One of the most successful limited partnerships in existence, Bloomberg L.P. bills itself as “the global business and financial information and news leader.” Bloomberg’s founder and former mayor of New York, Michael Bloomberg, owns 88% of the company’s stock, making him one of the dozen or so richest men on the planet. The privately-held company is believed to generate over $10 billion in annual revenue, the large majority of that courtesy of its Professional Services division, which began with the inescapable Bloomberg terminals. Obligatory for almost anyone with an occupation in finance, the terminals and their software-as-a-service successors offer comprehensive and vital information to 320,000 paying customers around the world.
While the bulk of Bloomberg's money comes from Professional Services, the company has several other subsidiaries, the most notable of which are its news-gathering operations via Bloomberg News. Investopedia readers are probably also familiar with Bloomberg Television. The 24-hour network is an anomaly in that it runs more live programming than competitors CNBC and Fox Business Network. Bloomberg Television also offers a deeper analysis and less light entertainment than the other financial broadcasters, which often air infomercials, paid programming, and repeat broadcasts throughout much of the day. Bloomberg Television also offers regional channels of international interest in the Philippines, India, Turkey, Canada, and other destinations.
- Bloomberg LP is a global media and financial data and analytics conglomerate.
- The company generates revenue from subscriptions and fees associated with Bloomberg terminals as well as a variety of other services including Bloomberg News and Bloomberg Business, focused on venture capital, brokerage, and more.
- Bloomberg terminals are essentially unrivaled within the finance world and have contributed to the company's massive growth in its 39-year history.
History of Bloomberg
Bloomberg was founded in 1981 as Innovative Market Systems and has since grown into a major international operation employing more than 20,000 individuals. The central component of the company—the Bloomberg terminal, which provides real-time market data and analytics—was already in place at the founding. Over the years, Bloomberg has acquired a variety of competitors across different industries, including media (New York radio station WNEW and BusinessWeek magazine), data companies (New Energy Finance), and even government and legal entities (Bureau of National Affairs).
As a privately-held company, details of Bloomberg's financials can be difficult to come by. However, a report by Business Insider indicated that the company generated more than $10 billion in revenue in 2018.
Bloomberg founder and former mayor of New York City Michael Bloomberg launched the company in 1981 after receiving a settlement when his former firm, Salomon Brothers, was acquired.
Bloomberg's Business Model
Bloomberg has parlayed its tremendous brand recognition into a widely-diverse array of product offerings. Central to the company is the Professional Services wing, which at some points in Bloomberg's history has accounted for close to 90% of its yearly revenue. This product, also known as the Bloomberg terminal, is the computer system that analyzes and generates real-time market and financial information for finance professionals.
One of the company's fastest-growing areas is data analytics. This includes a wide variety of products, including Portfolio Management & Analytics products, Real-Time & Trading Data products, and more.
Bloomberg News is the company's news service branch, responsible for delivering news content to Bloomberg terminal users and across a variety of the company's subsidiary media channels, including Bloomberg Television, Bloomberg BusinessWeek, and Bloomberg Radio.
Bloomberg Law is another of the most significant branches of the company. Launched in 2010, Bloomberg Law is a subscription service providing access to real-time legal data for research purposes. Bloomberg Government provides a similar service for government professionals.
Throughout its history, Bloomberg has also launched a venture capital wing (Bloomberg Beta), an agency brokerage (Bloomberg Tradebook), and many other arms as well.
Bloomberg's Professional Services Business
Being a Bloomberg Professional Services customer isn’t for the penurious, not at an annual cost between $20,000 and $24,000. That isn’t the company’s only subscription service, nor is it the most expensive. Bloomberg Law and Bloomberg Government sell specialized information for, you guessed it, lawyers and those who work in politics, respectively. The former service costs approximately $475 per subscriber per month, the latter $5,700.
Bloomberg's terminal revenues for 2018 accounted for approximately 76.6% of all company revenues, according to a report by analyst Jennifer Milton.
