Bloomberg’s Worth May Have Soared To Near $20 Billion

Mayor Bloomberg’s net worth is far larger than previous estimates indicate, and may be in the $20 billion range, given the value of his financial news company.An analysis by The New York Sun and conversations with people who have knowledge of the business suggest that the company, which has 125 news bureaus worldwide, is worth approximately $22.5 billion and possibly more — far higher than most estimates assume. The fortune could make the mayor more formidable, either as a philanthropist or a presidential candidate, than many had previously imagined.In September, Mr. Bloomberg ranked 44th on the “Forbes 400” listing of the wealthiest Americans. His net worth was pegged by Forbes at $5.3 billion, a figure directly linked to Bloomberg LP, the company he founded and in which he still owns a 72% stake.But with the higher company value, Mr. Bloomberg’s personal worth would be closer to $20 billion, catapulting him past News Corp. chairman Rupert Murdoch, Condé Nast chairman S.I. Newhouse Jr., and Google co-founders Larry Page and Sergey Brin on the Forbes list, into the top 10. It puts him up there with the heirs to the Wal-Mart fortune and makes him, perhaps, the wealthiest resident in New York City. It also means that Mr. Bloomberg, whose term expires in 2009, could pay more in income and unincorporated business tax than anyone else in the city.Bloomberg LP is a private company and is not required to publicly report its earnings, making it impossible to determine its exact value. But the company’s revenue streams are relatively easy to follow.The company derives most of its profits from its famed terminals, which sit atop the desks of thousands of traders, investment bankers, and financial analysts across the globe. Access to Bloomberg offers its customers financial information and analysis that historically was accessible only to a limited number of Wall Street investment banks and trading houses. The company gives users full capability to analyze global equities, commodities, bonds, mortgages, currencies, and money markets. In recent years, Bloomberg LP has expanded its product offering to include trade settlements, record-keeping, and messaging, which has given the machines a network effect, allowing users to talk to one another. In other words, not having one is not an option.The business has, for the last few years, been going through a huge growth spurt. In 1995, it had 52,000 terminals. By 2001, the number shot up to 156,000 terminals. Last year a New York Times story estimated the number at more than 200,000. And this week, a spokeswoman for the company, Judith Czelusniak, said the company has about 260,000 terminals and almost 300,000 users.At a rate of $1,425 a month, the machines bring in more than $4.4 billion a year (the company is known for its nodiscount policy even when leasing a single company hundreds of machines). That revenue estimate dwarfs companies such as the New York Times Co., which had 2005 revenues of $3.4 billion, and the publisher of the Wall Street Journal, Dow Jones, which had 2005 revenue of $1.8 billion. Bloomberg’s costs are lower than newspapers because its product is distributed over the Internet. There is no need for newsprint, presses, or delivery trucks.The expense side of the ledger at Bloomberg is a more complex analysis. Even within the universe of private companies, it has a reputation for keeping its finances close to the vest, with only inner circle executives privy to the numbers.In 2001, Business Week reported that Bloomberg had a 20% profit margin. Given the double-digit growth of the company in the years since and the spike in the number of terminals it leases, that margin is likely to be at least 35% and could be higher. The high fixed costs of the business mean the company increases its profits as sales take off. According to a Forbes list of America’s largest private companies, Bloomberg LP saw a 13% increase in revenue in 2005.The 35% margin would dictate $2.9 billion in expenses for everything from Bloomberg’s 9,000 employees to its rent to its electrical bills and equipment. It means the company is netting at least $1.5 billion a year pre-tax, making Mr. Bloomberg’s annual pre-tax income more than $1 billion. That is, of course, in addition to the symbolic $1 a year he accepts from his job as mayor. How much would that cash flow be worth to a buyer? Businesses with good growth and dominant market position can be valued at 15 times their pre-tax earnings. Using that multiple, Bloomberg LP’s $1.5 billion of pre-tax income makes the company worth $22.5 billion. And