Just a few months ago, Bloomberg News was faced with a potential crisis after Wall Street clients complained—publicly—that Bloomberg news staffers were inappropriately using data available on Bloomberg LP terminals for news gathering.

The revelations raised fears that Bloomberg’s business and editorial operations, which traditionally work together more closely than is the norm among older news organizations, were getting a little too close for comfort. Clients believed they had a right to some expectations of privacy about when, how, and how often they used Bloomberg machines, and that the news side was getting a little too aggressive in its pursuit of the news.

The affair’s faint—very faint—resemblance to News Corp.’s full-blown criminal hacking—scandal helped to fuel a media tsunami that, even at the time, seemed out of proportion to the problem.

Bloomberg LP adroitly handled the crisis with a blitz of internal investigations, candid op-eds, and PR mea culpas, and, as I wrote, effectively put the mini-scandal to bed.

Now, though, Bloomberg faces something entirely different.

Edward Wong in the Times uncorked a blockbuster that claims Bloomberg killed an investigative story that detailed the hidden financial ties between China’s wealthiest tycoon and the families of top Chinese leaders. (The Times piece claims a second article, about the children of senior Chinese officials employed by foreign banks, was also “declared dead,” according to its sources.)

The article quotes four “Bloomberg employees who spoke in some detail about the episodes on the condition of anonymity for fear of losing their jobs,” as well they might.
The lead reporters on the unpublished tycoon story were Michael Forsythe and Shai Oster, who had previously done prize-winning work in 2012 on the wealth of China’s ruling families (stories that some at Bloomberg believed deserved a Pulitzer more than a series on the same topic by the Times, which did win).

The tycoon story, the Times says, had been vetted and approved by top Bloomberg editors, Laurie Hays and Jonathan Kaufman, and seemed on track. Then on a conference call late last month, top editor Matthew Winkler told them the stories “would not be published”:

In the call late last month, Mr. Winkler defended his decision, comparing it to the self-censorship by foreign news bureaus trying to preserve their ability to report inside Nazi-era Germany, according to Bloomberg employees familiar with the discussion.

“He said, ‘If we run the story, we’ll be kicked out of China,’ ” one of the employees said. Less than a week later, a second article, about the children of senior Chinese officials employed by foreign banks, was also declared dead, employees said.

Bloomberg has flatly denied that the stories were killed and that it “postponed” the stories for any reasons other than journalistic ones. Via The Wrap:

“It is absolutely false that we postponed these stories due to external pressure,” the company said in a statement. “We are disappointed that they chose to publish a piece that claims otherwise.”

Winkler and Hays also denied the premise of the story to the Times.

Now the FT’s Demetri Sevastopulo chimes in with additional details including emails from Hays and Kaufman to the reporting team praising the work and indicating that the tycoon story was solid and on track:

On September 18, Laurie Hays, one of Bloomberg’s top editors in New York, wrote an email to the reporters in Hong Kong, which said the latest version of the story was “almost there” and that once she and other editors, including managing editor Jonathan Kaufman, had taken a close read, they would review it with the company’s lawyers.

Nine days later, Mr Kaufman emailed the reporters to say the story was “terrific”. In the email, which was obtained by the FT, he wrote: “The story is terrific. I am in awe of the way you tracked down and deciphered the financial holdings and the players. It’s a real revelation. Looking forward to pushing it up the line.”

A couple of things: First, the details of the Times and FT accounts ring true. The Times says, for instance, that Bloomberg editors, in justifying their decision not to run the year-long project, told the reporters they had “no smoking gun,” and that the story didn’t advance the 2012 series. Both may be true, but it should be understood that these are catchall reasons that can and have been used down through the ages at news organizations to justify not running something. That is to say, Bloomberg’s official account, both during the internal discussions and now in public discourse, that the tycoon story “wasn’t ready” is so vague as to be unpersuasive.

