The chatter across the world of financial journalism over the last few days has been the story of Bloomberg reporters accessing information about subscribers of the firm's financial data service that those customers thought should remain secret. The episode contains some important lessons for how the media business is evolving.
The controversy came to light after a Bloomberg reporter in Hong Kong asked Goldman Sachs if a certain employee had left the company, noting that the Goldmanite hadn't logged into his Bloomberg account in some time. The same had reportedly happened with J.P. Morgan as Bloomberg reporters were investigating the departure of Bruno Iksil, the London-based trader whose strategies lost the firm billions. The Treasury and Federal Reserve are now looking into whether Bloomberg reporters had inappropriate information on their officials' use of the terminals. The firm has acknowledged that journalists have long had access to information about when subscribers have logged in and what broad categories of information they accessed — and has now reversed that policy.
It is a window into the workings of what is surely the most financially successful media venture of this century. Bloomberg LP, the parent company of Bloomberg News, has achieved the thing that every company desperately seeks: An economic moat, a way to achieve persistently high profit margins that competitors cannot easily encroach. It is a textbook case of a company doing everything it can to seize and maintain competitive advantage.