if the companies operating margins are higher, as some suspect, the company and the mayor’s wealth, could be materially greater. If the company is worth $22.5 billion, the mayor’s stake would be $16.2 billion. But he has assets outside the company, too, including houses in Manhattan, Westchester, London, Florida, and Bermuda and brokerage accounts that reportedly throw off more than $3 million a year in interest and dividends alone.The company may be netting even more than $1.5 billion a year. Part of the company’s higher-than-average profit margin is tied to its lower-than-average overhead. Included in the company’s expenses is compensation for roughly 9,000 employees, of which about 2,000 are reporters.Assuming employees get an average of $125,000 in compensation, with senior management making more and entry-level reporters making less, the company spends about $1.25 billion on its employees.Some Bloomberg employees complain about the work environment, which they say is unrelenting. The company has earned a reputation for squeezing its employees harder than most. That seems to be part of its lean operating style. It is also famously efficient with spacing, packing staff into the open bullpen model that Mr. Bloomberg uses in his City Hall office.A former Dow Jones executive who is chairman of Zelnick Media’s business information holdings, Jim Friedlich, said he does not have direct knowledge of Bloomberg’s actual value, but noted that there is no disputing that the company is worth a lot.“This is a business that is very uniquely positioned. It has an exceptional brand,” Mr. Friedlich said in a telephone interview.”It has very strong repeatable revenues from the wealthiest of customers.”“It is the ideal information business in that it helps people make money and is therefore worth paying for,” he said.The company, which Mr. Bloomberg founded in 1981, seems to be outmaneuvering its competitors. For one, Bloomberg has consistently added value to its terminals. It recently began offering Bloomberg services on handheld Blackberry devices. The company is known for being responsive to customer requests.The editor of Inside Market Data Reference, David Anderson, said that while Bloomberg competitor Reuters “turned a corner in 2004,” Reuters had taken “a bit of beating” in the period before. He said Bloomberg surpassed it in the delivery of market data services in 2003 and could surpass Reuters on the revenue side by 2007.A spokeswoman for Reuters said that the companies are not entirely comparable because they offer different servicesMr. Anderson, a market data consultant who use to work at Reuters, said his former employer is growing, but “Bloomberg is growing faster.”The president of The New School, Robert Kerrey, a former United States senator and governor of Nebraska, said he’s heard that if Bloomberg were for sale it would fetch between $20 billion and $30 billion.Mr. Kerrey — who flirted with the idea of heading of the Democrats for Bloomberg committee during the mayor’s re-election campaign — said he had no direct knowledge of the company’s finances. But when asked where those numbers came from he said: “People who are sort of in the game, in the private equities game.”“It’s an amazing success story,” Mr. Kerrey told The New York Sun after speaking at a New School event at the Mandarin Oriental Hotel on Wednesday night.As recently as last month, Mr. Bloomberg said he had been approached about selling the company, but denied that he would do so at this time. And, as far back as 1997, he predicted that his company would surge just as it has.“I’ll have to work very hard to screw this one up,” The New Yorker quoted Mr. Bloomberg saying. “We’re way ahead in critical mass business with technology. It’s very hard to play catch-up ball. It’s very hard to kill momentum.”Ms. Czelusniak, the Bloomberg spokeswoman, would not comment on the value of the company, but said via email: “We are having one of our best years ever.”A spokesman for Mr. Bloomberg at City Hall, Stuart Loeser, declined to comment.Mr. Bloomberg has given away more than $400 million of his fortune to charity and spent about $150 million on his two campaigns — both have moved money out of his bank account and into causes that he cares about.The editor of the Forbes 400 list, Matthew Miller, said: “The net worth calculations take a lot of information into consideration. We make the estimates purposefully conservative. We’d rather be low than high.”

Bloomberg’s Worth May Have Soared To Near $20 Billion

Bloomberg’s Worth May Have Soared To Near $20 Billion

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