Sunday, November 24, 2013

Bloomberg News and China

Back in the day, the late 1980s, when China was breaking the bonds of a strictly party-run command economy and was opening up a market-driven capitalist sector, Deng Xiaoping, the top Communist Party leader famously said of his pioneers along the capitalist road: “It doesn’t matter if a cat is black or white; what matters is that it catch mice.”

China’s capitalist cats have prospered in the quarter-century since Deng’s revolution in economic affairs.  They’ve caught a goodly share of world markets, and an ungodly share of Chinese domestic wealth.  And they’ve changed Deng’s motto.  Now, “It doesn’t matter if the cat is black or white, or even if it catches mice.  What matters now is that it’s a family cat.”

Cronyism and family dynasties have so distorted Chinese economics and politics that they threaten to destroy the dynamism of the first generation of Dengism and even more, to shatter the Chinese people’s tolerance of a corrupt Communist party and its egregious “Royal Families.”

But that’s their problem.

Our problem is when China’s me-and-my-family-first elite starts to corrupt our American institutions, like, it would appear, Bloomberg News.

Sunday’s New York Times featured a long examination of Bloomberg L.P. and Bloomberg News’ conflicted interests in China by Amy Chozick, Nathaniel Popper, Edward Wong and David Carr.;_r=0

This latest report follows upon weeks of global coverage, spearheaded by the Times and the Financial Times, of leaks from inside Bloomberg News that the latest investigative report on the nexus in China of great wealth, Party power and family connections, by the Polk Award winning correspondent Michael Forsythe (and Shai Oster) had been spiked by Editor in Chief Matthew Winkler.

In subsequent reports Winkler has denied killing the story, saying it’s “alive” but “isn’t ready” for publication and Forsythe has been fired.

Undermining Winkler’s declaration are reports that he told staff he had killed the story, to keep Bloomberg News from being tossed out of China (which he compared to Nazi Germany). 

The new Times story suggests Winkler was acting to save, not his news presence in China, but Bloomberg L.P.’s market for its data terminals, a significant example of what the Times called, “some troubling developments” for the company.

“The growth of Bloomberg’s terminal sales worldwide had softened over the last several years, and had dropped significantly in the last year in mainland China, a vast untapped market. Bloomberg News’s tough reporting last year about China had prompted officials to cancel subscriptions for the lucrative terminals, frustrating the company’s Beijing sales staff.

Forsythe’s firing, the Times reported, was only the beginning:  Last Monday, Bloomberg began to lay off roughly 40 people, about 2 percent of its news staff. Coverage of culture and sports would be scaled back, and the investigative unit had losses as well. The signal accompanying the announcement was clear: ‘We must have the courage to say no to certain areas of coverage in order to have enough firepower in areas we want to own,’ Mr. Winkler wrote to the staff.

Until proven otherwise, one area Editor Winkler no longer wants “to own,” is investigative journalism.  What will take its place?  What the Times says “executives on the business side” want is more of what they’ve recently been getting: “short bursts of market-moving news, not prize-winning investigative journalism. …Editors are increasingly asked to send only brief, bullet-point news reports to terminals — easily digestible facts for traders and hedge fund managers.”

The 40 firings from arts, sports and investigative reporting are not part of an overall cutback at Bloomberg News.  Company officials have told the Times, “Bloomberg … would add around 100 newsroom positions next year, many in a division called First Word, which produces a Twitter-like burst of short-form news of market-moving importance. (A spokesman said that even with the recent cuts, the number of employees at Bloomberg News by the end of 2013 would be up from last year.)”

Like Deng’s propagandists, Bloomberg’s insist, their cat is setting its mousetraps with the bait the market bites.  Like America’s other providers of television news, Bloomberg News claim their customers have driven them toward news that is short and crappy.  And they have the chutzpah to claim the proof is that “nobody watches” the real news they won’t show.

All this editorial stress and strain is occurring at an iconic moment: “Your father’s home.”

Torn back to the business he forsook for the 12 years he rule New York’s City Hall, Michael Bloomberg will soon be back at the company, where he faces some critical questions about his venture into journalism. 

Since he left in 2001, Bloomberg news has grown in impact and stature, as has its viewership on television screens as well as those on Bloomberg terminals.  But increased visibility and influence have their consequences, and for Bloomberg L.P. the money-losing tail (News, the Times reported, accounts for roughly 4% of the company’s revenues) is threatening the health of the money-making dog (Terminals, the Times says, bring in about 85% of corporate cash flow).

For years, Bloomberg News gave a limited kow-tow to complaints from Beijing. 

“In early 2011,” the Times reported, Bloomberg News carried stories “on an online movement in China to stage peaceful ‘Jasmine Revolution’-style protests modeled after the uprisings in the Middle East. Angry Chinese officials told top editors in Hong Kong that Bloomberg’s information distribution license permitted it to publish only financial news in China, not political news, according to employees with knowledge of the discussions.

“Editors ordered the article in question deleted from the website, even though the site is global and not China-specific, these employees said. Word spread among Bloomberg journalists in China. ‘A lot of people were angry they would just cave in like that without much discussion,’ one employee said. 

“After the outcry,” the Times coninued, “editors reposted the article to the Bloomberg website, but as of Sunday, it could not be found using the site’s search engine. (It shows up in a Google search.)”

To head off future trouble, the Times said, Bloomberg News found a digital fix: “Managers also created a function called Code 204, which can be appended to some articles to keep them off terminals in mainland China.

But then, Bloomberg published “a report [by Michael Forsythe] about the fortunes amassed by family members of Xi Jinping, which won a Polk Award for foreign reporting…” But, the Times reported, ”Bloomberg paid a price: The purchase of terminals in China all but ceased, the Bloomberg News site was blocked and no residency visas were subsequently granted to its reporters.”

When Forsythe struck again this month.  His story on the political family connections of China’s richest billionaire passed through all the legal and editorial wickets, Bloomberg newspeople told the Times, until it got to Winkler.  And there, until proven different, it seems to have died, and Bloomberg’s Beijing bow-down seems to have reached the head to ground stage.

So,  Mr. Bloomberg, will you return Bloomberg News to its safe and narrow roots: fast financial news as brief as our editors think the market wants it to be?

Or will you continue to grow and burnish the Bloomberg News brand, even at the expense of the terminal business, from which the Times reminds us, some of the latest news ain’t so good. “The total number of terminal subscriptions increased by 23,000 in 2010 and 14,000 in 2011, but only by 1,000 in 2012 and 3,000 so far this year, according to several employees’ estimates.”

Not that all the Times’ Bloomberg financial news wasn’t fit to reprint:  “Still, the company said overall [2013] revenue was on track to rise to $8.3 billion, up from $7.9 billion in 2012 and $3 billion in 2001, when Mr. Bloomberg was still at the company.”

And that’s with China’s 1% mad at Bloomberg.

Maybe there’s a Solomonic solution (yes, it’s also a Murdochic solution) here.  Split the company.  Keep the terminals, keep a financial news division to serve those customers, but spin the TV News channel off.  It may, as the Times reported, lose $100 million a year, but it has a voice and an audience, and I’ll bet could attract a buyer, for whom the prestige and public service would be cheap at that price.

So if the perils of the news business are too great for a businessman like Michael Bloomberg, don’t kill that TV baby, Mike, find it a foster home, whose proprietors might behave like journalists, and blow off governments trying to hide their failures with threats of hacking or economic harm.  The new Bloomberg (or Not) News could be a cat that served not only its master, but the world, by catching a lot of vermin.



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