Bloomberg is back at Bloomberg – Ratti Report Bloomberg is back at Bloomberg

Bloomberg is back at Bloomberg

t1larg.bloomberg.september12Steve’s breakdown: The goal now is to go global because “The more readers and viewers of Bloomberg News we have, particularly among corporate executives and government officials who make business news, the more influence we have. The more influence we have, the more access we have to them. The more access we have, the more market-moving information we have. That helps us sell more Bloomberg terminals. The more we sell, the more we invest back into our news organization, creating this wonderful virtuous cycle.”

NEW YORK, NY: On November 5, 2014, Mike Bloomberg settled in front of a Bloomberg terminal, logged on with his “B-unit” biometric identity card and prepared to send an email to his employees. He’d been gone 12 years, balancing budgets at City Hall and reshaping New York on a grand scale. Three terms running the greatest city on Earth. Now he was back where he began, at Bloomberg L.P., his $9 billion financial data and media company. He’d started showing up, days after leaving politics, at a desk on the fifth floor of the company’s glassy Lexington Avenue headquarters. He attended editorial meetings and involved himself in business strategy. He watched. He listened. In September, he had announced that he would be resuming CEO duties. Now this would be his first all-staff message since then. He had to choose his words carefully.

Bloomberg employees never imagined this level of involvement from the now 73-year-old oligarch. They expected him to decamp for philanthropy or relax with his grandkid, maybe write an occasional column about gun control for Bloomberg View, the editorial vehicle designed to promote The Mayor’s causes and filled with pedigreed smart types housed in a beautiful Stanford White-designed townhouse on the Upper East Side. They thought Bloomberg would cloister himself there with coffee and the Economist. But he was The Owner again now. And everyone—including perhaps The Mayor himself—had underestimated The Owner’s desire for control.

He was, in the view of one former Bloomberg executive, “schizoid,” at once the corporate chieftain obsessed with keeping his lucrative data terminal business humming for Wall Street traders and the politician with an insatiable lust for influence through his broader media platforms, including television and magazines. He was a data guy, cold and logical, who cracked down on smoking cigarettes in New York because they were bad, then banned trans fat in restaurants, also bad, then tried to ban soda as liquid evil. But he was also a man of consequence. It wasn’t enough to be mayor twice—he changed the law to get a third term. He was never going to just sit around and read the Economist and give money away. He had to return to his company and rejigger it somehow, control it from within, cause ripples without. The oligarch was The Owner some days. On others, he was The Mayor. His intentions were often inscrutable.

Either way, Mike Bloomberg had already accepted the resignation of Dan Doctoroff, the CEO he installed in 2008 to watch over the company while he kept watch over the city. There was no struggle—Doctoroff referred to him as “God”—but there had been strain. A week before the transition became public, the two performed the ALS ice bucket challenge with a large group of staffers in the office courtyard. Doctoroff’s father and uncle had died of ALS, and as he counted down and raised his bucket, Bloomberg dashed in from stage right and hurled his ice water on Doctoroff, who then, roaring too loudly and overlong, dumped his bucket on the boss. It had been scripted, of course, as a buddy routine, but they had slicked the courtyard with alpha male awkwardness. The larger symbolism of corporate minions in the background robotically dumping cold water on their own heads while executives drenched each other was lost on them. Such was the Bloomberg Way.

Matt Winkler was a separate matter. At The Owner’s behest, Winkler, an eccentric rarely seen outside a bow tie, had founded Bloomberg News in 1990 and built it into the giant centerpiece of an expanding media portfolio. His identity, news despot and enforcer of the Bloomberg Way, was so enmeshed with the wire service that excising him might cause a terrible disturbance. Bucketing Winkler would require more tact. In 2013, Winkler had shamed the company with an embarrassing China mess, killing an investigative story about a well-connected billionaire tycoon, which might have been the right thing to do for the business—the Chinese government would have been furious—but definitely was not the right thing for the journalism. Winkler had even popped off about Nazis to the reporters while spiking their story. He’d done it on tape, likening China to the Third Reich in a screwball justification for killing the piece.

And everyone—including perhaps The Mayor himself—had underestimated The Owner’s desire for control.

It was a spectacle that highlighted the conflict of interest at the heart of Bloomberg News, which existed, by design and admission, to sell Bloomberg terminals. The China story wasn’t worth the risk to the business. It had to die. But instead of strangling it behind a dumpster, Winkler had jabbered about Nazis.

Just as bad, the river of money from the terminals—an estimated $7 billion in revenue each year (combined with another $2 billion from other parts of the company)—produced little journalism, proportionally, to be proud of in any intellectual or service-to-the-republic sense. Yes, Bloomberg Businessweek had made a splash since Bloomberg bought it in December 2009—winning awards and offering eye-popping covers with airplanes mating in midair or a struggling hedge-fund guy with a flaccid arrow pointing downward from his zipper. But most Bloomberg stories had scant impact beyond finance circles. Bloomberg TV remained so unpopular that Nielsen didn’t even rate it. An influx of new talent at Bloomberg Media to this point had not delivered on the promise of more consumer-friendly journalism to broaden Bloomberg’s reach. And the Washington operation? The bureau was in the midst of an increasingly pitched war with the seat of empire, in part because the company had just launched a walled-off politics vertical, based in New York and built around two journalism stars with seven-figure salaries, that was already competing, bizarrely, with Bloomberg’s own less lavishly compensated staffers in Washington.

