AJR  Features
From AJR,   March 2002

Covering the Boss   

Bloomberg News grapples with an unprecedented problem: Its owner is the new mayor of the world’s financial capital.

By Alina Tugend
Alina Tugend is a writer based in the New York City metropolitan area.     

Few would think to associate Michael Bloomberg, the low-key owner of Bloomberg L.P., with the legendary father of yellow journalism, William Randolph Hearst. Yet they have one thing in common besides great wealth--they are both media moguls and both ran for mayor of New York, albeit almost a century apart.

Hearst lost twice. Bloomberg won.

And that victory marks the first time in history that the owner of a major news organization--and one that bears his name--also serves as mayor of a large city.

"I've never seen anything on this scale--the mayor of the biggest city and the financial capital of the world owns one of the biggest financial news agencies in the world," says Louis Hodges, Knight Professor of Ethics in Journalism at Washington and Lee University.

The unprecedented situation has created, if not a furor, then a rumbling of concern among some journalists and media critics.

"I'm sure the people at Bloomberg News will try as hard as they can to be fair to the new mayor, but they've got a huge perception problem because his name is on the door," says Howard Kurtz, media reporter for the Washington Post.

Bloomberg L.P. makes the bulk of its money by leasing terminals that provide real-time financial data--as well as general news, sports and Web connections. The terminals provide the main access to Bloomberg News, though it's also available through other systems. The New York metropolitan region is by far the largest market for the terminals; so if Bloomberg doesn't want its screen users to go elsewhere, it's important that it cover the city and the government. Bloomberg Television, another facet of the company, covers business and financial news 24 hours a day on 10 separate networks in seven languages around the world, and Bloomberg Radio, WBBR-AM, is a 24-hour all-news station that can be heard throughout New York, New Jersey and Connecticut. The station also provides syndicated reports to more than 200 radio stations around the world, and listeners in the United Kingdom can tune in to their own Bloomberg station.

Reporters from other news organizations addressed the potential conflict during Bloomberg's candidacy, but without much fervor--largely because virtually no one thought he would win. After all, Bloomberg, 60, had never held public office and was pitted against a number of political veterans. Furthermore, he was running as a Republican--after switching from being a lifelong Democrat because the Republican slate was weaker--in a strongly Democratic city.

During much of the mayoral campaign, Bloomberg's candidacy was treated by many New Yorkers as an interesting hobby for a billionaire. Also, much of the media attention was focused on the extraordinary amount of his own money Bloomberg was spending on the race: In the end it was $72 million or about $95 per vote.

What didn't get much play in the press were questions about how Bloomberg's news organization could offer anything close to objective coverage of city politics. "In the campaign, [the conflict issue] came up, but it came up as less urgent," says Dean E. Murphy, who covered Bloomberg's candidacy for the New York Times. "We did repeatedly ask, 'How do you deal with the potential economic conflicts?' and Bloomberg said he was going to be really open and disclose. He also said he would put his holdings in a blind trust, but since his financial holdings are mainly Bloomberg L.P., what does it mean to put it in a blind trust?"

For most reporters, Murphy says, "the most interesting and appropriate aspect of his empire was his success and how that could translate to City Hall."

To the shock of many New Yorkers, when the ballots were counted on November 7, Michael Bloomberg--with the backing of the immensely popular incumbent, Rudolph Giuliani--was the new mayor of New York City. And his news agency found itself in the surprising and not entirely welcome position of being owned by the man it now would cover on a regular basis.

As CEO of Bloomberg L.P. (a position he resigned after becoming mayor), Bloomberg was well known as hands--off in the news division. Nonetheless, after he announced his candidacy in the summer of 2001, his news editors had to start making some decisions about how to handle their boss' venture into the public arena.

Initially, says Matthew Winkler, the first and only editor in chief in Bloomberg News' 12-year history, editors decided that the news agency would not cover the mayoral race; it would summarize what the other major newspapers reported. This was an extension, Winkler notes, of the long-held Bloomberg policy to summarize from other published sources when covering any news about Bloomberg and the company.

