The Terminal Patient: Is Bloomberg's Return Bad for Bloomberg?
Since Michael Bloomberg retook the reins of his empire, he has laid off top journalists and embarked on a radical restructuring program. The multibillionaire's leadership has become imperious and unpredictable -- out of fear for the future of his life's work.
In the end, the call of deliverance never came -- the call which, in the final days of Michael Bloomberg's term as New York City mayor, would have told him: The world at large needs you.
Bloomberg had expected "someone would call him and offer him a job," says a former senior executive who knows the one-time mayor personally. But then nothing happened. Bloomberg, 73, experienced the same anticlimax as any top manager or politician who is constantly in the spotlight, seven days a week, 18 hours a day. Once that comes to an end, so too does the magic. What ensues is a vast sense of emptiness.
He kept himself busy for a few months as a full-time philanthropist, sponsoring the development of solar-powered lighting for Africans through his foundation and donating hundreds of millions of dollars. But is that enough to fulfill a man accustomed to being in command?
And so Michael Bloomberg did what he had until then categorically refused to do. After a year of upscale idleness, he returned to the helm of his financial and media empire. "When nothing else seemed to work, he asked for the keys back so he could get back into the driver's seat," says his former senior executive.
Out of a longing for control and concern over his life's work -- or perhaps it was a just mixture of boredom and ambition -- the multibillionaire has since been presiding over a restructuring like no other in the history of the $9 billion concern. Bloomberg replaced nearly all of the top managers on the journalism side of the business and laid off more than 80 editors. Entire divisions were closely examined, and that in a company that had been raking in estimated profits of $3 billion and whose vocabulary until that point did not include the word "save."
The Future of Journalism?
The radical change of course has raised questions about a business model that, at least in the US, had been widely regarded as the future of journalism. It was a model whereby high-quality journalism, of the kind that furthered democracy, was financed by other business activities. Other proponents of this model include Jeff Bezos, the Amazon founder who took over the time-honored Washington Post. But the case of Bloomberg shows that such a construction only works as long as the patriarch wants it to.
Bloomberg isn't a traditional media company like the New York Times or the Financial Times. Journalists at the company have always played a subordinate role. What made the company its riches was a device that once had about as much charm as a gray, plastic Commodore 64 and today has been reduced to a black keyboard with lots of colorful buttons. It is the "Bloomberg Terminal," a computer system for bankers on Wall Street or at the London Stock Exchange.
The terminal spits out prices for government bonds and raw materials; it knows the position, load size and speed of container ships at sea; and it lists the fortunes of CEOs, including their yachts and private jets. More than 60 billion pieces of market information are processed by the Terminal every day and access costs more than $20,000 per year, per user. At the moment, there are about 325,000 subscribers.
The terminal is Michael Bloomberg's brainchild and life's work. After the Wall Street firm Salomon Brothers fired him in 1981, the then-39-year-old used his $10-million severance package to found his own company. The terminals did everything but print the money themselves, and they made Bloomberg the 14th richest man in the world with an estimated fortune of $35.5 billion.
Bloomberg's own fortune may dwarf that of his media empire, and yet with more than 2,400 journalists in 73 countries, Bloomberg is a gigantic news machine that wields significant influence. Michael Bloomberg realized early on that his terminal needed to be more than a niche product for data geeks, and he wanted it to become the most important source of information for the financial world. To reach that goal, however, it needed stories and news that would create customer loyalty. In 1991, Bloomberg News began as a kind of customer service provider. The journalism it offered was to help bankers to decide whether to buy, sell or hold.
An End to the Deal
The company's reporters enhanced the prestige of its founder and kept the terminal customers happy. The terminals, in turn, were raking in the money and paying for the journalism. It was an ingenious model from which all sides seemed to profit.
Bloomberg's recent decisions, however, have put an end to this deal. Many of the company's journalists fear that after 12 years, the age of limitless freedoms and lofty ambitions is over. They feel reduced to peddling information for the world of bankers and CEOs, their value measured in their servitude to the rich clients behind the Terminal. If they're right, it would be a bitter diagnosis indeed. The days of Bloomberg's high-quality, independent journalism would be over, having deteriorated from being an important contributor to social discourse to being a lubricant of sheer capitalism.
The way into the realm of Michael Bloomberg leads up to a sixth-floor office along Lexington Ave. in New York. The Bloomberg Tower is a mighty glass-and-steel building located between Central Park and the United Nations headquarters in which 6,000 of the company's approximately 16,000 employees work.
Visitors to the building could be forgiven for thinking that the heyday of journalism was still ongoing. Staff exit the elevator into a light-filled foyer that feels like the lobby of a designer hotel. The eye is drawn to orange sofas and white lacquered counters, upon which rest bowls stuffed with apples, oranges and diced melon. There are carrot sticks and broccoli, as well as fresh roasted coffees that would put any Starbucks to shame. The employees scurrying by can help themselves free of charge. Bloomberg wants his people to be comfortable.
