Michael Wolff on How Bloomberg Became Media's Money Sinkhole
As his terminals mint billions, and with succession an issue, Mayor Mike must decide how long to indulge a vanity TV and digital arm.
This story first appeared in the April 22 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
Michael Bloomberg, according to associates, quite believed he should have run for president and really might have won, and has been pretty miserable since reluctantly acceding to advice that he could not win and should not run.
While there are reasons to think the 74-year-old billionaire (40 times over) and former New York City mayor could have made a good president, among the good reasons for him personally to run was to get away from the business that bears his name. Bloomberg LP, a highly lucrative financial data and terminal company joined to a money-losing consumer media division, catapulted him to the mayor's office in 2002, where for more than a decade he was removed from his old office's politics.
But then he fell back to Earth. Before he was elected mayor, the consumer media arm of Bloomberg — more accurately, a personal branding arm with a small radio and television business — was losing, by some estimates, $50 million to $70 million a year on companywide revenue of about $3 billion (largely from the Bloomberg Terminal business). He returned to a company whose revenue had expanded threefold but whose losses in the consumer media business had leaped as much as tenfold.
Make no mistake, he could afford it. During an early meeting after Bloomberg returned to the company — following a reshuffle to deal with those losses in which Justin Smith had come from The Atlantic to run the media division, replacing former Time Inc. editor-in-chief Norm Pearlstine and NBC News chief Andy Lack (both have returned to their former employers) — Smith is said to have presented cost-cutting approaches. To which the impatient former mayor is reported to have replied, "Do I look like a man who has to save money?"
The frequency with which this anecdote is repeated within New York media circles (apocryphal or not) suggests how accustomed Bloomberg's 15,000-employee company is to a split identity of hubris and fear — and, of course, its owner's whims.
During his 12 years as mayor, as the news industry contracted, Bloomberg LP became one of the few fast-growing parts of the media business and, for many, an employer of last resort. To some, much of the dead wood washed out of the rest of the industry came to work at Bloomberg. And if, to the industry, it seemed an important and successful media company — a heavy investment had been made in space station-style offices on Lexington Avenue to make the company look important and successful (when most media companies were looking quite forlorn) — in many ways it merely presented an amped-up version of the problems faced by all other news companies: Less and less impact cost more and more money. Arguably, no company ever has achieved less impact for the size of its investment than Bloomberg's media arm.
Its original function as something of the mayor's personal vanity play seemed to have expanded vastly to become the vanity play of nearly everyone who worked there. Bloomberg's media ambitions played out notably against the backdrop that there was, in fact, a real company — the terminal and financial information business — making all the money (90 to 95 percent of the revenue), its leadership ever more frustrated by how this money was being spent — or why it was being spent at all — on the consumer media side.
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But the consumer side, with Smith and Josh Tyrangiel in charge, was yet ascendant in the company — under the sponsorship of the mayor's confidant Dan Doctoroff, who had been appointed CEO in Bloomberg's absence — while the terminal side, represented by company co-founder Tom Secunda and longtime editorial head Matt Winkler, was left stewing.
Part of the Smith initiative was to expand on the relative (yet money-losing) success of Bloomberg Businessweek, a print magazine, led by Tyrangiel, that was a showcase within the company by virtue of its not adhering to "Bloomberg values" — that is, the cautious, carefully sourced, no flash, no controversy, wire-service approach to producing financial news primarily for terminal customers. Instead, Businessweek sought to be a succes d'estime among the chattering classes and other media outlets. Following this model, there would be, in the new plan, a series of television and digital "consumer facing verticals" — in politics, business and tech, among others — seeking external stature and buzz.
The first sign of open backlash against these "non-Bloomberg values" came during the China controversy in 2014, with The New York Times reporting Bloomberg tabled a story that might have upset China's leaders. While this handling of the China story would, in effect, cost Winkler his job (he since has been kicked upstairs), the larger point was well taken: Was this really what Bloomberg LP, a financial data company, wanted to be doing, fighting contentious public battles?
