Bloomberg News and the problem of church-state separation

The downside of eroding the traditional wall between business and editorial

It has become accepted wisdom in future-of-news debates that the church-state divide between the newsroom and the business side was something of an archaism, one more legacy that legacy news had to shed.

The current thinking is that reporters have to at least be aware of how their paychecks are earned, and it’s hard to argue with this narrow point, as far as it goes.

Jay Rosen frames the question of editorial involvement in the business side as empowering journalists:

Being ignorant and uninvolved in “the business side” has been a disaster for the newsroom. For all its strengths, separation of church and state also meant no seat at the table when the big decisions were made. Anyone who doesn’t want to know what the numbers say should not be trusted with editorial decisions. Listening to demand is smart journalism, so is giving people what they have no way to demand because they don’t know about it yet. If you are good at one, the other goes better.

The problem with the argument is that it downplays the “strengths” of the church-state separation and overlooks potentially ruinous long-term costs of eroding it.

Nowhere has the church-state concept been rethought quite so radically as at Bloomberg LP, which is not a legacy news organization at all but an old new-media news organization, founded in 1981 as an innovative financial information intranet and growing to a $9 billion a year behemoth today. As the future mayor put it himself in his 1997 biography: “Most news organizations never connect reporters and commerce. At Bloomberg, they’re as close to seamless as it can get.”

Bloomberg is now in crisis after allegations surfaced that a lengthy investigation on official corruption in China was spiked at the behest of top editor Matthew Winkler, who, according to unnamed sources, cited fears that Bloomberg’s journalists would be expelled from the country. As I pointed out the other day, and as the Times makes explicit today, Bloomberg also has huge commercial interests in China, an enormous potential market for its terminals, the bulk of Bloomberg’s business.

Winkler and Bloomberg LP’s position is that the investigation in question was never spiked, but was simply not ready and postponed until it was, and that the organization remains as committed as ever to investigations. If true, and it may be, that would make this a non-crisis over a non-story.

But, it must be remembered, the allegations here originated from Bloomberg’s own staff, four unnamed Bloomberg employees quoted by the Times and insiders quoted in the Financial Times. As I wrote, in this age of anxiety, newsroom rebellions of this sort are rare. Bloomberg responded to the revelations, not with introspection, but by suspending one of the reporters involved in the spiked/postponed story, Michael Forsythe, who has announced on Twitter that he is no longer with the company.

Yesterday’s Times story, via Amy Chozick, Nathaniel Popper, Edward Wong, and David Carr, peels back the curtain on an internal debate on the “future of news” at Bloomberg. The debate as reported by the Times is framed, eerily, just as Felix Salmon framed it a few days ago: whether to pull out the stops and go for the great stories, no matter how ambitious or provocative to potential customers, or to focus instead on narrower, market-moving news and headlines, a view said to be held by Thomas F. Secunda, who founded the company with Mr. Bloomberg and oversees financial products and services, where the money is.

“We shouldn’t be doing any news other than what makes money for our readers,” Mr. Secunda has frequently said, according to one longtime employee.

(A spokesman is quoted in the Times as saying Secunda “thought market-moving news was the most important but not the only journalism the company should be producing.”)

Or as an unnamed “former senior executive” puts it:

“If you have a $9 billion company that is about to be crippled by a news division that loses $100 million a year, shouldn’t you take a breath and think about the implications of what you are doing?”

In fact, it’s a fair question. Bloomberg News’s worth to Bloomberg LP has always been ambiguous. Would the financial data provider have grown to its size and prominence without a news organization at all or by providing news offered by other financial wires? The hard fact is that Bloomberg LP is a data provider first; its journalism is a distant second, an add-on, one more data stream added to “the box” to make the $2,000-a-month subscription that more valuable. That makes the church-state equation that much more complicated.

With other news organizations—the Times, The Wall Street Journal, and the like—compromising the news can carry existential costs. The news is all they have. That’s why Bernard Kilgore’s landmark decision at the still-shaky Wall Street Journal in 1954 to face down General Motors over stories its then-biggest advertiser didn’t like made perfectly rational business sense over the long term. “When a newspaper begins to suppress, whether at the behest of its advertisers or to please some special segment of business, it will soon cease to be of any service to its advertisers or to business because it will soon cease to have readers,” as a Journal editorial at the time put it (read all about it in Dick Tofel’s Kilgore biography).

At Bloomberg, it’s really not the case that the fate of the company rides on readers’ faith in its news.

When I spoke to Winkler in 2008, he insisted in no uncertain terms on the news division’s importance to the company. He said, for instance, the Bloomberg terminal had (at the time) 30,000 functions, and “news” was consistently hit more than all but ten other functions, less than instant messaging, stock quotes and the “cancel” key, for example, but more than the rest:

Thirty thousand functions on the Bloomberg! Thirty thousand functions on the Bloomberg! Now, I’m going to ask you another question. Of these ten, which of these ten is the one that’s invented at Bloomberg, okay. It’s not a commodity. Now, we just walked through this. Message. Everybody’s got it. [Stock] quote everybody’s got it. Equity. Everybody’s got it. … The only thing in the top ten most used functions that was invented at Bloomberg is news. And guess what? It gets hit every day… And so all these other functions are there for everybody to use, so when someone says, you know, it’s just the machine and it enhances the machine, very true! It sure enhances the machine. It enhances the machine so much that it’s one of the top ten most used functions on the Bloomberg and there are 30,000 of them.

I’m inclined to side with Winkler on the news division’s importance, but I’m not sure it’s a given.

But here’s one thing that is a given: trying to confine a professional news organization to “market-moving” news makes no sense on any level, even if it were possible. In the last decade, Bloomberg News has crossed the threshold from marginal financial wire to mainstream news powerhouse, boasting 2,400 journalists in 150 bureaus. Both those numbers are huge. Put that many reporters in the field—particularly after the talent-hiring binge Bloomberg has been on—and they are bound to come across stories that transcend breaking news, stories that readers would want, and deserve, to know. Any news organization that tries to confine itself to an artificially narrow definition of news is asking for internal conflict and is buying a one-way ticket to second-tier status. And all of that is completely out-of-step with the overall Bloomberg culture of excellence. It just doesn’t work. Bloomberg News used to be a marginal, quotidian wire. It can’t go back.

And here’s why it doesn’t want to. Market-moving news (I assume we’re talking about earnings, M&A scoops, executive appointments, and the like) is all about the short-term horizons at the expense of the big picture. Anyone who thinks the fact of endemic corruption at the top the Chinese leadership isn’t important or relevant to investors in China—and everyone else—in the medium to long term isn’t thinking straight. It also grossly underestimates terminal subscribers’ range of interests.

I’m not saying anyone would put it that way, but that’s rather the choice as framed by the Secunda/Winkler debate, which is not new to journalism by any means.

This kind of heavy lifting by news organizations will always involve difficult conflict and confrontation with powerful governments and institutions. If you think you can outsource such work to the Times or others, that’s a business decision. But terminal users will be relying on others for the big stuff, and that’s probably a bad idea.

You don’t have to go back too far to realize that we’ve seen to this movie before, and recently. The big picture, and, yes, systemic corruption, was exactly what was missing journalistically in the run-up to the crash of 2008, as (plug alert) I discuss at considerable length in my book.

So in the Secunda/Winkler debate, even from a narrow investors’ point of view, Winkler is right. And while Winkler tries to quantify the newsroom’s value by how often it is clicked, the fact is it has added enormously to the Bloomberg brand as a world-class organization, even if the value is difficult to quantify.

The value comes from the news organization’s independence, and that’s why the church-state divide was created in the first place.

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.