Bloomberg's Law Business
Bloomberg Law opened for business in 2010, and its model is unusual in comparison to its established competitors such as LexisNexis. The former charges a flat monthly fee, rather than per use. Bloomberg Law subscribers can learn about breaking decisions, which judge owns how many shares of which publicly-traded company, the implications of the latest sections added to the existing ones of the Internal Revenue Code, and more. Yes, that information might be available to anyone willing to dig for it, but Bloomberg knows digging can be labor-intensive and daunting for its customers.
Bloomberg's Government Business
For $5,700 a month, Bloomberg Government will tell you which bills are passing through which houses at what level at what time, and even when non-legislative regulations change. Care to know what happened during the Senate Appropriations Committee’s last meeting? Probably not, but if you do, Bloomberg Government will gladly give you access to a full transcript, from opening to adjournment. Rely on the Senate’s own devices to tell you which Senator stuck which foot in his or her mouth, and you could literally be waiting years. Bloomberg Government will tell you almost instantly. The inefficiency and sclerosis of the legislative process might be tiresome for ordinary voters, but it offers a market opportunity for Bloomberg.
Bloomberg's Venture Capital Business
Finally, there’s Bloomberg Beta, the limited partnership’s venture capital firm. Appropriately ensconced in Silicon Valley, the $75-million fund has put its money into some startups that have become famous, such as Codeacademy, the online programming tutorial warehouse that claims 24 million users. Other Bloomberg Beta investments, such as Newsle (a news service that delivers stories about one’s favorite personal contacts) don’t appear to have quite as broad an appeal, but Newsle did sell to LinkedIn Corp. for an undisclosed amount in 2014.
According to Bloomberg Beta’s own manual, made available to the general public, venture capital operations offer a relatively inexpensive way for Bloomberg to detect startup trends before they become too well-publicized or expensive. Bloomberg Beta was created to stand on its own merits and turn a profit rather than be bankrolled by the existing Bloomberg businesses.
Bloomberg's fastest-growing revenue stream for 2018 was research products.
Bloomberg's Other Businesses
Bloomberg also operates a handful of other, smaller concerns, such as its enterprise data management division, PolarLake, which manages and interprets complex data sets for clients both large and small, saving them money and time. There’s also Bloomberg View, the editorial counterpart to the Bloomberg News service. Bloomberg View has a roster of renowned columnists whose work is syndicated in various print publications and online. Again, all this is minor compared to the billions upon billions brought in by Bloomberg Professional Services. Bloomberg is under no obligation to disclose which of its departments make how much money, but any observer can calculate just how much the company’s biggest division earns relative to the other divisions.
Throughout its history, Bloomberg has been in the position of either brash new competitor or individual player with a market unto itself. Rarely has it been the legacy company facing off against young and nimble competitors, at least not until the advent of Symphony, the Alphabet Inc. backed company that threatened to eat into Bloomberg’s large profits.
But Bloomberg is still the go-to service for hundreds of thousands of financial professionals who swear by its ease of use and reliability. This is enough to justify Bloomberg’s high price tags. Even the infamous 2013 privacy breach, which inadvertently or otherwise allowed company reporters access to customers’ personal information, was but a temporary blip. Somehow Bloomberg came out of the scandal without sustaining any long-term damage.
In 2018, Bloomberg continued a long-term process of diversifying its revenue streams. While Bloomberg terminals still enjoy what is essentially a monopoly, that may not be the case forever. With non-terminal revenues totaling about 23% for 2018, an increase of about 9% over the previous year, it's possible that the company will continue to search for other ways to generate revenue into the future.
Bloomberg has enjoyed being the dominant player in what has essentially been an industry of one for most of its existence. That being said, the company has not taken that for granted, and in nearly four decades has grown its list of offerings tremendously. With greater diversification—outside of the Bloomberg terminal product, or even outside of the world of finance altogether—comes the increased likelihood that the company will weather future storms.
Bloomberg has faced legal troubles in its past, including a 2007 class action suit regarding female employees and maternity leave, and it has also faced challenges related to data breaches, as indicated above. Newcomers in the finance data analytics field have come and gone, but that's no guarantee of Bloomberg's dominance in the future. Still, though, it seems unlikely that this dominant company is going anywhere anytime soon.