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Guarded hopefulness

A sense of paranoid optimism helps Bloomberg News' editor-in-chief John Micklethwait adapt to challenges from the rise of digital platforms to expanding coverage in Asia's growth story.
Saturday, November 7, 2015 - 05:50
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'You look at the New York Times, Financial Times, The Economist, the Wall Street Journal - they're all doing some version of a circulation-first strategy, where they are charging people, where they're saying, 'our content is so good, you should pay for it'. Bloomberg, on the terminal, is perhaps an ultimate example of that, as well. And Reuters is doing the same thing.'

JOHN Micklethwait is a newspaper man seized by fear and hope for the future of journalism. To be sure, "newspaper man" is actually a bit of an anachronistic description for the new editor-in-chief at Bloomberg News, where no ink is spilled on paper. Across 325,000 Bloomberg terminals, headlines splash upon screens in seconds, bumping stale events much faster than one wraps fish with yesterday's page one.

But Mr Micklethwait began as a journalist at The Economist, the magazine that insists on being called a newspaper. And there, over 27 years as a reporter and editor, he has seen media giants falter in the great online migration.

He will not forget when Twitter was started: 10 days before he became editor at the London publication in 2006.

"I tend to follow a kind of spirited paranoid optimism. I think it works very well for Bloomberg," Mr Micklethwait tells The Business Times at the Bloomberg office in Singapore, in his first major interview since taking the helm at the news agency.

"I used to have an office in the LA Times, and I remember sitting there in the early 1990s and thinking, this must be the most powerful media organisation on the planet who kind of dominated one city. There were worries there about whether the Orange County Register had stolen a thousand readers or not, but the general impression was almost Soviet-like. It dominated classified advertising," adds Mr Micklethwait, who had set up, and ran, the Economist office in Los Angeles for three years.

"And yet, the LA Times is still a great paper but it faces a much, much, more fragile future."

Being aware of keen competition, Mr Micklethwait has cleanly defined Bloomberg's target market as "the clever customer who is short of time". And the journalistic work in turn should channel intrigue over how people make money, as opposed to "gotcha journalism" on investment bankers as a snub to the profession, he has told staff. Plainly, Bloomberg should seek to be the chronicle of capitalism.

"I talk about the six pillars of what I think we need to do: business, finance, markets, technology, economics and what I loosely, or pretentiously, phrased as power, which is government and politics," he says. "In modern journalism, a lot is about doing what you're good at."

Mr Micklethwait keeps the jitters in check, in part as the free-market champion sees the world shaped for the better by competition.

"There are some things that are beginning to emerge. It's interesting how quite a lot of the quality press has begun to coalesce around reasonably successful circulation models," he says.

"So you look at The New York Times, Financial Times, The Economist, The Wall Street Journal - they're all doing some version of a circulation-first strategy, where they are charging people, where they're saying, 'our content is so good, you should pay for it'. Bloomberg, on the terminal, is perhaps an ultimate example of that as well. And Reuters is doing the same thing."

He hangs onto hope that readers will pay for quality journalism, that circulation will drive earnings once supported by advertising. "You tend to be safer and better protected the more you're asking people to pay, because then you're not relying on advertisers. Advertisers are great, but they can make more demands on you than readers do."

The Economist is proof in point. Under Mr Micklethwait's charge, its operating profit for its latest fiscal year rose 2 per cent to £60 million (S$129.5 million). And amid the industry's grey introspection over reader loyalty, The Economist had a 13 per cent increase in gross profit from its 1.6 million-circulation.

Mr Micklethwait now leads an editorial team that supports a business worth more than US$9 billion in global revenues per year. And at Bloomberg, he manages more than double the staff from before, with 2,500 editorial and research staff in 73 countries.

Bloomberg is the clear leader in financial data services, with a market share of 32 per cent, against Thomson Reuters' 26 per cent. Consultancy Burton-Taylor noted that Bloomberg took a bigger chunk of market-data spending in the Asia-Pacific last year than in the Americas, where there is also more competition.

