Mumbai: Bloomberg LP, the global financial news and data provider, is serious about increasing its footprint in India. It’s hiring sales personnel and journalists and setting up an analytics desk in Mumbai to offer more services to Indian customers, Peter Grauer, Bloomberg chairman and chief executive officer said in an interview on Monday.
Grauer is not interested in acquisitions if Bloomberg continues to see organic growth in its existing business as it does now. He’s pleased with the way the Bloomberg-UTV business channel has progressed. Bloomberg holds a 16% stake in the joint venture. Edited excerpts:
In a sense, Bloomberg terminal sales are a proxy for the economy and markets. What’s the state of affairs in developed markets, especially in the US?
For our business for the 12 months ending October, terminal sales grew at almost 8% annually and (it’s) not surprising that business has been driven by our developed markets business, which was growing slightly under that number, and our emerging markets business that was growing roughly twice that number. Both for the United States and western Europe we were coming somewhere between 7.5-8%, and now business in emerging markets is roughly two times ahead of that.
Is Japan still your biggest market in Asia?
Tokyo is the third largest city that we operate in, after New York and London. The vast majority of the Japan market is in Tokyo, servicing the financial services industry. Hong Kong is the fourth largest city for us.
Japan is our biggest market in Asia, but it is growing at a very modest pace compared to Singapore and Hong Kong. My expectation is that Hong Kong will surpass Japan in the next 12-18 months.
How is the Indian market in terms of terminal sales?
Our market in India—we were up in 2009 when we were down globally about 2.4%. We have a positive growth rate in India. In fact, our growth rate this year exceeds our growth rates for other emerging markets. It’s about 2.5 times the overall corporate growth rate—that continues to be a real bright spot for us. Our business rate in India is growing between 15-18% right now.
What is India’s contribution to the global balance sheet?
It’s still quite small in percentage terms, but this is one market that we are not only dedicating our resources to, but also are very optimistic about.
Tell us about your investment plans in India.
We obviously look at the Indian market that holds a great growth opportunity for us. And, as the market evolves and develops more broadly — similar to some of the developed markets around the world—the full offering of the Bloomberg capabilities will be available to the Indian market as well.
When it comes to the sale of terminals, do you see competition from any overseas player in the Indian market or any local player?
Well, we have competition across everything that we do, but we don’t like to talk about the competition because the more competition, the better it is for us because it sharpens the execution of our business plans, the service that we provide to our customers. We have lots of competition. If you look at every single asset class that we service across the Bloomberg professional terminal, in some cases there are hundreds of competitors. We take them all seriously and make sure that we deliver to our customers at the best possible capabilities.
When you talk about emerging markets, how do you see India vis-a-vis China and Brazil?
The good news about Bloomberg is that we have products in over 160 countries around the world; one of the reasons our performance in 2009, when we were down 2.4% in units but up 2.5% in revenues, is because we have the benefits of this widely diverse portfolio of users around the world. We are very keen about our business in India.
Traditionally, terminals accounts for 90% of your business. With new products such as Bloomberg Law and Bloomberg Government, is there any change in the business mix?
In 2010, the terminal business constituted about 84% of our total revenue stream. We are working on other businesses like Bloomberg Law etc., and we have our media business. Five years down the line, my guess is the contribution of the terminal business will come to around 75%, or may be even less, but our business will be constantly dominated by terminal products. It’s something that got us here and it will continue to propel our growth as we go forward.
Talking about other businesses, what’s happening at BusinessWeek?
We have owned it... it will be one year, effective December. We had fully integrated the BusinessWeek team into our office by the middle of the second quarter in 2010. We are ahead of our plans so far this year.
We relaunched the magazine on April 15 and we hope you read it because it is dramatically better than what it was under the prior ownership. We are very optimistic that it will exceed our expectations as we go forward. We have created an extraordinary leadership team and we are very pleased on what we have achieved and what we have seen.
