There’s no mistaking where Andy Lack feels Bloomberg LP is positioned versus its competitors. “We may be the last man standing,” says Lack, who oversees the news organization’s multimedia operations.
A veteran of network television, Lack sits in his small office in Bloomberg’s gleaming New York headquarters, which is stocked with signs of the company’s largesse: expensive artwork, oversized fish tanks, a state-of-the-art TV studio. “Most of the other news organizations I’ve worked at are fighting the delusion factor,” says the former news executive for both CBS and NBC. “There’s enormous pressure of economics on journalism. It’s an expensive, tough game to be in.”
Awash in subscriber revenue, Bloomberg and Thomson Reuters are those truly rare things: news organizations that not only are healthy but also are on a hiring spree. Bloomberg boasts about 2,400 edit staffers, up from 2,100 three years ago, while Thomson Reuters has added 600 full-time journalists over the past four years for a total of 3,000. Each employs more newspeople than The New York Times and The Washington Post combined.
In Bloomberg’s case, the handsome newsroom salaries are legendary. “They’re spending like drunken sailors on all these top-flight journalists,” grumbles an exec at a competing media company. “It’s allowed them to corner the talent market.” That’s because Bloomberg and Reuters have something no other player in the news business does: subscription-only financial data and services that pull in billions of dollars.
Compare that to the calamitous newspaper industry, where some 13,400—about one-fourth—of newsroom jobs were lost between 2006 and 2010, according to Pew’s State of News Media 2012 report. As that carnage continues, consumers remain steadfast in their refusal to pay for news online—and news outfits are left scrambling to figure out a profitable future.
Meanwhile, Bloomberg and Reuters, with the vast majority of their journalism paid for by non-advertising revenue, are already there. With their global footprint and vast distribution system, they are an enviable model. While print brands still struggle to adapt their content to digital platforms, these companies are churning out articles and sharing editorial costs across multiple outlets, from Web to TV to print. “This is the newsroom of the future, where television, print and digital are really connected,” says Larry Kramer, founder of CBS MarketWatch. “Each one may not have to be profitable, but they will all contribute.”
News is actually a relatively small factor in the bottom line of both Bloomberg and Reuters. While there are key differences between the two companies—Bloomberg is private and has only been in the news business for a couple of decades, while Thomson Reuters is public and has a news operation dating back to the mid-1800s—both have financial services at their center. News is a core part of their offerings, but it is their subscription-based businesses and financial intelligence that contribute the bulk of their revenue—82 percent for Bloomberg, 90 percent for Reuters. Apart from financial services, Reuters has its subscription-basedlegal and tax and accounting units. For its part, Bloomberg has been expanding into new businesses, including Bloomberg Law and Bloomberg Government.
With their outsized role in the news ecosystem, the companies also raise some thorny questions about the future of journalism. On the one hand, their deep pockets subsidize content that might not otherwise see the light of day. Bloomberg, for example, will lose an estimated $20 million this year on the magazine Bloomberg Businessweek. And the global presence of both Bloomberg and Reuters is formidable, as other news outlets have been forced to gut or shutter their overseas operations.
Yet the core news content produced by the two companies is not exactly what one would call public-interest journalism. Rather, it is made up of stories geared to making, as one critic puts it, “a handful of people even richer.”
All that hiring is not doing much to support reporting on the local level, Bloomberg’s enlisting of statehouse reporters and Reuters’ year-old news service Reuters America notwithstanding. Most significantly, more bodies in the newsroom does not necessarily translate to more influence, since Bloomberg and Reuters’ content is mainly distributed digitally to their subscribers. As Rick Edmonds, a media analyst for Poynter, puts it: “It’s good they’re hiring. On the other hand, if 20 superstars are hired by these organizations, you won’t have as [many] people seeing those stories.”
The perception that the companies are just in business for the wealthy is something Bloomberg and Reuters are sensitive about. Investigative journalism is “incredibly important,” says Stephen Adler, editor in chief of Reuters News, who has built up an investigative team with several marquee hires. Matt Winkler, the bow-tied editor in chief of Bloomberg News, points to his news organization’s investigation of secret federal loans to banks that was disseminated across all its platforms, potentially reaching millions. “These stories were shared with the world,” he declares.
Still, there’s no debate that both companies got where they are by serving their financial subscribers’ interests, with terminals that blink with mind-boggling amounts of up-to-the-minute, specialized market data. That’s how Bloomberg can command from its subscribers $20,000 a year for access to one of its terminals. (“Terminal” is actually a misnomer; it is a Web-based service, as Bloomberg no longer sells the machines). No surprise, then, that most of Bloomberg’s resources go toward news that can make its customers money, which is why it has armies of reporters covering global companies, commodities and acquisitions.
Unimaginable at traditional news organizations, where editorial is theoretically insulated from the money side, the terminal permeates every aspect of the Bloomberg culture—from the oversized video screens that display the total number of terminals sold to date and the year-end bonuses based on terminal sales to the very way in which news is disseminated. All news goes out through the terminal first (ahead of the free website), while fully half of all content it distributes is exclusive to subscribers.
