ALL THE NEWS THAT ENRICHES
Ask Matthew Winkler to name his journalistic model, and he doesn't hesitate: Joseph Pulitzer's New York World. "It went where newspapers had never gone before," says Winkler. "It embraced the 20th century in an exciting way." As editor of Bloomberg Business News, Winkler has a similarly lofty goal. He wants his news service to be a prototype for the electronic news company of the 21st century.
To succeed, though, Winkler will need another Joe Pulitzer. And his boss would seem an improbable choice. Michael Bloomberg makes his money by leasing a desktop machine through which he distributes financial data to Wall Street traders, bankers, and analysts. Everything this onetime equity trader says or does is calculated to lease more of them. "I'd love to win Pulitzer prizes," says Bloomberg, who owns about 65% of the news service and its parent, Bloomberg Limited Partners. "But the short-term way of measuring success is how many terminals we sell."
BIG PUSH. So why is Winkler even embarking on such a crusade? Because Bloomberg believes that becoming a media potentate will boost sales of his terminals. Journalists might find that a prosaic motive. But Bloomberg has allowed Winkler to assemble the most ambitious worldwide news organization since CNN. In little more than three years, Winkler, a scrappy former reporter for The Wall Street Journal, has hired 170 reporters and editors to staff 39 news bureaus from Tokyo to New York to London.
What's more, the news service is only one of several new media ventures. Last year, Bloomberg bought a New York radio station, which he converted to a 24-hour all-news format. He also built a small TV studio in his bustling Manhattan newsroom to tape interviews with corporate chieftains. He is outfitting his terminals so they can show photos taken from the interviews and play snippets from the radio station. Some of the interviews also appear on cable services such as USA Network. And Bloomberg has even started a glossy monthly magazine that offers everything from chatty profiles to dense studies of option-adjusted spread analysis.
Bloomberg's strategy is simple: He wants to offer his data in as many media as possible. So he is even mulling a further push into TV, perhaps with a cable network. And rivals and employees are asking: Does Mike Bloomberg want to be the next Ted Turner? Or does he still regard news as an extra bit of data, to be peddled alongside his stock quotes and yield-curve charts?
Until now, the 51-year-old Bloomberg has made his name in the world of numbers rather than letters. A former head of the equity trading desk at Salomon Brothers Inc., Bloomberg started his company in 1981 with money he netted from the sale of Salomon to Phibro Corp. Since breaking into the $2.5 billion market for real-time financial data, Bloomberg has used low prices, crackerjack technology, and assiduous customer service to take on giants such as Reu-ters Holdings PLC and Dow Jones & Co. With 29,000 terminals, Bloomberg is still way behind the 200,000 of Reuters and 95,000 of Dow Jones Telerate, though his 52% growth in terminals in 1992 outstripped both.
Reuters and Dow Jones are also bolstering their multimedia capabilities, though, and both have more resources to do it (table). For Bloomberg, branching into capital-intensive areas such as radio and TV could drain away cash he needs to stay ahead in technology: "People are wondering if he is spreading himself too thin," says Margaret T. Fischer, director of the electronic information practice at market researcher Link Resources Corp.
Bloomberg insists media services are simply a shrewd way to market his core product. Each time he introduces a new one, he says, sales jump. In 1989, when he started the wire service, he had 7,500 subscribers. Today, he is pushing 29,000. Last year, he sold terminals at a rate of 650 a month. Since the radio station, WBBR, went on the air in January, he has been selling more than 900 a month, at $1,100 per terminal. On a recent trip to Munich, Bloomberg says his German hosts all wanted to talk about WBBR: "Everybody wants to be involved in media. That's all they talk about."
No question, Bloomberg's revenues have spiraled along with his visibility. This year, his company, which is 30% owned by Merrill Lynch & Co., should generate an estimated $382 million in revenue, compared with less than $100 million in 1989. Bloomberg won't disclose profits, but Richard J. MacDonald, a media analyst at Wasserstein Perella Securities & Co., figures he generates an annual cash flow of up to $200 million.
So far, Bloomberg has run his media ventures on a shoestring. Bloomberg Business News has a budget of only $9 million a year. As Winkler hires new reporters to reach his target of 250 staffers, though, those costs will rise. And while Bloomberg bought his radio station for a low $13.5 million, it has won few listeners and is losing money. He insists WBBR will turn a profit in 1994.
Ironically, Bloomberg jumped into media as a defensive strategy. He has offered the Dow Jones News Service on his terminals since 1982. But as Bloomberg made inroads on competitors such as Dow Jones Telerate, it became clear he couldn't rely on outsiders for news. Indeed, Dow Jones has informed Bloomberg that at the end of 1993, it will no longer sell news from its AP/Dow Jones joint venture on Bloomberg's terminals overseas. Dow Jones will keep selling its news wire to Bloomberg's U.S. customers, though insiders say that will eventually end, too.
OLD HANDS. Bloomberg gets exposure for his news service by offering it gratis to 52 papers, including The New York Times and The Boston Globe. After two years of relying on fairly green reporters, Winkler has used his budget to lure more seasoned hands with experience at publications such as the Times, The Wall Street Journal, and BUSINESS WEEK. "The first year was 'show up and throw up,'" says Winkler. "Now we want to provide stories that can stand scrutiny on any platform."
The bulk of Bloomberg's 1,700 daily stories are still cut-and-dried summaries of interest-rate fluctuations or corporate earnings. Winkler, though, is urging his reporters to range more widely. He recently published a series from Thailand, for example, which included a feature on child labor. Newspapers say they are growing more confident of the quality of Bloomberg articles. But Larry Edelman, assistant business editor of The Boston Globe, says the reports still contain more inaccuracies than Dow Jones or Reuters.
That hasn't prevented both rivals from eyeing Bloomberg warily. "We do respect him," says Julian B. Childs, executive vice-president of Telerate. "He is a viable competitor." Andrew M. Nibley, editor of Reuters America, says Bloomberg remains a secondary news source. But that has advantages: Bloomberg has carved out specialties in areas such as bond-market coverage. Now Nibley wants to bolster Reuters' reporting on bonds.
A bigger issue is whether there is a market for stories that stray beyond pure business. John Sabre, a managing director of Indosuez Capital, says he values the Bloomberg machine for its trove of information about the underwriters of bonds. But as for nonfinancial news: "I don't care what's going on in Sarajevo at 5:04 p.m.," he says.
Bloomberg may also be vulnerable if he continues to insist on selling his news and data only to subscribers who lease his machines. Rivals offer services via personal computers and even through competing systems. Even fans are frustrated by not being able to transfer his data into their computers: Bill Michaelcheck, chairman of Mariner Investment Group, says he favors Knight-Ridder Inc. terminals for that reason.
Beyond such nitty-gritty issues, one has to wonder whether Bloomberg has the news business in his blood. He wants his wire service to be as hard-hitting as its more established brethren. Yet he is bothered by the visceral skepticism of journalists: "When someone comes up and smiles sweetly at you, you're normally receptive, unless you're a journalist, in which case, you're wondering what's up their sleeve." Given what Bloomberg has already pulled out of his sleeve, his rivals had better not be distracted by his smile.Mark Landler in New York