But his paternalism can at times seem condescending. The potato chip bags are free, but they're only available in the smallest size possible. Bloomberg would like his people to eat healthily. And the elevators don't stop on each of the building's 25 floors -- only on those marked with a white circle -- forcing employees to take the stairs.
In nearly every Bloomberg bureau around the world there is at least one saltwater aquarium with purple and yellow fish and corals -- to foster relaxation, Bloomberg says. Those who work for him should be proud of their job. One of his favorite sentences is: "The best for us."
'Scientology on Speed'
Those who jump ship, though, get a taste of his colder side. Bloomberg once confessed that he doesn't attend going-away parties out of principle, saying that he couldn't wish departing employees all the best. "That just wouldn't be honest of me," he said. Whoever turns his or her back on the company is no longer one of us, but one of "them." Bloomberg's employees must enter a binding contractual agreement to not divulge company secrets, including a clause that permits the company to scan an employee's e-mails even after that person has left. The microcosm of Mike Bloomberg is a whimsical world of good and evil, one with its own unique -- some might say sect-like -- view of things. An insider jokingly refers to it as "Scientology on speed."
When Bloomberg took over as mayor of New York City in 2001, he handed over control of his company to two trusted associates: Peter Grauer, a former investment banker, and later, Dan Doctoroff, who served as Bloomberg's deputy mayor until 2008. Both appeared to be ideal partners. They were loyal and they didn't have much in the way of their own ambitions.
Doctoroff and Grauer, however, revealed themselves to be surprisingly independent and ambitious. They expanded the company's free online content and its TV business. They created new services such as Bloomberg Law and acquired the famed yet floundering magazine Businessweek.
Their plan called for the Bloomberg brand to be well established outside the world of finance. Its website should be accessible to everyone, not just elite subscribers to its Terminals. Its hiring of star authors, some of whom it lured with yearly $1 million salaries, was seen as a direct challenge to industry heavyweights like the New York Times, Washington Post or Politico.com. While other media companies were tightening their budgets, the number of Bloomberg editors was steadily increasing. From 2008 to 2013, Grauer and Doctoroff brought on more than 600 journalists.
While Michael Bloomberg was busy in City Hall banning smoking from parks and obliging restaurant chains to specify the amount of calories in their menus, his journalists were pursuing the lofty goal of becoming the "most influential news organization in the world," as Doctoroff put it. The more award-winning writers from the Wall Street Journal and the New York Times flocked to Bloomberg, the more it invested in TV, websites and magazines, the more its reporters' understanding of themselves as mere auxiliaries of the Terminal diminished. Bloomberg's editors emancipated themselves from the bankers on their Terminals, by extension, from the almighty Mike Bloomberg.
A Famous Blunder
But the growth came at a price. The bloated apparatus became locked in a power struggle between the classic journalists of the news division in their collars and ties and the casually clad crowd of the online and magazine divisions. In one famous blunder, the kerfuffle between the fiefdoms in the Bloomberg empire led to an 11-minute delay in breaking the news of Hillary Clinton announcing her candidacy for president -- an eternity in the fast-moving news world. The writers for the website and the wire journalists for the Terminal got in each other's way when it came to putting the news out, one editor complained.
The results of the Bloomberg-free interregnum are mixed. On the one hand, the concern has overtaken Thomson Reuters and logged fabulous profits, but on the other, exponential growth in its media business has come at a high cost. Bloomberg TV and Businessweek alone were at one point incurring losses of more than $100 million a year.
When Michael Bloomberg took up his post again at Lexington Ave., he granted the New York Times a brief interview at a nearby coffee shop along with his friend and then incumbent Dan Doctoroff. With a "wry smile and a laugh," as the paper described it, Doctoroff said, "Mike is kind of like a God at the company. He created the universe. He issued the Ten Commandments and then he disappeared. And then he came back. You have to understand that when God comes back, things are going to be different."
Doctoroff left the company and others, like Matt Winkler, who had served as editor in chief for 25 years, were sidelined. If there were any remaining doubts as to who was to be in charge in the future, they were laid to rest at a meeting called by top Bloomberg executive Grauer in a conference room at the company's headquarters. When Grauer tried to shut the door to prevent people outside from listening in, Bloomberg ordered him to keep the room open. Grauer objected and closed the door. The next day, workmen showed up and removed the door. Permanently.
The man Bloomberg has now charged with cleaning up the media business is John Micklethwait, who spent nine years as editor-in-chief of the Economist, Bloomberg's favorite magazine and required reading for those interested in economics. Micklethwait traded his comfortable, book-lined London office for a desk in Bloomberg's open-plan space. His colleagues can only guess what inspired Micklethwait to relinquish the freedom he enjoyed at the Economist in exchange for the task of bringing Bloomberg's journalists back into line: Bloomberg, they say, pays well for trophy hires. It took Micklethwait but a few weeks at Bloomberg to lose his laid-back British charm. At the beginning of September, he sent a long email to the editorial staff, the tone of which was rather sharp.