Reuters also has the subscriber at the heart of its business. Its news content feeds into its financial and other subscription products, which are sold to traders, law firms and other professionals for anywhere from $12,000 to $20,400 per year. All of its editorial content is distributed to clients first. As for the traditional separation between journalists and the sales side, at Reuters newspeople are required to pay a given number of visits to clients every year, says Douglas Taylor, a former Reuters executive who now tracks financial information services as a managing partner at Burton-Taylor International Consulting. “The point was so they could see, touch, smell the people reading their stories,” explains Taylor.
As lucrative as their market data services are, the companies would like to lessen their dependence on these products. Together, Bloomberg and Reuters control two-thirds of the financial data market, but they took a hit with the economic collapse. As a hedge against instability in the markets, Bloomberg, as noted, has expanded into government and legal data businesses. Its $990 million purchase last summer of BNA, a provider of legal and tax news and data, got scant notice but was a significant step toward that diversification.
At the same time, the companies are attempting to expand their influence beyond their professional constituencies by growing their footprint among news consumers at large—all in the service of selling more subscriptions. To that end, Bloomberg bought and breathed new life into the gasping BusinessWeek from McGraw-Hill in late 2009 and moved into the world of opinion with Bloomberg View, along the way hiring A-list journalists including David Shipley from The New York Times and Josh Tyrangiel from Time. As Winkler says, “We’re scrambling to apply our model as fast as we can.” There’s even been talk that Bloomberg wants to acquire the Times.
Reuters is in a somewhat different situation. A household name in the U.K., where it started, it’s less known in the U.S. Reuters’ financial and news service was bought by professional information provider Thomson Corp. in 2008, and the merged company has since lured top journalists like Slate media critic Jack Shafer. (Adler himself is a Wall Street Journal veteran, as well as an editor of BusinessWeek pre-Bloomberg). And in a sign Reuters is serious about spreading its influence among a broader audience, last year it made Anthony De Rosa, a ceaseless blogger whom The New York Times dubbed the “King of Tumblr,” its social media editor. In addition, Reuters bought BreakingViews, a financial commentary service, and has been moving in on the Associated Press with its own wire service, Reuters America. “It’s a very sweet coming together of a news organization and a branding exercise where we’re helping people be aware of us 24/7,” Adler says.
Reuters doesn’t have a magazine or newspaper, at least not yet. It created a glossy magazine for the annual World Economic Forum in Davos, Switzerland, and execs haven’t ruled out expanding it. Also, as Bloomberg is said to want to get its hands on The New York Times, it’s been rumored that Reuters has its eye on another blue-chip print property, The Financial Times.
Powerhouses that Bloomberg and Reuters are, their path to dominating the news business hasn’t always been smooth. With Bloomberg Government, a $5,700-per-year service for lobbyists, government agencies and corporations seeking government contracts, and one of the company’s most ambitious new ventures, Bloomberg took an unconventional approach by pairing journalists with policy analysts to produce news stories and white papers. It has since separated the two staffs and relocated the analysts to their own quarters. While a Bloomberg rep says the change stemmed from a recognition that the two groups have different work styles, insiders reveal there was outright tension between the camps from the get-go. “Journalists despise the analysts,” says one Bloomberg staff member. “Reporters felt they had to correct a lot of stuff the analysts got wrong.”
Reuters has its own challenges. The 2008 merger was supposed to create a news and information behemoth that would give it an edge in the highly competitive professional data market. But the merged company’s first subscription product, Eikon, was considered a disappointment. In December, with Reuters losing share to Bloomberg, Thomas Glocer, the CEO and a Reuters legacy, was replaced with longtime Thomson executive Jim Smith, which led to speculation that the new boss might tap the breaks on editorial hiring.
For both Bloomberg and Reuters, perhaps the overarching question is whether they can serve the general public as well as they do their professional clients. “[Bloomberg’s] mantra is data, and get it first. How do they do that and at the same time move into the analytic and consumer journalism that distinguishes The Wall Street Journal?” asks Ken Doctor, a media analyst with Outsell.
That each may be looking to buy a leading newspaper isn’t a surprise, as neither company has the consumer scale to attract the advertising that would diversify its revenue base. Peter Gardiner, partner and chief media officer at Deutsch, says that with Businessweek, Bloomberg has “done a great job of taking an incredibly boring product and making it more Bloomberg-y,” while Bloomberg Markets, the monthly magazine distributed primarily to terminal subscribers, is a “hidden jewel.” At the same time, Bloomberg TV has a problem in that it is “not as distributed and easy to find as CNBC,” Gardiner adds.
As for Reuters, it still must figure out how to combine its legacy businesses and differentiate its news product. Like Bloomberg, it hasn’t easily grown its consumer footprint. Reuters’ original YouTube channel has been slow to take off versus the products of other established media, achieving 7,383 subscribers and 893,759 views since its Jan. 17 launch.
“It’s complicated, because you’re serving multiple customer groups,” Adler concedes. “The areas we need to work on most are enterprise and commentary—the thoughtful, insightful piece that explains where everything is heading. But this, right now, is an extremely viable model.” (In a dig at Bloomberg, Adler notes that Reuters’ $300 million in non-subscriber revenue, while small, happens to be “much larger than Businessweek.”)
Bloomberg’s mission to become the most influential news organization is evidenced by the extreme confidence of its top brass. “Every year, we get to be more indispensible,” says Winkler. “Whether we are the sole provider of news to a community … I think that remains to be seen. But every year, we get deeper and broader.”