Telerate

~ the eulogy ~

Telerate's entire product was a number on a screen, and the screen was on somebody's desk inside a bank. In Turkey the same numbers reached the rest of us as a strip crawling under the evening news, rounded off and hours behind. That gap was the business.

Neil Hirsch was 21 and working for Merrill Lynch when he raised about two million dollars and started the company in 1969, in a small office above Penn Station. The insight was narrow and correct. Stock prices already had electronic terminals, but the commercial paper and bond markets ran on telephone calls, which meant a dealer could only know what he had personally asked about in the last hour. Telerate put those quotes on a screen and charged for the screen.

Cantor Fitzgerald took a quarter of the company in 1972 and supplied the contribution that made it permanent, which was US Treasury pricing. By 1981 there were 8,000 terminals installed in North America and another 2,500 spread across 21 countries, each renting for somewhere between $540 and $700 a month, and the company cleared $13.6 million in net profit that year. Exco International bought 89 percent of it for $75 million in the same period.

Dow Jones then bought it in stages, and the stages tell you what the market thought of the asset. Thirty two percent for $285 million in 1985, then another $415 million in September 1987 to reach 56 percent. A further $148 million in 1988 took the holding to two thirds, and the rest followed by 1990. For a while it was the most valuable thing Dow Jones owned that was not the Wall Street Journal.

None of this was ever going to reach me. It was not a matter of being in the wrong country or the wrong decade, because Telerate was still running when i was already online. The distance is that the smallest unit it sold was a leased terminal on a trading floor, and there has never been a version of that product for a person sitting at home who is merely curious what the number is.

~ the dossier ~

~ the fall ~

Michael Bloomberg started selling terminals in the early 1980s, and his machine did something Telerate did not: it let you calculate on the data instead of only reading it. Telerate stayed a page you looked at. Dow Jones, having spent about $850 million on those three stakes alone, spent the following decade underinvesting in it, and by the mid nineties the newer desks in every bank had a Bloomberg on them and kept the Telerate screen out of habit.

In March 1998 Dow Jones sold the whole thing to Bridge Information Systems for $510 million, which was already a painful markdown. Bridge collapsed into bankruptcy in 2001, and MoneyLine Network picked the Telerate business out of the wreckage for $10 million. Read those two numbers next to each other. Three years took $500 million off it.

MoneyLine Telerate limped on, dropped the MoneyLine half of the name, and in June 2005 Reuters paid around $175 million for the remains and folded them into its own products. The brand stopped existing that month.

~ what got buried with it ~

Telerate addressed information by page number, and traders memorized the pages the way people later memorized URLs. The most consequential of them was page 3750, where the British Bankers' Association published LIBOR every morning. Loan contracts around the world named that page directly as the source, which means for years the legally binding definition of an interest rate was a screen location on a private financial network.

The other casualty was the single-purpose terminal itself. Telerate rented you a box that did exactly one thing, and the rent was the whole business. That model died in the same decade the general-purpose computer on the desk got good enough, and nothing built on it survived.

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