Notebook
Idon't suppose many people read last week's article by Geoffrey Robertson and myself about the future of Reuters news agency, because it was long and dealt with some rather complicated legal issues. But one of the shareholders in Fleet Holdings read it and flourished it in the pasty face of Lord Matthews at the group's annual general meeting. Lord Matthews had come to gloat over his role in putting Reuters up for public auction. Fleet Holdings, like all the other newspaper publishers in Fleet Street, owns shares in Reuters which would soar dizzily in value if Reuters were floated on the stock exchange. Fleet's share could be worth about £120 million, which would be very nice for Lord Matthews and his shareholders. The question we were asking last week, however, was whether flotation of the company is legal under the Reuters trust agreement of 1953, by which the owners of the company are bound to 'regard their respective holdings of shares in Reuters as in the nature of a trust rather than as art investment'. Asked if this trust document made flotation illegal, Lord Mat- thews replied: 'Not true', explaining — according to his own newspaper, the Stan- dard — that the Reuters trust 'concerned the protection of editorial integrity and had no bearing on the company's financial structure'. To anyone who has read the trust document this is a perfectly extraordinary statement — all the more extraordinary because Lord Matthews is himself a trustee of Reuters, charged with upholding the Principles of the trust. The company's ex- isting financial structure is the only guarantee of its editorial independence. That is why the trust says that the owners Should not expect to profit from thar. shareholdings and why it dictates that 'Reuters shall at no time pass into the hands of any one interest group or faction'.
Amore subtle rebuttal of the Spectator article was attempted on Friday by the Reuters company secretary, Nigel Judah, Whose own 306 shares in Reuters could, by some estimates, be worth more than £3 million if tbe company goes public. In an interview ■tith the Daily Telegraph, Mr Judah said that the flotation could be Justified by the trust's fifth objective, name- ly 'that no effort shall be spared to expand, develop and adapt the business of Reuters in order to maintain in every event its posi- tion as the leading world news agency'. Ac- cording to the Telegraph, he 'stressed the word "adapt" '. But no amount of em- phasis on 'adapt' can obscure the fact that the word refers here to Reuters' business, not to its corporate structure. Flotation would not 'adapt' its business at all: it would merely produce windfall profits for People who are supposed to be regarding their shareholdings as trusts rather than in-
vestments. If Reuters needed more capital, why did it last year for the first time pay its shareholders a dividend — a sum of £2,500,000? This year its profits are ex- pected to exceed £50 million. No, Reuters does not need more capital. What it does need, to remain 'the leading world news agency', is an ironclad guarantee of in- dependence, which the Reuters Trust and its present structure have provided for the last 42 years, A s we pointed out last week, the national
newspapers have avoided any discus- sion of the possible legal difficutlies which could stand in the way of the Reuters flota- tion from which they all stand to gain. This is one of the most outrageous aspects of the whole affair. Among the Fleet Street press barons there has, however, been one honourable exception. Lord Harwell, the proprietor of the Daily Telegraph and the Sunday Telegraph. Although he has a large stake in the Reuters gold mine, his newspapers have been alone in taking up the issues which we debated in the Spectator last week I have already referred above to the Daily Telegraph's interview with Mr Judah. But the question of the Reuters Trust was also discussed in the Sunday Telegraph by that newspaper's City Editor, Mr Ivan Fallon. As he himself indicated, Mr Fallon is much more of an expert than I am on the details of the proposed Reuters flotation and what it would mean to the company's shareholders. He takes the view, and I expect rightly, that the bonanza will turn out in the end to be a good deal less ex- citing than generally predicted. But there is much else that he does not seem to have grasped. He does not, for example, take at all serliously the role of the Lord Chief Justice who, under the trust agreement, is
the person who must ultimately decide whether Lord Matthews etc. may sell any of
their Reuters shares. For some reason, he refers to this provision in the agreement as 'an obscure clause', whereas it does not seem to me — in what is a very short docu- ment — to be any more obscure than any of the others. One could equally well define it as a crucial clause. Mr Fallon also says that that the clause concenred is not Clause 12, as we stated last week, but Clause 13, im- plying that we weren't quite on top of our subject. But it is Clause 13 in the currently valid trust document — that of 9 July 1953 (was Mr Fallon working from the first trust agreement of 1941?) But I do not wish to be petty. The point is that Mr Fallon, like so many others, seems not only to underrate the difficulties of breaking or amending the trust but to assume far too glibly that flota- tion can be achieved without any risks to Reuters. The mere fact that the owners of Reuters may in future look upon it as a source of profit rather than as a trust must inevitably transform the situation. In the past their attention has been focussed upon the Reuters news service and how to main- tain its quality at the lowest possible cost to themselves; if Reuters goes public, their attention will be redirected towards those aspects of the company which are likely to make them money — in other words, towards everything but the news service. And if Reuters is to become a public com- pany, what will happen when one day the computerised financial services stop making the enormous profits they are making today? What will happen, in other words, if the bonanza comes to an end? Who then will feel responsible for the survival of the loss-making news agency? We need some clear answers to that.
It is really rather surprising that the whole world is so excited about the Spectator's Daimler competition when there are so many other newspaper competitions around which might on the face of it appear just as attractive. I am discounting Lord Matthews' Millionaires Club because nobody seems to believe that anyone will actually win £1,000,000. The Daily Mail's belated imitation seems more promising, for the paper states unequivocally that it plans to turn at least four people into millionaires. But what of the new competi- tion in Soviet Weekly, the voice of the Soviet Union in Britain? This offers as first prize 'a fortnight's spring cruise for two to the Canary Islands aboard a Soviet liner': consolation prizes include a camera and 'an attractive battery clock'. In order to win, you have to answer three questions about East-West relations, the trickiest of which is the second one. This asks: 'Nato and the USSR have rough parity in medium-range nuclear warhead delivery rockets and air- craft, the Soviet total being 938. How many has Nato? 857, 986 or 1,003?'
Alexander Chancellor
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