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The Bloomberg News Scandal: 10 Burning Questions and Answers

The Bloomberg News Scandal: 10 Burning Questions and Answers

The snooping scandal erupting at Bloomberg News is filled with intrigue. Who knew what and when? Why did the reporters do something so brazen and stupid? What does it mean? Why did it happen?

As someone who worked at Bloomberg from 1993 to 1999 and has followed the media since then, I offer these 10 burning questions and answers:

1) Why did it happen in the first place? 

In a word, arrogance. Why do smart people tend to make ethical miscalculations in business or politics or any walk of life? Arrogance. The Bloomberg reporters who used the Bloomberg Terminal to spy on the company’s customers were supremely arrogant, thinking that they weren’t being unethical or that they wouldn’t get caught. Perhaps they thought this was their right considering it was company property. Maybe  now, the whole operation — which has a Kremlinesque way of doing things and a corporate smugness to boot — will lighten up a little and not take itself oh-so seriously.

2) Will the fallout hurt Bloomberg L.P.’s business? 

That gets to the heart of the matter for the thousands of employees of Bloomberg, who rely on strong sales of those terminals to make hefty salaries and healthy annual bonuses. Will this slow terminal sales? Bloomberg folks say, no way. But we’ll see. If Wall Street felt victimized and got tired of paying top dollar for those devices, the company might see a slowdown. But the fact is that those Wall Street traders can’t do without their Bloomberg terminals. Today. For now.

3) Whose head will roll?

It depends on one factor: If Mike Bloomberg is looking for a scapegoat, he’ll surely find one. Bloomberg, the New York mayor, founded the company and continues to have big fists over there even though he had nothing to do with this debacle and isn’t around on a daily basis.But much of his personal fortune is tied up in it so, you bet, he cares and has a loud voice at the firm.

4) Who could benefit from this fiasco?

Thomson Reuters could see an acceleration of sales for its information and date terminals. It’s Bloomberg’s biggest rival in terminal sales. Plus, this scandal might make it hard for Bloomberg to buy the Financial Times — rumor has it Bloomberg wants to — which could give Reuters the inside track. Can Bloomberg still ultimately buy the New York Times Co.? (Another popular bit of speculation). All bets are off.

5) Why is this a big story, anyway?

Bloomberg L.P. employees aren’t the only ones asking this particular burning question. 

Non-journalists want to know, too. We have high-stakes hearings unfolding in Washington about Benghazi, an IRS scandal of mortifying proportions — and this Bloomberg business? Well, it is a big deal — among the journalism community, especially in financial media and particularly in New York City, where Bloomberg is based and Mayor Mike lords over the city. Part of it has to do with our age-old satisfaction when a perceived arrogant and sleazy bully gets his or her comeuppance, as with, say, Sigourney Weaver at the end of Working Girl. The media will not spare the rod when it comes to piling on one of its own, if only to give the appearance of teaching an ethics lesson and giving a wake-up call to one who seems to sorely need it..

6) Will this story have legs? 

Yes — meaning you’ll be reading stories about this for the next few days, at least, in the print and web media as well as on CNBC and Fox Business (Bloomberg TV? Maybe not so much). Bloomberg would be wise to spill on everything that it knows went wrong because it will inevitably come out, anyway, in due time. Let me state for the billionth time: When it comes to abuses of power, and this counts as one of them, the cover-up invariably gets you in more trouble than the actual crime. Journalists feel snookered when someone lies to them and then we try very hard to get even. We can look stupid on our own. We don’t need any help. We’re likely going to see this bizarre story continue to gain traction for the time being because there is so much to examine: the company, Wall Street, the mayor, the media, the integrity of the markets (and all that stuff).

7) What was Bloomberg’s biggest crime?

in the clear light of day, it would have to be accomplishing the unbelievable outcome of mustering public support — if not outright sympathy and even pity — for Goldman Sachs! This is the most powerful securities firm in the world. But because Bloomberg spied on its employees, now ordinary people think Goldman Sachs should be regarded as a victim, in an electronic mugging.

8) How will this have an impact on Hizzoner?

It shouldn’t because he has been away from Bloomberg’s day to day operations for more than a decade, as the mayor of New York. 

But oh yes, it will, just the same.

See earlier post here about how much fun it is for the poor schleps in the media to hurl stones at a powerful company. Multiply that cheap thrill by a zillion and you can imagine the kicks that the New York media are getting as they poke holes in billionaire Mayor Mike’s legacy. 

MEDIA MATRIX QUESTION OF THE DAY: What intrigues you about this case?

Please feel free to post your comment right here.


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