Then, as the verticals hired talent, there was the issue of money, with high-six- and seven-figure contracts going to "non-Bloomberg values" journalists — another aspect of Bloomberg values was an aversion to contracts — drawing bitter criticism among longtime employees.
It was the mayor who, upon his return, believed he quickly could rationalize the media business and its relationship with the greater terminal business. This was what some call the mayor's having-it-all moment, epitomized by him getting his friend and New York's most famous restaurateur, Danny Meyer, to take over the Bloomberg kitchens — until he saw the bill. Then, no more Danny Meyer.
There were two other immediate Bloomberg-values issues. First, the mayor's own values, a practical, reductive, "what's in it for me" view, quickly came up against the pie-in-the-sky promises of the multiplatform media business. This led him, amid the company's ever-grander digital rethink, to ask a fundamental question about modern media strategy: Why exactly does Bloomberg need a website? What would one of the world's most successful information and data companies get from an apparently bottomless digital investment that it didn't have already? That question, and the absence of a cogent answer, led to the ouster of high-flying digital director Josh Topolsky.
Likewise, Bloomberg values confronted the emerging star system at the company's media arm: To wit, Bloomberg values allowed, ahem, only one star (you know who). But following Pearlstine and Lack (who rankled the mayor with the frequency of their personal press), there were Tyrangiel and Smith, and, to boot, Mark Halperin and John Heilemann, stars of the politics vertical and a new Bloomberg show, With All Due Respect. Tyrangiel, reined in, shortly left. Smith, sidelined, still hangs on. The theoretically autonomous politics vertical was folded back into Bloomberg News.
Then, as part of his reassertion of dominance, the mayor in early 2015 hired John Micklethwait, editor of The Economist, to run the full Bloomberg News operation, to the bewilderment of nearly everyone. From running a staff of 75, Micklethwait now would run Bloomberg's editorial operation of 2,400. The Micklethwait logic seemed to follow on the interest of some of the mayor's closest advisers in buying the Financial Times, which followed on the mayor's own interest in becoming chairman of the Economist Group, in which the FT held a 50 percent stake. (There was, too, a rump group around the mayor continually making a case for buying The New York Times.) But with the FT proving too expensive (sold to Japanese media firm Nikkei for $1.3 billion and The Economist to an investor group), the mayor hired Micklethwait directly. There was some sense here: If the mayor admired any piece of media, it was The Economist — and if he had to be paying for a media company, he'd like it to have that sort of stature and gravitas.
But it was nonsense, too. Bloomberg was a data company, and there never was a scenario in which it wasn't going to be, nor one in which it ever was going to put stature and gravitas over its core product and basic efficiencies. (Part of the internal discussion about acquiring the FT and The Economist or The New York Times was for the mayor to do it personally, far from the pressures of the terminal business.) Micklethwait was said to be stunned not only by internecine tensions at the company but also by his own need to adapt quickly to Bloomberg values — a metamorphosis, quite a tragic one to some, from a serious journalist and much-loved editor to an information company apparatchik.
To longtime Bloomberg loyalists and observers (of both the man and his business), the billions spent on the company's media venture, together with its chapters of grandiosity and disappointment, merely presaged the inevitable. Everyone now waits for details of the expected reorganization, which, prompted by the mayor's aborted presidential run, will set up a succession plan for the company. In this, the terminal side obviously wins and hastens the turn of consumer-facing media back to its job as the news wire that supports the terminal. The central effort, supported by the terminal side, is in automated news — replacing writers with machines. At the office gathering where Bloomberg announced he wasn't going to run for president, he joked he was going to give Secunda $30 billion to get serious about R&D for the terminal, as a grim Micklethwait looked on.
Still, none of this quite answers the question of what Michael Bloomberg is going to do with himself now.
Michael Wolff, a THR contributor, writes frequently about the media business. His latest book is Television Is the New Television.