Both Bradley and Bloomberg ended up passing on CQ—it was sold in 2009 to the British-owned Economist Group, which owns the newspaper Roll Call, another Washington fixture, for a reported price of just over $100 million. Bradley’s team decided CQ wouldn’t mesh well with National Journal, and while Bloomberg had participated in the earliest stages of the bidding, it dropped out when it felt the price had gotten too high. The experience, though, left Bloomberg executives with a question: Why can’t we do this better ourselves?
The resulting effort two years later—one in which Bloomberg has reportedly invested the equivalent of the CQ sale price—is being referred to in newsrooms around town as the Death Star. It’s very big. It’s very quiet. And no one knows its ultimate purpose—except to destroy everything in its path.
Bloomberg calls it BGov, for Bloomberg Government. Since launching in January 2010, it has become the most disruptive force in Washington media since the emergence of Politico, a once improbable-sounding news venture that, when it started in 2007, drew scoffs from the media elite such as National Journal and CQ. But within three years, Politico had stolen much of their thunder, along with their advertising, and forced the established players to reexamine the premises of their business.
Politico had proved something the barons of the Beltway had overlooked: The minutiae of politics and government, which they’d long purveyed to a professional audience, are interesting to a lot of people who don’t live here. Bloomberg also took note of Politico’s success. And it’s taking this idea a step further.
With BGov, Bloomberg is betting that the mechanics of Washington, particularly the way government regulation affects businesses, are important to people. Key to this assumption is that readers will pay handsomely for news that clears the fog, explaining how the decisions of Congress and the administration affect a company’s future and exploring the dark recesses of government and the executive branch.
“A lot of companies out there are flying blind about what goes on in Washington,” says Mike Riley, BGov’s managing editor, the top job in the newsroom.
BGov’s launch underscores a strange quirk of the modern media landscape: Even while mass-market journalism struggles, particularly daily newspapers, expensive business-oriented publications aimed at the nation’s elite—such as the Wall Street Journal, the Economist, and the Financial Times—are faring better. It turns out that in the information economy, access to better information is an arbitrage opportunity.
Months before BGov opened its doors, Bloomberg performed its characteristically exhaustive due diligence, testing the business model with potential subscribers.
In the spring of 2009, a pair of company executives interviewed more than 100 Washington lobbyists, government-affairs staff at trade associations, congressional staffers, and businesspeople. Everything they heard affirmed BGov’s thesis that the rest of the country, especially the business community, doesn’t understand Washington and doesn’t particularly trust it. The health-care debate was heading toward the vitriolic town-hall meetings of August. The Obama administration had inherited the bailout of banks and financial institutions, and the government had taken a controlling interest in General Motors. Polarizing debates loomed in Congress, and each of them had uncertain implications for American businesses—environmental regulations such as cap and trade; immigration reform; tax cuts; and employee health benefits.
There was a sense of “almost panic” among business owners about the direction Washington was heading, says Don Baptiste, head of strategy and product development for Bloomberg. The anxiety created an opening. By January 2010, BGov had hired its first employees. Anonymous sources spread word to media-gossip sites that the new company was going to war with the Beltway rags—National Journal, CQ, Roll Call, and Politico.
BGov executives did a “market assessment” before plunging into Washington, to determine how much readers were spending every year on information—not just traditional publications but specialty news services such as BNA and trade publications focused on narrow policy areas. The total was $1.3 billion. But even that sum won’t satisfy BGov’s owners. So in addition to Washington-based subscribers, BGov’s sales force is targeting businesses beyond the Beltway, including small and medium-size companies it thinks are looking for more news than what they read in their association newsletters.
The current price for an annual subscription to BGov, exclusively an online publication, is $5,700 per user. That gets readers original news and reporting from BGov’s reporters covering technology, health care, energy, government contracting, and other beats of interest to business. The articles are written in the utilitarian style Bloomberg developed for Wall Street brokers and traders, the audience that built the company into a news powerhouse.
But BGov subscribers, of whom there are currently fewer than 2,000 individuals, get something potentially more valuable than news. BGov’s “killer app”—the feature that sets it so far apart from its competition that prospective customers will feel compelled to buy it—is a database that lets users track how much money US government agencies spend on contracts, something no other media organization in Washington offers. Users can break down the spending by agency, company, amount, or congressional district; they can track the money over time; and with a single mouse click, they can call up news associated with the companies and the type of work they do. They can also see which contractors are giving money to elected officials.