'Higher Barrier of Interest'
Bloomberg, Micklethwait wrote, needs to shift its focus back to its customers. And customers, he went on, don't like it when their valuable time is wasted on long-winded content "that serves us rather better than it does the people who are paying to read it." He wrote that Bloomberg no longer needed education or sports coverage, noting that those wanting to write about soccer or Saudi Arabian schools would have to get used to the fact that "there is a higher barrier of interest for such stories to jump over."
Micklethwait wrote that Bloomberg's guiding principle would be the "chronicle of capitalism." "So if you are not intrigued by how people make money, are inclined to sneer at those who are good at it, or yearn to practice 'gotcha journalism' on investment bankers simply because they've chosen to be bankers, Bloomberg is probably the wrong place for you." Many interpreted the letter to mean that journalism within the company would be tailored to the needs of clients of the Bloomberg terminal to the detriment of a broader readership, not to mention democratic discourse.
In recent months, a number of top staffers who had previously enjoyed considerable freedom have left the company. Among the departed is digital chief Joshua Topolsky, whose vibrant website was viewed by the wire-service old-guard at the company as a betrayal of the "Bloomberg Way," the firm's 300-page style guide, which bans the use of words like "but" and "although" for fear that they may confuse stressed-out bankers. Some sources claim that, in a meeting with close advisors, Mike Bloomberg asked, "Why do we need a website?" Topolsky ultimately left and Bloomberg is reportedly now heavily involved in the site himself.
Josh Tyrangiel, editor in chief of BusinessWeek and, until a short time ago, a man considered to be a creative superstar inside the company, also put in his notice, likely because he was not appointed as head of Bloomberg's entire editorial operation. Tyrangiel, colleagues claim, made no secret of the fact that he considered many wire journalists in the newsroom to be small-minded. In September, Bloomberg laid off 80 journalists, including foreign and security policy reporters in the company's Washington bureau.
A Prominent No-Show
An anecdote from the awarding of this year's Pulitzer Prizes illustrates what little regard Michael Bloomberg holds for that which many of his journalists consider to be sacrosanct. In April, Bloomberg News became the recipient of America's top journalism prize for the first time in the company's history. Journalist Zachary Mider had won the award for his reporting on loopholes that enable US companies to systematically dodge taxes.
The afternoon news broke of the prize, Mider stood together with colleagues in the newsroom on the fifth-floor of the Lexington Avenue offices. Colleagues gathered spontaneously and gave the reporter a champagne toast. The only person who didn't seem to be in a cheerful mood was Bloomberg himself. One person present asked Bloomberg what it felt like to win the Pulitzer for the first time. Bloomberg reportedly answered that he had the impression that it is "apparently important to worry about these types of things."
Neither Bloomberg, Grauer nor Micklethwait attended the gala dinner at Columbia University, which administers the prize. And when a group of employees celebrated the award at the tony Spotted Pig restaurant in New York's West Village, Bloomberg was also a no-show. Officially, Bloomberg himself does not want to comment, but his people say that he doesn't go to gala dinners like the one at Columbia out of principle and that the party at the Spotted Pig had been an internal event for the reporting team. Mike and his firm, however, are "extremely proud of the Pulitzer win and we aim to win more," a Bloomberg representative says.
"It makes me sad to see what has happened to Bloomberg in the past year," says former culture editor Jeremy Gerard. He says that Bloomberg's new direction has had "a damaging effect on the journalism." Another former section editor says that, increasingly, Bloomberg is moving away from the idea of journalism as a public service. "Bloomberg's aspiration is shrinking back to what it used to be: a newsletter for bankers."
One former close colleague says that Mike Bloomberg wasn't pleased about what happened to his company in his absence. "Mike felt like he lost his influence over what had been his life's work."
Signs in the Restroom
The company is also now facing unexpected competition. Many customers consider the company to be arrogant and overpriced, with discounts given only rarely. When the Bloomberg network went down in April and the financial world had to get by without data for several hours, one banker tweeted that he finally understood how his daughter felt when Facebook crashes. But the crash also forced many banks to recognize their dependence on Bloomberg, prompting them to begin looking for alternatives.
Last year, 14 banks, including Goldman Sachs and Morgan Stanley, founded Symphony, an alternative to the chat system that is the core of the Bloomberg Terminal product. Several weeks ago, Google invested in Symphony, and the grapevine is abuzz with reports the company is interested in building its own editorial operation. For Bloomberg, that means that the fat profit its Terminals had guaranteed for years could be in jeopardy.
These days, Bloomberg can often be seen pacing the halls of the company's Lexington Avenue headquarters. Even as journalists fear further layoffs, Bloomberg himself derives immense pleasure from micromanaging everyday life at the company. He reportedly even personally drafted Bloomberg TV's new look.
And then, of course, there are the paper towels in the bathrooms. One of the more popular anecdotes making the rounds these days is that, during a restroom visit, it took Bloomberg awhile to find the paper towel holders, which are hidden beneath the mirrors. Deeply irritated, he called the superintendent and demanded that small signs be posted in restrooms throughout the building.
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