This comes as Goldman Sachs in September launched a startup to challenge Bloomberg's messaging service. Whether this has been sparked by ire over Bloomberg reporters monitoring bank employees using the terminals, or over the princely US$21,000 price tag for a yearly terminal subscription, is hard to say. The new venture is backed by other banks and has teamed up with Dow Jones and McGraw Hill Financial to bring data and content to users.

Growth in Bloomberg subscriptions has slowed, though to be clear, terminal sales had doubled over the previous decade.

These developments put Asia-Pacific into the frame. The region has grown to contribute about 18 per cent of Bloomberg's global revenues.

"When we're old and clapped out, in 30 years' time if I sit and look at what happened in my lifetime, the big thing will be the emergence of two billion people, out of something close to poverty, into a big emerging middle class," Mr Micklethwait says.

China's rise will be a big part of the growth story in Asia, and so will it feature in Bloomberg's push into this region. But Bloomberg, like other news agencies, will have to contend with restrictions, including the control over visa issues.

This also comes amid controversy over reports of Bloomberg's self-censorship over an investigative story on ties between Wang Jianlin and President Xi Jinping in late 2013. These ties have emerged this year under the masthead of The New York Times. The byline was that of Michael Forsythe, the ex-Bloomberg reporter in the thick of the story then, who was hired by the Grey Lady a few months after he left Bloomberg.

Mr Wang, chairman of Wanda Group, responded in late October to the story - a rare occurrence. He said that its commercial properties subsidiary had earlier placed out shares to investors that included the company of Mr Xi's brother-in-law, but this investment was fully exited at "a low price point".

"This incident demonstrates that President Xi is not only strict in managing our country but is even more scrupulous when it comes to family affairs," said Mr Wang, who spoke at Harvard as vice-chair of the university's global advisory council.

Mr Micklethwait seems unfazed by the existential bad press surrounding the issue, noting that Bloomberg seeks out "textured" stories on the country.

"To some extent, the press is a useful part to what Xi Jinping wants to do in China. He does want a slightly more transparent society, and also I think particularly, the sort of stuff we specialise in on business and finance, that is immensely important - both from the point of view of dealing with corruption, but also from the point of view of trying to build a slightly more modern society. But so far, at least in broad terms, the relationship's been fairly happy. We've put more journalists in there, there hasn't been any obvious disagreement." Bloomberg has hired about 30 journalists in China over 2014 and this year.

"If you're just writing one story a week on China, you tend to focus on the government's crackdown on this, or whatever. If you're writing about the whole texture of Chinese business, politics, you're going to have stories saying, 'Look, Alibaba's just come up with this new product. Is it any good?' People have got past that somewhat cliched first bit of China, and people now want to know what's happening at provincial governments, they want to know whether local utilities are making money or not."

Besides expanding its coverage on Asia - as a case in point, Bloomberg is expected to take up more office space in Singapore - it has gone deeper into the mobile and online space. It has refreshed its website, and will launch next year a service known as Daybreak, a new morning brief for its terminal users, through a mobile application.

The wider assault comes despite terminal sales making up 75 per cent of Bloomberg's revenue, with Mr Micklethwait eyeballing free finance services such as Google or Yahoo, and trying to make money from its online presence. This is also an evangelical tool, influencing users to convert to a terminal subscription.

"Where you look back through history, people are screaming 'read all about it', and trying to get people to read one version or the other. But over the past 20 years, it's also been about platform battles. What's the most convenient way, what do we have that is different to Google News, or Yahoo Finance? That's the one that someone like me should look at every day."

It's easier to persuade people to work at Bloomberg when the news reaches a wider audience, he adds. In September, Bloomberg.com sites reached 3.6 million unique visitors on their desktops in the Asia-Pacific region. This, it said, beat numbers from WSJ.com, CNBC.com and CNNMoney.com.

"Journalists like to be able to reach people. I've always been a fan of metered paywalls. People always like the idea of 'Can your mother see the story?' That makes a tiny bit of difference."

Bloomberg this week launched a fast commentary service called Gadfly, to challenge financial news services that are churning out quick analyses of deals and breaking announcements. The name has Michael Bloomberg's trademark on it.