"We decided we would not cover any candidate in the mayoral race--other than poll results," Winkler says. "There wasn't much hand-wringing or anxiety in the newsroom. The way we are structured, [the policy] enabled us to get through the last nine months of the year without much difficulty either from the ethical or journalistic perspective, and I don't think our readers were shortchanged." Winkler also says that "the race for mayor is not at the top of Bloomberg News. It's not even close. It would be included in the mix, but it's a pretty diverse mix."

Bloomberg, whose net fortune is estimated at $4.5 billion by Forbes magazine, owns the majority of the privately held Bloomberg L.P., which he created in 1981 with the $10 million severance package he received after being fired as a partner at Salomon Brothers, the investment banking firm now known as Salomon Smith Barney. He started the news organization nine years later. The company provides financial data to traders, brokers and fund managers as well as the government and 350 newspapers around the world.

One of the few negatives to surface about the soon-to-be mayor during the campaign--and a story reported widely in the New York media--centered on a birthday present Bloomberg received from some members of his staff 11 years ago. It was a compilation of quotations attributed to Bloomberg containing off-color remarks about women, Jews and homosexuals. Bloomberg acknowledged receiving the gift, but contended he didn't say the jokes attributed to him.

Bloomberg News reported the political tempest by summarizing a New York Times story of an attack by his Republican opponent.

As for what the organization would do if its boss won the mayor's race, Henry Goldman, Bloomberg's City Hall reporter, says no preparations were made. The staff, he says, was in denial. "Very few thought he could win except for me." Bloomberg News, with 82 news bureaus around the world, regional headquarters in Princeton, London and Hong Kong, and 1,200 reporters and editors, is not traditionally oriented toward local news. However, a year ago it established a now 17-person metro desk in New York.

"I, by design, did not spend a lot of time thinking about the campaign," Winkler says. "Then it's November and, lo and behold, he wins."

The first thing Winkler did was send out a memo to his staff, saying that, as Winkler recalled, "now that he has won, and we can all take some pride in his victory, we have to remember the values and ethics that sustain him and us, and adhere to them--and if we do that, the best is yet to come."

The news organization has a rigid writing style outlined in its thick stylebook, "The Bloomberg Way," which Winkler says will serve reporters well in covering the Bloomberg administration. Adjectives, adverbs and all modifiers are strongly frowned upon. Instead, reporters are told to use anecdotes and explicit facts for everything.

One example, Winkler says, is that he recently admonished a reporter for saying George W. Bush "narrowly won" the 2000 presidential election. Instead, he says, the reporter should give the vote count and say the election went to the U.S. Supreme Court, allowing the reader to decide if the victory was narrow or not.

Political descriptions like "center right" and "center left" are verboten as well, and "if I see it or my disciples see it, there will be hell to pay," Winkler says. "It works when you apply this to stocks and markets, but when you apply it to politics, one could argue it works even better. If journalists have a rigorous style that precludes the kind of words that invite scrutiny--adjectives, adverbs and modifiers--they'll do better."

Winkler says, however, that he is "very reluctant to put on paper, 'You can't do this or you can do that.' I want to use common sense as a guide."

Staff reporters, he says, can cover what the mayor and his staff say and do, but they would not do an investigation of Bloomberg "because of the relationship of Bloomberg [News] to Bloomberg."

Goldman, who worked at the Philadelphia Inquirer for 17 years before joining Bloomberg News in 1999, says, "I'm not going to be out sleuthing and hunting through trash, but any good reporting has elements of investigative reporting. And I don't want to leave the impression that if anything happens that is not to the pleasure of the administration, we won't publish it. We intend to be quite hardheaded in our approach to the news."

Goldman continues: "I'll stick to documents, what he says, what he does and what others say--and will do it faithfully. In this job, I'm going to be a lot more conservative writing about Bloomberg, because we'd be idiots not to think about what our readers think." Goldman acknowledges that "it's a difficult assignment, but I know it's very doable. The real difference is I will not write conclusionary stories about what Bloomberg appears to be."

Pointing to a January 17 front-page New York Times story that, flatteringly, compared Bloomberg's ability to reach out to the poor to that of his predecessor, Goldman says, "I would not do stories like that. I might have for the Inquirer, but not Bloomberg. It is likely to be read by the reader as not credible. It's common sense: When you work for Bloomberg, you do not write glowing positive stories about what a wonderful job he's doing, even if he is."