You have taken a 16% stake in UTV, given it the Bloomberg name and the content but under current Indian laws, foreign partners cannot have editorial control. How do you tackle this?
We are very pleased with the progress made to date. We think the partnership made together between the UTV team and the Bloomberg editorial team has been very successful. We think it will exceed our expectation going forward.
Culturally, joint ventures haven’t worked well for Bloomberg. We don’t have a history of joint ventures around the world. We have very few of those relationships in the past and this is largely because we have always chosen to go on our own as a 100% shareholder. But this is a market where we can’t do that. We spent probably two years looking for the right partner. And, ultimately, we got engaged with the UTV team and as I said we are optimistic.
Where would you like to take the channel?
You mean whether ultimately we (will) own the channel? That remains to be seen. We will see how it goes. We comply with all of the local laws and regulations and we continue to do that.
You can raise your stake to 26% as that’s within the permissible limit. Will it happen sooner rather than later?
We haven’t yet begun that discussion yet. Well, the fact that Reliance (Reliance Capital Ltd) has invested in UTV, from our point of view, is just a further affirmation of the fact that we have two very good partners.
For Bloomberg, more than business, the TV channel is a vehicle to build the brand. That may be the perception, but from my point of view, as the chairman and CEO of Bloomberg LP, that is not the way I look at it. We made a decision just over two years ago to restructure Bloomberg television, by getting out of local language programming.
We used to be in a position where we produced English, French, German, Spanish, Italian, Portuguese and Japanese-language business television for Bloomberg and we chose to move away from that model and focus on a model that will give us a global channel and much more leverage in producing the highest quality content and the best distribution.
The purpose of that was basically to drive us to profitability. We are in this to make money and we will do the best job we can in terms of quality of content, distribution to attract advertisement revenues so that we can make money on business, and not just use it for brand promotion around the world.
Would you like to share any numbers in terms of investments you plan to make in the TV channel and the overall in Indian market?
I don’t know the numbers off the top because that is primarily driven by the UTV folks. But we are quite aggressive in our investment profile with our global TV channels, particularly with recent things like high definition capabilities and the kind of technologies that will enable us to use that kind of content across a wide range of platforms for our customers. We are continuing to employ additional sales people, additional service and support people and additional journalists to broaden our product offering. What we are very excited about is that we have listened to a lot of our customers, and many of them like to be serviced locally by locals. One of the decisions that we have made is that we will be putting in one of the most important departments that Bloomberg has, which is our analytics desk, for our customers in Mumbai. So Indian customers will be able to talk directly to Indian staff about the Indian domestic market and all the markets they want to. This is a very, very important market for us.
Bloomberg LP is one of the few media companies sitting on a huge amount of cash. Anything on your shopping list?
Our accounts are seen by only five people, I don’t know about the huge cash you are talking about.
We are a company that has historically chosen to build versus buy. I think the 29 years that the company has existed, we have done only three acquisitions.
The largest of which was about $75 million. In the BusinessWeek acquisition, there was a very modest amount of cash that changed hands. We did it for a very particular reason as you may know, we have an aspiration to be the most influential provider of news to the world of business and finance. BusinessWeek has (a circulation of) about 900,000 and is read by another four million on a weekly basis and it dramatically expanded the market opportunity for us. So far we are happy. That being said, for us, the best use of our capital is investing in our core business and businesses that we are already involved in. We know them the best and we are most comfortable in.
You had a five-year plan to hit some $10 billion revenue and give a big payout to your employees. I think it ends in 2013. Are you on target?
It’s called 10B and it is a long-term incentive plan for our colleagues around the world. When we structured the plan which was in the summer of 2008, based on our historical growth rate and expectation for the future at the time, we thought we will be there by 31 December 2013. In light of what happened in 2008, our expectation is now that it will probably get pushed to mid-2014 to the second half of 2014. We will keep working hard to achieve that.