October 4, 2009

Crain's New York Business

Bloomberg Aims to Lasso BizWeek

Mayor Michael Bloomberg is a name familiar to millions of consumers. Bloomberg LP, the financial news and information company he founded nearly 30 years ago, is not.

That may be about to change.

Best known for data terminals used by Wall Street professionals, Bloomberg is widely seen as the front-runner in the race to buy BusinessWeek.  The winner is expected to be announced this week, nearly three months after McGraw-Hill Cos. put its money-losing magazine on the block.

For Bloomberg, the acquisition would mark the organization's biggest step to date to expand the consumer side of its media empire, a goal it set for itself over a year ago. The deal would also be the most visible sign yet of what Norman Pearlstine, the former top editor of Time Inc. and The Wall Street Journal, has been up to since he signed on as chief content officer of Bloomberg LP in June 2008.

He is a key figure in the effort to target the general business news user through a ramp-up of the company's consumer properties, including the cable television channel and Web site.  With the world's largest news-gathering staff, and its enormously profitable terminals, the company is uniquely well-suited to grow its media properties, even in a recession.

Mr. Pearlstine makes no secret of how much he'd like to have a magazine like ... BusinessWeek.

“We love and respect great journalists and great journalism, and anybody who we think can provide information that makes us better and gives us an edge, we're anxious to work with,” he says, while declining to comment about the magazine.  “We're also anxious to get the best of Bloomberg's content read by a broader audience than sees it now.”

He points to ambitious, long-form pieces that have appeared on Bloomberg.com and in the monthly magazine Bloomberg Markets, but which have generally gone unnoticed by the general public.

The pursuit of BusinessWeek is part of what's known as Plan B—a strategy announced by Bloomberg in July 2008 to grow company revenue to $10 billion by 2013, partly by adding a focus on consumer media.  The privately held company had sales of about $6.1 billion last year, says Douglas B Taylor of Burton-Taylor International Consulting.  He expects revenue to be up slightly in 2009, driven by growth in emerging markets.

Hiring, not firing

In addition to Mr. Pearlstine, Bloomberg also brought in former NBC News chief Andy Lack last October.  His task is to revamp Bloomberg TV—an also-ran in television business news—as well as its radio and Web operations.

The company's core business remains its terminals, ubiquitous in trading rooms around the world.  Today Bloomberg has around 275,000 subscribers, down about 4% from last year, according to Mr. Taylor.

Rented for $1,590 to $1,900 per month, the terminals provide cutting-edge software and analytics, as well as an endless bounty of news drawn from the Web and from the company's 2,300-strong news and multimedia staff.

Thanks to the terminals business, the company is pretty much the only major news organization in the country that is hiring rather than firing.  Still, some insiders are leery of Bloomberg's decision to devote more energy to its consumer media offerings.  They fear that the shift could cannibalize some of the terminals business while adding little revenue.  Their concerns extend to the potential acquisition of BusinessWeek.  The 80-year-old title lost $43 million in 2008.

Mr. Pearlstine argues, however, that investing in consumer news will be good for the terminals business.

“The more the brand is known, the more access you're going to have and the more scoops you're going to get,” he says.  “That's of tremendous value to the terminal user.”

Analysts suggest that Bloomberg's moves are at least partly in response to greater competition.

News Corp.'s acquisition of Dow Jones & Co. in 2007, and the Thomson Reuters merger the following year, have led to a “fierce tectonic shift in Bloomberg's competitive landscape,” says media consultant Peter Kreisky.  Thomson Reuters in particular has been vocal about challenging Bloomberg's data terminals business.  Distinctive content has become more important to all of them.  The appeal of BusinessWeek is that it's a brand the general public recognizes.

“Bloomberg is a business-to-business name,” says Ken Doctor, an analyst with research firm Outsell Inc.  “It's hard to create a business-to-consumer brand that resonates, and BusinessWeek already has it.”

The title just needs a better business model, which Mr. Pearlstine insists Bloomberg can provide.

“Given the cost structure here, because of the terminals business, we're able to do things in a different, and I would argue more efficient way in the consumer space,” he says.

by Matthew Flamm