the Monitor now serves 15,000 subscribers in 78 countries, offering instantaneous quotations on dozens of currencies, as well as trading data on gold, oil commodities, shipping, stocks and bonds. Using the Monitor, traders around the world can turn quick profits on market conditions that often change before information is available through other news sources. This service accounts for 90% of Reuters' revenues (an estimated $329 million in 1983) and nearly all of its profits.

Reuters' move into the computer age was a return to its roots as a business news service. In 1850, in the days before wire links between major European financial markets were completed, Baron Julius Reuter used a flock of carrier pigeons to send the latest stock prices from Brussels to the nearest telegraph station, some 100 miles west. By the time the eastward advance of telegraph lines made the pigeons unnecessary, Reuter had launched a general news service that today is one of the world's largest.

The plan to reorganize Reuters as a public company causes concern in Britain that the agency might be taken over by investors who would compromise its journalistic integrity. Says Spectator Editor Alexander Chancellor: "The shareholders will no longer be simply interested in the quality of the news product." Former Prime Minister James Callaghan, a leading opponent of the reorganization, says the move "will certainly weaken [Reuters'] independence." The company's trustees are considering a plan that will attempt to prevent any one group from dominating Reuters. Last Friday the House of Commons heatedly debated whether any such safeguards could be effective but decided not to block the proposed public sale.

The public offering of Reuters' stock could provide a welcome cash infusion for some threadbare Fleet Street publishers that are plagued with outmoded equipment and restrictive labor pacts. The Press Association, a British wire service owned by 80 regional newspaper groups, controls 40% of Reuters' shares. Britain's 20 national newspapers, which form the Newspaper Publishers Association, hold an equal amount of stock. The remaining shares are divided among publishing interests in Australia and New Zealand and executives of Reuters. Among those who stand to make the most from a public sale is Rupert Murdoch, the Australian publishing czar who owns the Times of London and in January acquired the Chicago Sun-Times. His Reuters' stock is estimated to be worth more than $135 million. Other publishers with a piece of the Reuters gold mine have been watching stock in their newspapers go up for months. Already, the value of shares in Fleet Holdings, owner of the Daily Express and the Daily Star, has risen nearly 600% (to $2.55) in anticipation of the windfall.

Stock in Associated Newspapers, which owns the Daily Mail, has more than doubled (to $6.76).

Reuters has provided Fleet Street with a good human-interest story too--tracking down the new millionaires. So far, the Press Association has been unable to identify the current holders of 1,800 of its own shares, which could be worth more than $12 million. The trouble is that the association has never paid a dividend; consequently, the descendants of the five families that originally purchased the shares in question may have long since forgotten about the stocks. Says Jack Purdham, who is leading the Press Association's search: "The last communication with any of the five families was in 1930." Among the possible owners of 200 of the shares, registered in 1872 to an editor named Jones and now worth as much as $1.4 million, are 14 pages of people named Jones in the London telephone directory alone.

Burke's Peerage, the keeper of Britain's pedigrees, has joined in the hunt along with other genealogical experts and squadrons of lawyers eager to litigate future claims.

The promise of inheriting millions has unearthed some buried history in at least one family. Just when Diana Parsons was making plans to do "something sensible" with her fortune ("I mean, I'm not going to go out and buy ten yachts"), a heretofore unknown stepbrother came to light with claims of his own. Parsons' right to the Dundas shares was traced through her stepfather, who died in 1962 leaving no will. But it seems that an earlier marriage of his produced a son, Jeremy Dundas, now an insurance executive in Zimbabwe. Both sides are arming themselves with lawyers and consulting genealogists. Perhaps Reuters should add a new feature to its Monitor service: keeping track of the fluctuations in potential fortunes it has created. --By Janice Castro. Reported by John Saar/London

With reporting by John Saar-/London