Strategy

The jewel in the Thomson crown

They've taken back The Globe and Mail, but is it good business, or nostalgia?

David Thomson, the country’s wealthiest man, surfaced briefly this month to announce that his family had taken back ownership control of The Globe and Mail. The acquisition of 85% of the Globe by Thomson’s private investment company, Woodbridge, received little attention, however. It was a side deal in BCE’s $3-billion acquisition of CTVglobemedia, and the story was buried beneath breathless narratives about a future where everyone will watch television on cellphones.

It’s understandable that the Globe is seen as a billionaire’s bauble. Three generations of Thomsons have coveted the paper, and David’s father, Ken, finally succeeding in purchasing it in 1980. Shortly before his death, Ken Thomson expressed no buyer’s remorse, describing it as the “jewel in the crown” of the family’s massive fortune.

Held up against BCE’s latest gambit, the Globe deal seems very last century, reeking of ink-stained newsprint and private clubs. When Ken Thomson divested his company of all its newspapers, including the Timmins Daily Press (his father’s first paper), he famously said, “You can’t run a business on sentiment.” But, as John Miller, professor emeritus with Ryerson University, puts it, ” The Globe and Mail is an exception to that rule, and somehow it has always been.”

Despite the baggage and responsibilities that come as family patriarch — he was tapped by his grandfather, Roy, decades ago to one day helm the family fortune — the business has gone from success to success under David’s direction. Buying back the Globe either needs to be viewed as a continuation of Thomson’s winning ways or a vanity buy of a cherished but dying business. “[The Globe] has been important to them; however, the family is — I would argue — known for not sort of emotionally holding on to assets. They used to be newspapers, North Sea oil and European travel, and you don’t see those in the Thomson portfolio anymore,” says Roger Martin, dean of the Rotman School of Management. Martin is also a Thomson director and self-described “strategy adviser” to Thomson consigliere Geoffrey Beattie, the president of Woodbridge and former deputy chairman of Thomson Corp., who has advised the Thomsons on investments for decades.

An 11-year director with Thomson, Martin had a front-row seat as the family-controlled company sold off its newspaper and learning operations — in typical form near the peak of the market — and used the proceeds to bankroll the bold 2008 purchase of Reuters and a controlling stake in Thomson Reuters, a deal that was worth over $17 billion. While he prefers to stay in the background, David, like Ken, has had an active role steering the public company that is the foundation of the Thomson billions. “Thus far it has been thinking carefully about the long term of business and asking the fundamental question: Is this going to get more valuable or less valuable over time?” says Martin.

The family’s purchase was greeted with some relief at the Globe, where staffers are working on an October redesign for the 166-year-old paper, and David dutifully attended a meeting with employees the day of the purchase. “I think the news went down very well with our staff,” says Phillip Crawley, the Globe‘s publisher and chief executive. A Brit hired to fight the newspaper war sparked by the 1998 launch of Conrad Black’s National Post, Crawley says the Thomsons have been unwavering in their support for the paper, and there was no doubt about their ownership when the Bell deal came together. “The family have been very consistent, and that goes back to Ken, and David is very much of the same mind.”

The purchase was also taken as a bit of welcome news among industry executives. “People should look at that as the Thomsons who very rarely make a bad decision in business realize that owning a major newspaper in a major metropolitan area is not a dying [enterprise],” says Paul Godfrey, chief executive of Postmedia Network Inc., the country’s largest chain of newspapers bought out of the bankruptcy of Canwest Global. John Hinds, CEO of the Canadian Newspaper Association, is even more direct: “It is further evidence that the media might not be just as dead as everyone thinks it is.”