It was simpler when the boss had decamped for City Hall, weeks after the attacks of September 11, 2001. Back then, the company had 7,800 employees. By Bloomberg’s return, the company had doubled in staff and, in the case of Bloomberg News, stretched across 150 bureaus in 73 countries. Within months, the wire service would win its first Pulitzer Prize for a “painstaking, clear and entertaining explanation of how so many U.S. corporations dodge taxes and why lawmakers and regulators have a hard time stopping them.” But now, in the doldrums of late fall 2014 in New York, Mike Bloomberg was just starting to reorganize his empire. Could he have the award-winning high-profile content he craved without undermining his profit center, the all-important terminal?

Bloomberg had a new editor in mind who might help—a man with brains, a writer of books, a self-deprecating Brit. He might sort it out. Right now, however, Bloomberg needed to send that email, his first missive as the returned chief. Who would he be in this moment? He needed to address the troops. All the many thousands of them around the world. Time to take charge. The company was an ocean liner, but the right leadership could make it dance on the waves.

So he sent the following:

To All Bloomberg People

Hi. It’s great to be back and start to meet all 16,000 hard-working Bloomberg employees. Obviously, it’ll take me some time to learn everyone’s name, so if I don’t recognize you immediately, please bear with me.

One thing that helps are the badges we all wear around our necks. Unfortunately, when one puts our B-unit on the same lanyard as the badge, 50% of the time we block our names and photos. It makes the memory process for someone my age more difficult (and creates an issue for our hard working security guards). To help everyone, it makes sense to do what I do: badge on the lanyard, B-Unit in your pocket.

Tks, Mike

Yeah, Mike Bloomberg was back.

***

Anyone who wonders how Mike Bloomberg is worth $37 billon should take a look at a Bloomberg terminal, that reliquary of financial data. Not the new ones you see in photos of traders at work, with the flat screens and an online portal, but the old, boxy models with the chunky keys, all linked together to stream stock and bond prices. It was an email network before email caught on, a hive-minded revolution. When I was in journalism school in 2004, we had a middle-aged model down a dark corridor, a mysterious ark from another dimension of information.

Introduced in 1983, the terminals helped transform Wall Street and created a fortune for the boss. In the 1970s, traders were still crunching stock and bond data by marking up broadsheets. Bloomberg, who had grown up in the Boston area, become an Eagle Scout and gone on to a career in finance, was working at Salomon Brothers at the time, developing digital financial tools for a computer he dubbed the B Page. He saw an opportunity to take those tools to a wider market. It was the dawn of the personal computer era, and after Salomon Brothers laid him off with a $10 million severance check, Bloomberg had the resources to build his magic box and the company he would fashion in his image.

Today, the faithful call the terminal The Bloomberg, as if man and machine had merged, humanity transubstantiated into circuitry. Tom Secunda, one of the company’s co-founders and the chief architect of the terminal, sometimes acts as though he were The Bloomberg. “There are certainly places where I can still be a more important product, where I can still make my product more valuable so that people buy me,” Secunda told Fortune in 2013.

Winkler was fanatical about The Bloomberg. Once, he fired a reporter after a computer glitch published a headline too soon. When colleagues asked Winkler to reinstate the man and—apostasy!—faulted The Bloomberg, Winkler exploded: “No. The enemy was not the computer. That’s wrong. … I figured that a lot of you were going to think this way. It’s wrong! It’s not the computer! It’s the human!”

The Bloomberg was often seen inside the company it built as a sort of heavenly body. Dan Doctoroff likened it to the sun, a “life-giving force” that sustains its orbiting planets of business and media ventures. The CEO kept a model of the solar system near his desk, with a tiny replica of The Bloomberg affixed to the sun. The analogy might have even been too limited. There are now 324,000 Bloombergs in operation. Each brings in more than $20,000 in annual subscription fees per user. Bloomberg’s annual revenue is about $9 billion, with gross profit approaching $3 billion, according to Douglas Taylor of Burton-Taylor International Consulting, a market research and consulting firm that closely tracks the privately held company. The lion’s share of that profit comes from the terminal, which Bloomberg’s media operation and its 2,400 journalists exist to serve. Started by Winkler as a supplement to the terminal, the wire service has evolved into an essential feature. Taylor estimates that Bloomberg’s terminal business would suffer a 30 to 50 percent hit if Bloomberg News were to disappear.

He was never going to just sit around and read the Economist and give money away. He had to return to his company and rejigger it somehow, control it from within.

The same cannot be said of the many layers of “added value” that comprise the other parts of Bloomberg’s media business—the magazines, the TV channels, the specialized verticals. Together, these are known as Bloomberg Media. They generally lose money. Lots of it. Businessweek, easily the most appealing product to consumers, reportedly burns almost $30 million a year. The TV operation has lost about $100 million a year for the past decade. Bloomberg Media is essentially a welfare state.

As any capitalist might point out, lack of accountability creates bloat. And there is bloat inside the empire, where some questionable schemes have been kept on life support for years. Examples: Bloomberg Muse (arts vertical, now shuttered), Bloomberg View (milquetoast opinion vertical, oft-maligned), Bloomberg TV (disaster, permanent). Of course, the money also creates room to experiment. Bloomberg Markets magazine has garnered awards by producing impressive, impactful work: on the supply chain connecting modern slavery in South America to cars and appliances manufactured in the United States; on injuries and deaths of participants in clinical trials throughout the United States; on life insurance companies withholding billions of dollars in benefits from the families of slain soldiers and other Americans.

And Bloomberg News does at times range beyond its all-important market-moving scooplets for the terminal to do first-rate investigative reporting. In 2011, the wire service published a deep dive about financial institutions that borrowed from the Federal Reserve after the stock market crash, journalism that only happened because Bloomberg pursued a costly lawsuit against the Fed to force it to release records. That same year, Bloomberg News won a prestigious George Polk Award for a series on the for-profit college industry. And another the following year for an investigation into how Western companies provide surveillance systems to authoritarian countries with abysmal human rights records.

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