After the election, the media took a greater interest in the issues created when a business executive/media owner steps into public office. A number of stories in Newsday and New York's Daily News, among others, raised the conflict-of-interest question. But they focused primarily on Bloomberg's ownership of his entire company and not specifically on the news division.

For example, in a November 18 Daily News article, Business Editor David Andelman wrote that "unless the company that bears his name is sold, Michael Bloomberg and the city's Conflicts of Interest Board will have some hard decisions to make about who controls his multinational media conglomerate while he is mayor."

In a December 9 Newsday story, staff writer Dan Janison explored what the city's Conflicts of Interest Board might look into when examining Bloomberg's holdings.

"First it must review a thicket of dealings from the sale of Bloomberg L.P. financial-data machines to the city's offices and the firm's ties to a major municipal bond underwriter, to the cable-franchise status of the mayor-elect's television news network and the holdings of his competitors," the article said.

Janison points out that the dilemma "bears some parallel to the one unfolding in Italy, where Prime Minister Silvio Berlusconi, another billionaire media mogul, was accused last month by foes of having a conflict of interest involving his ownership of the nation's three biggest TV networks."

A November 8 Washington Post article by Kurtz focused directly on the problems facing Bloomberg News as it tried to cover its boss. In the piece, Kurtz wrote that Bloomberg is no stranger to such questions; although Merrill Lynch owns 20 percent of Bloomberg, "the news service has reported aggressively on the Wall Street brokerage."

But he also quotes a number of journalists who are concerned about the inevitable conflicts that will be raised. New York magazine writer Michael Wolff calls the situation "incredibly difficult...if this guy had been in the real estate business, we would have said this is a big problem.... What is this business? Who are its lenders? Who are its major customers? Instead of electing a politician beholden to special interests, we've just elected the special interest."

In an interview, Kurtz says he's not surprised that the issue has not received more press coverage. "Media conflicts of interest, even ones as blatant as the Bloomberg situation, don't get as much attention as political conflicts of interest," he says.

Adds Marvin Kalb, executive director of the Washington office of the Joan Shorenstein Center for the Press, Politics and Public Policy: "I think it is very sad but illuminating that there is no one--outside the media mavens--raising a fuss. Maybe the people in New York are still in a state of shock over 9/11 and cannot bring themselves to address another major – although obviously on a lesser scale-- issue."

In the first month of the Bloomberg administration, the mayor received largely positive press from the New York media, even the notoriously scandal-hungry tabloids who have nicknamed him "Bloomie."

Bloomberg News has relied on the same strategy it used during the campaign--summarizing other newspapers' stories and reporting directly from press conferences--to cover the few minor controversies that have surfaced. Those focused primarily on $850,000 in bonuses the mayor gave to 11 campaign aides, out of his own pocket, and whether it would be a conflict of interest if he allowed one of his daughters and his sister to serve as unpaid workers in his administration.

The most public steps Winkler has taken so far to reassure readers that Bloomberg News is above reproach are to require that every story about the mayor mention that he also is owner of Bloomberg L.P., which owns Bloomberg News. And he has hired Tom Goldstein, departing dean of the Columbia University Graduate School of Journalism, to act as a part-time temporary consultant to oversee the Bloomberg coverage.

That step, however, raised concern among some in the media that Winkler was defanging a potential critic. The weekly New York Observer ran a January 14 article about the situation and a January 21 editorial under the headline "Dean Goldstein of the Columbia J School Makes a Sleazy Turn." In the editorial, the Observer wrote "integrity and ethics have taken a holiday at Columbia University's Graduate School of Journalism.... The central issue is that Mr. Goldstein's greedy double-dipping makes a mockery of everything Columbia J School ostensibly stands for. What does it say about a journalism school's impartiality and ability to objectively assess news organizations in the classroom...when the dean of that school is collecting a paycheck from a news organization?" Goldstein, who announced on January 24 that he'll leave Columbia at the end of this term--a move unrelated to the Bloomberg consultancy--wrote in a letter to the Observer that the editorial was "riddled with mistakes." Goldstein said the consultation fee he personally receives from Bloomberg will go to charity and that "I strongly believe that journalism schools, while retaining their independence, need to collaborate with journalism professionals. Our job is to make sure journalism is practiced at the highest level." In an interview, Goldstein says he regrets that he didn't send a memo to his Columbia University colleagues telling them about the consultancy before he decided to take the job. A few questions have been raised, he adds, but otherwise "everyone says it sounds like a good idea."

