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What You Need to Know About That Bloomberg News Snooping Scandal

Does Bloomberg News Function Within A Sort of Reality-Distortion Field?

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Remember that time Bloomberg News got caught using subscriber information from Bloomberg data terminals to spy on the financial industry?

Oh, right, that pretty much just happened. But conveniently for Bloomberg, a bigger journalism-related scandal -- the revelation that the Justice Department was spying on the Associated Press (a story that will haunt the Obama administration forever) -- broke, overshadowing the Bloomberg scandal.

Credit: Kelsey Dake

So you may have missed Bloomberg News Editor-in-Chief Matthew Winkler's admission and apology, titled "Holding Ourselves Accountable," that was published in the dead of the night last Monday -- at 12:11 a.m. ET. In it, he owned up to the fact that Bloomberg News reporters had access to "limited client information" for Bloomberg's financial-data-terminal business, a sibling division of the Bloomberg empire that serves more than 300,000 subscribers on Wall Street and beyond.

That information (access to which has since been disabled) included user log-in and feature-usage history -- which allowed some Bloomberg journalists to behave rather stalkerishly. As the New York Post reported, "In one instance, a Bloomberg reporter asked a Goldman [Sachs] executive if a partner at the bank had recently left the firm -- noting casually that he hadn't logged into his Bloomberg terminal in some time." (He sees you when you're sleeping / He knows when you're awake / He knows if you've been bad or good, so be good for goodness sake!)

The proprietary market data Bloomberg terminals serve up is a lifeline for its subscribers, so it's unlikely anybody's going to be canceling -- but some customers are newly wary. Late last week, for instance, Citigroup banned some of it traders from using the instant-messaging function on their Bloomberg terminals for internal chats.

Bloomberg News' admitted misuse of its power is worth deconstructing here, in Advertising Age specifically, because we're one of the more than 440 publications worldwide that license Bloomberg journalism. (Adage.com occasionally runs Bloomberg stories.)

For those of us who sit outside the Bloomberg bubble, it's easy to understand how some of its reporters felt entitled to snoop. The company, from the top down, is ego-driven -- it was founded, of course, by the current mayor of New York City -- and because of the absurd economics of the Bloomberg terminals, which rent for roughly $20,000 a year per subscriber, the Bloomberg empire is awash in cash that almost defies comprehension. Bloomberg LP is 88%-owned by Mike Bloomberg, which has made him the seventh-richest person in America, with an estimated net worth of $27 billion.

Bloomberg's monument to himself, glittering Bloomberg Tower in midtown Manhattan, has a sprawling newsroom that architecture critic Paul Goldberger once called "one of the most exhilarating workspaces I've ever seen." Given that vibe, it's also a monument to that lost post-Watergate, pre-internet golden era of journalism when a lot of journalists actually felt powerful, not embattled.

In fact, Bloomberg newsrooms are among the last remaining precincts in which journalists don't constantly feel like members of an endangered species. Enabled by the Bloomberg-terminal lotto money, Bloomberg News functions within a sort of reality-distortion field that shields it from the harsh economic realities other media companies face these days.

Bloomberg, the man, tends to get what he wants (he spent $108 million on his self-financed campaign to win a third term as mayor); likewise, Bloomberg, the media empire, tends to get what it wants. Though Bloomberg has had some layoffs here and there -- notably in early 2009 at Bloomberg Radio and TV -- it's never really been hesitant to spend big. (One journalist I know took a job there after Bloomberg made him the proverbial offer he couldn't refuse: a more than $50,000 raise to jump ship from a competitor.)

Keep in mind that Bloomberg News exists only because, well, Mike Bloomberg whimmed it into being -- and six years into starting his terminal business, he had money to burn. In November 1989, he called up 33-year-old Matthew Winkler, then a Wall Street Journal reporter, and, as Winkler writes in his book "The Bloomberg Way," said, "Hi, it's Bloomberg. I need some advice. What would it take to get into the news business?"

Ah, where would the media world be without voracious rich men attempting to spend their way to omniscience -- and, by extension, Oz-like, man-behind-the-curtain power?

It's worth noting here that the New York Post, owned by News Corp., which is run by another voracious billionaire -- one Rupert Murdoch -- is the money-hemorrhaging news organization that broke the story that led to Winkler's mea culpa. "GOLDMAN SACHS EMPLOYEES CONCERNED BLOOMBERG NEWS REPORTERS ARE USING TERMINALS TO SNOOP" was the headline of the Post piece that, curiously, failed to make any mention at all of a certain epic phone-hacking scandal at News Corp.

I leave you to apply schoolyard wisdom -- "Takes one to know one," maybe, or perhaps "I know you are, but what am I?" -- as you see fit.

Simon Dumenco is the "Media Guy" media columnist for Advertising Age. You can follow him on Twitter @simondumenco.

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