Bloomberg makes bold media moves—but why?

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The Bloomberg brand has done well in New York, both in providing Wall Street traders with information and the nation's biggest city with its current mayor. Now, a number of recent moves show that Bloomberg LP intends to extend its brand beyond serving the finance market to the wider corporate world. Additionally, the paid-content stalwart is wading deeper into producing advertiser-supported content. In addition to its headline-grabbing acquisition of BusinessWeek from McGraw-Hill Cos. in a deal that closed last month, Bloomberg's recent moves have included: -Hiring Paul Bascobert away from Dow Jones & Co., where he was CMO, to lead BusinessWeek as its president. -Hiring its first CMO, Maureen McGuire, who had previous experience at IBM Corp. -Launching a search for a global advertising agency to promote the Bloomberg brand. The moves have led many industry observers to wonder what Bloomberg is up to. After all, many large business media companies—witness Nielsen Co. and Reed Elsevier scrambling to unload their trade publishing units—long to shed their advertising-supported products in favor of paid content. So why is Bloomberg zigging when everyone else seems to be zagging? On its face, buying BusinessWeek appears to be a move with minimal risk. Bloomberg, a $6.1 billion company with strong cash reserves, paid a relatively small amount—less than $10 million—for a brand once valued at almost $1 billion. That risk, however, grows larger when the publication's annual loss—pegged at $20 million or more—is considered. Additionally, Bloomberg faces the challenge of turning around a brand that has essentially been in free fall for almost a decade. Between 2000 and 2008, BusinessWeek's advertising pages fell by almost 70% annually. Its revenue totaled about $365 million in 2003, but was estimated to be about $80 million in 2009, according to Outsell. In the week or so before Bloomberg took over BusinessWeek, a large number of jobs were eliminated. Published reports said the cuts totaled more than 100, as an estimated one-quarter to one-third of BusinessWeek employees lost their jobs. Bloomberg and McGraw-Hill declined to comment on the exact number of positions slashed. BusinessWeek's traditional competitors, Forbes and Fortune, have also made cutbacks. Forbes has laid off scores of employees in several waves over the past year. Fortune also cut staff and scaled back its print frequency. Forbes and Fortune are clearly in retreat, but BusinessWeek, with Bloomberg's backing, may be in a position to advance. Now securely in the fold at Bloomberg, it has access to about 1,500 Bloomberg editorial staffers around the globe to help the brand produce original content both online and in print. “Anybody who has that many reporters out there has an advantage,” said Jeff Dearth, partner at media investment bank DeSilva & Phillips. “Forbes and Fortune never had that many people out there.” While taking a wait-and-see attitude, media buyers have tended to be satisfied with the move of BusinessWeek to Bloomberg. “It was good to see that they were acquired by a company so committed to the practice of business journalism and also plugged into the global business climate,” said Mike Paradiso, VP-global media director at CA. Although BusinessWeek will still compete with Forbes and Fortune under Bloomberg's ownership, the acquisition is ultimately not about that narrow competition with those print brands. It is about remaking the company and expanding its reach to a broad swath of businesspeople around the globe as well as reaching them in a variety of media, including print, online, mobile, e-readers, radio and, of course, on terminals. Some industry observers have characterized Bloomberg's move as reactive. With the reduction in staffing in the financial industry, analysts say Bloomberg has taken a hit in fees for its terminals and is looking to supplement that revenue stream with more ad dollars. “Between November 2008 and August 2009, the number of Bloomberg terminals decreased by about 11,470, or about 4%, according to the Financial Times. Bloomberg disputes those figures, saying that between December 2008 and December 2009, the number of terminals declined by 2%, falling from 286,000 to 280,000.

Industry observers expect that the falloff in financial industry jobs will still hurt Bloomberg in 2010, but the company said it is increasing sales and gaining market share already this year. One industry observer who spoke on condition of anonymity questioned the strategy of adding more ad-supported media. “They're going from strength to weakness,” the observer said. Ken Doctor, affiliate analyst at Outsell, however, characterized Bloomberg's strategy as proactive. The landscape of business information is changing, and three large companies—Bloomberg, Dow Jones & Co. and Thomson Reuters—are establishing themselves as leaders in providing a continuum of information desired by businesspeople. This continuum extends from the must-have paid content that a trader needs to do his or her job to the nice-to-have newspaper or Web content that is primarily advertising supported. “That marketplace itself is shaping up as a titanic battle of a few global business news and data suppliers. Thomson Reuters and the ascendant Bloomberg ... along with the Financial Times, are in a battle with Dow Jones to win business customers—in large enterprises and small—around the globe, as all of their businesses are going quickly digital,” Doctor wrote in a recent report. In the report, Doctor wrote that Dow Jones' recent merging of its consumer business, which includes The Wall Street Journal, with its enterprise business, which includes Factiva and the Dow Jones Newswires, was made for essentially the same reasons Bloomberg bought BusinessWeek. “Clearly, the marketplace is witnessing a blurring of the news-oriented enterprise and consumer news businesses overall,” he wrote.

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