Loomis: Bloomberg is "smashingly profitable"
Fortune at-large editor Carol Loomis takes a look at the Bloomberg LP empire that includes its news wire service in the latest issue of the magazine and comes away impressed with its operations.
In addition, his decision not to sell the company apparently meant a reprieve for the Bloomberg Television operations.
Loomis wrote, “Fortune’s estimate, derived from many interviews outside the company as well as in, is that the company’s 2006 operating profits (that is, before taxes) were about $1.5 billion. That put the company’s operating margin a bit above 30 percent of revenues. That margin doesn’t match Microsoft’s (about 37 percent), but it is way above Apple’s (Charts), which has been running under 15 percent. And none of Bloomberg’s most visible competitors in financial information – Dow Jones (Charts), Reuters (Charts), and the Thomson Financial unit of Thomson Corp (Charts). – have operating margins that reach 20 percent.
“Mike Bloomberg is enormously and justifiably proud of Bloomberg LP. He nonetheless recently considered selling it. A sale, of course, would sweep in the other shareholders, who include (a) a few people who started the company with Mike and (b) Merrill Lynch, which helped finance it along the way and owns 20 percent of it (a large fact that goes completely unmentioned in Merrill’s financial statements). But having tight control, Mike engaged last year in small discussions with at least a few possible buyers. Among them were private-equity firms that are rolling in cash and would no doubt kill to get hold of this property.
“However, the proprietor emerged from his excursion deciding not to sell just now, giving no further explanation. The news sent waves of jubilation through the company’s offices, since few think another owner could match Mike. In particular, the television staff at Bloomberg – 650 people – breathed sighs of relief, because the perception is that new private-equity owners would immediately cut expenses by exiting the costly TV business. Mike Bloomberg, on the other hand, has always thought TV good for the Bloomberg brand.”
Read more here.