"For a long time, I was very keen on (the name) Ergo. But then I went to see a man called Mike, who didn't entirely grasp it. I had wandered around the world, offering people a bottle of champagne if they came up with a better name. Mike Bloomberg himself said, 'Oh god, there must be a better name than this, what about Gadfly?' Gadfly is a biblical telling of it, it was somebody who spoke truth, which is quite useful. It also has that slight element of observational fluttering, which I actually like," says Mr Micklethwait.

"I bought him champagne. He rather grumpily accepted it. So it shows, proprietors can do good things. His main objection to Ergo, was that this was a pretentious, Latin name wrapped up by the English. Maybe he was right about that."

The Englishman was hired late last year by Mr Bloomberg, who had returned that year to the company he founded after three terms as New York mayor.

Mr Micklethwait stepped through the doors - and there are few at Bloomberg, because the owner hates them - at a time of infighting and as flab had begun to build. A tighter focus and pivot towards Asia has meant laying off about 90 people - the first major retrenchment that Mr Micklethwait oversaw.

"There were a lot of silos when I came. So the answer is, you arrive somewhere and you move people around, you're always going to cause some problems," says Mr Micklethwait, who expects no further major restructuring for now. Headcount will be unchanged this year.

"The truth is that any editor has to fire people. Where possible, when you make these nasty decisions, then you should be as involved in the process as possible. I'm not a great one for trying to delegate that."

He also noticed the number of editing layers at the wire service has been at least the same four to five layers of editing at The Economist, a weekly publication. And reporters, who tend to complain, made their irritation of this feudalism known, quips Mr Micklethwait. He pledges to give the Asian bureaus more autonomy.

"News is much more crucial to Bloomberg than it is to The Economist. What was odd, given that, was that we were putting it through at least as many layers, and often many more. Because you want to get the story out as quickly as possible, people were waiting out here to get the story back from New York, and then pushing it out at 11, 12 o'clock at night. I thought that was just wrong," says Mr Micklethwait.

"Why did the Japanese beat Detroit? Because the Japanese believed in total quality management. When you've finished making your bit of the car, it was perfect. And you assumed nobody would ever check it again. In America, they used to have a quality department at the end. We were doing that a bit with the editing. People were writing stuff, and thinking, 'Well it's going to go through seven people anyway, so who cares if I got something right or wrong'?

"All my life in journalism, I've seen the same thing: people who know the most are the people who are closest to the story, and they are the ones who can come up with the good ideas as well. I'm keen on trying to empower journalists to do that."

Singapore, where Bloomberg has been for 25 years, is partly important in telling the story of Asia and China, standing as a model for the emerging powerhouse. As a tidy coincidence, Mr Xi is in Singapore this week. China and Taiwan will hold a historic summit in the city-state on Nov 7.

"I'm always struck by the fact that when I came here once to see Lee Kuan Yew, I was delayed in seeing him. And the reason was Xi Jinping, who had just been appointed the heir-anointed in China, was coming across to see him. Singapore is a very small place, and here was this man thinking, 'This is a place I still need to come and see this old man in frail health, because it's important in terms of the way I run society'," says Mr Micklethwait.

But he argues the risk is of China looking "too much at the rhetoric, and not at the reality" of Singapore, citing Asian values as an example.

"The other bit is that China might be drawn to the idea that you need to mix democracy with some degree of authoritarian. Part of the genius of Singapore was that Lee Kuan Yew used to say one set of things, but what he was doing was deeply pragmatic, and actually relatively easy to imitate. If China is clever, it will draw from that, rather than worry about chewing gum on the streets."


JOHN MICKLETHWAIT

Editor-in-Chief, Bloomberg News

Born: London, UK, Aug 11, 1962

Education: BA in History, Magdalen College, Oxford

1985-1987: Worked at Chase Manhattan as a banker

1987: Joined The Economist as a finance correspondent

2000-2006: US editor of The Economist

2006-2014: Editor of The Economist

2015: Editor-in-Chief, Bloomberg News (since Feb 1)