Second, this kind of media story is actually rarer than you might think. News “employees” (as the Times calls them) don’t usually put their jobs on the line to talk about stories they feel are being spiked (or “postponed,” as Bloomberg puts it), no matter how bitter the internal arguments. For one thing, whether a big investigative piece is “ready” is always, up to a point, a judgment call, and the line between maintaining editorial standards and obstructionism will always be hazy. There is rarely a “smoking gun” in such matters, so to speak, and it’s a difficult argument to win outright, so most frustrated reporters don’t go public on such matters, even through leaks.

Plus, generally there aren’t that many people involved in an internal controversy like this, so sources are more vulnerable to exposure than they might be in your usual inside-the-newsroom stories, like, for instance, Politico’s gossipy piece on Jill Abramson. The allegations there were so vague and catty that anyone could have been the source. That’s not the case in the Bloomberg affair.

And yet whomever the sources were leaked the dispute anyway, in some detail and at considerable career risk—with little upside. That’s unusual and, in my opinion, it tips the scales in their favor, even though they’re nameless.

Indeed, the sources are unusually blunt in contradicting their bosses accounts. From theFT:

The person familiar with the discussions dismissed Bloomberg’s comments that the story was not ready for publication, saying it had been approved and just needed a Chinese government response. “We had crossed the Rubicon,” the person said. “The story was fully edited, fact checked and vetted by the lawyers.”

This is pushback against the pushback.

Third, this is actually much more important for Bloomberg News as a news operation than the terminal mini-scandal was. In the latter case, the interests at risk were business interests, and Bloomberg LP moved in and stomped out the problem with a shock-and-awe campaign of scrutiny and disclosure. No one doubts that Bloomberg will protect its business interests.

Here, the allegation is that journalism interests were sacrificed. Now, Winkler is quoted in the Wong story as saying on the conference call that his concern was about the organization being thrown out of China and left unable to report the news. That’s a legitimate journalistic concern—sort of—but news organizations and/or reporters are not infrequently thrown out of countries that object to one story or other. It happens. And it’s a problematic reason to not run a true story. After all, who knows what will trigger ejection, and how do you base editorial decisions on that probability? Coincidentally, we see that Reuters’s veteran Paul Mooney was just denied a visa by China. That, of course, speaks well of him and of Reuters.

Bloomberg won’t comment on the accuracy of the conference call anecdote but says flatly that editorial considerations alone drove the decision. As Winkler told the FT: “The reporting as presented to me was not ready for publication. Laurie and other top editors agreed.”

But here’s the rub: Bloomberg is different from other news organizations, and its peculiar terminal-sales model gives it a far larger stake in China than a traditional news organization might have. If the Times gets thrown out of China, it would suffer journalistically, but not so much financially (though now it’s trying to grow its readership base there). If, on the other hand, Bloomberg were to get thrown out of China, it would lose journalistically, yes, but also much more financially. Its $20,000-a-year terminals are sold to mostly financial firms, and Wall Street isn’t the market it used to be (thank goodness). Here’s a snapshot of the company’s growth in the last few years:

2010: 300k subscribers, $6.9B revenue;

2011: 313K subscribers, $7.6B revenue;

2012: 315k subscribers, $7.9B revenue.

Not bad but nothing to write home about.

There is no evidence—at all—that financial considerations had anything to do with the editorial decisions on the stories in question. On the other hand, Bloomberg’s unique business model gives it interests in the market that other news organizations simply do not have. The real parallel might be to Rupert Murdoch’s News Corp, which has often been accused of sacrificing journalism interests to business interests in China. But the comparison would be decidedly unfair to Bloomberg, which, in so many ways, is the anti-News Corp.

Still, the story of Bloomberg News in the last decade or so is that of an upstart news organization—by dint of massive spending, talent recruitment, and sheer, maniacal effort—muscling its way into the forefront of the business-news business, even as it carries a terminal-sized chip on its shoulder.

It has proven itself, time and again, perfectly capable of taking on Wall Street, itself an important market for terminals. One could argue that it has earned the benefit of the doubt.

But its own staffers, at considerable risk to their careers, have brought the issue to the fore. And now it’s up to Bloomberg News to prove it again.

 

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014).

Follow Dean on Twitter: @deanstarkman.