The Bloomberg consultancy, he says, is simply an extension of the work he does all the time as a dean at Columbia--such as fundraising and dealing on a financial basis with publishers. Columbia is "connected to the real world in lots of ways," Goldstein says. "If I can't rise above it, then I shouldn't be in this position." (Under Goldstein's deanship, Bloomberg also had endowed a full professorship--one of four endowed during Goldstein's tenure.)

In terms of how Bloomberg News should cover the new mayor, Goldstein says that the organization is "in a very tricky position. It's totally uncharted territory. The more people looking at [the articles] the better." He says he's reading Bloomberg stories every morning and "in the end, I may say, 'You're doing great,' but it's way too early" to assess the coverage.

Marvin Kalb says of Goldstein's appointment: "I have the greatest confidence in Tom Goldstein to spot the problems. However, it's another thing to resolve the problems." The issue of Bloomberg covering Bloomberg "clearly raises enormous issues of journalistic ethics."

For Christopher Byron, a columnist for the New York Post and MSNBC, the real conflict is not how Bloomberg covers New York City politics, but rather the financial intertwining of the city and Bloomberg News. (Byron's column, which previously appeared in the New York Observer, was syndicated by Bloomberg in 2000 and 2001 but discontinued by the news outlet after disagreements regarding the content of a column.)

Byron explains one potential problem: The economic downturn means New York City will have to issue municipal bonds to cover its expenses. "At that point, what Bloomberg News has to say is important--the entire business was built on bonds" and its financial data service, he says. "The city's finances are infinitely worse than they were four months ago, and press scrutiny has to be more intense. One of the biggest voices is instantly conflicted out of the game."

Does the situation mean that Bloomberg's coverage of the mayor will be largely inconsequential? Winkler says no. "Whatever the mayor says and does we can report. Whatever people say about the mayor, as long as it is on the record, we can report," he says. "If we follow our style--anecdotes, no anonymous sourcing, on-the-record quotations--there is no impediment to our coverage."

City Hall reporter Goldman is even more adamant. "It's ridiculous to assume that Bloomberg News will be conflicted out of covering financial issues involving the city. It hasn't happened; it won't happen, any more than the New York Times is conflicted about covering tax abatements as it builds its new headquarters," he says. "In this world, almost every news organization has what might be seen as a potential conflict. The key is disclosure of the relationship and scrupulous adherence to the documentable facts."

Michael Bloomberg repeatedly said during his campaign that he would follow any ruling by the Conflicts of Interest Board about possible problems concerning his majority ownership of Bloomberg L.P. Interestingly, Bloomberg's mayoral press office was less than open with the media for this article. It failed to answer repeated specific queries regarding whether or not the mayor has asked the Conflicts of Interest Board for advice and what rules the mayor's office has adopted – if any--to guide it in dealing with Bloomberg reporters.

Wayne Hawley, general counsel of the Conflicts of Interest Board, says the board responds to requests for advice and can investigate and prosecute conflicts that have occurred. He also says the board cannot reveal what cases it is looking into. However, in general, he says, it's "very rare" that the board asks a public figure to divest himself or herself of a business.

"More commonly," Hawley says, the board asks that public officials with large business interests recuse themselves--for example, step down from serving on a board--if that business has dealings with the city.

Bloomberg has made it clear he has no intention of selling his company or, as some have suggested, changing its name.

As for the remaining journalistic questions, Kurtz says, "There is no rulebook about having your owner running the city of New York. It's going to come down to the day-to-day judgment of the journalists at Bloomberg News."

Adds Louis Hodges, of Washington and Lee University, the only answer is constant vigilance to ensure fair coverage.

"It's a huge, huge set of forces at work, and I don't see a way to avoid conflict," Hodges says. "This puts a very special burden of responsibility on other reporters to monitor the Bloomberg coverage of the mayor."