An earthquake, a hurricane, and a proposal by Bloomberg to buy BNA all hit Washington, D.C., in the same week. The earthquake and the hurricane were just passing through, but Bloomberg seems to have more serious intentions of staying.
In a press release and blog post issued the morning of Aug. 25, Bloomberg L.P., a New York firm, announced plans to acquire The Bureau of National Affairs Inc. (BNA), an employee-owned publishing company in the D.C. area. In “Questions and Answers Related to Bloomberg’s Acquisition of BNA,” a document accompanying the press release, Bloomberg says that the company “anticipates that the transaction will close later in 2011, subject to regulatory approvals and successful completion of the Offer and Merger.” The Q&A document also states that after the purchase, “BNA would retain its name and remain a stand-alone subsidiary within the Bloomberg family, operating from its current location under existing management.” Bloomberg is offering about $990 million in cash for the purchase.
Bloomberg has been a high-end financial information powerhouse since its start in 1981. However, business and finance do not happen in a vacuum, and recent moves by the company recognize the importance of legislative, regulatory, and judicial information to business decision making.
Other companies in this niche have much longer histories than Bloomberg—histories, albeit, gained through acquisitions. Thomson West traces its lineage to West Publishing, founded in the 1870s. LexisNexis got its start as a product of Mead Data Central in the 1970s but acquired 19th century brands such as Martindale-Hubbell and Shepard’s Citations. Wolters Kluwer, founded in the Netherlands in 1836, moved into the U.S. market with the acquisition of CCH (the old Commerce Clearing House), a company that itself was the product of a 1927 acquisition.
BNA has been part of the Washington information scene since it was founded in 1929. It is known for its high-quality news services such as Daily Report for Executives, Daily Tax Report, and United States Law Week. BNA also publishes books supporting legal reference, litigation, accounting, and regulatory compliance. The company became employee-owned in 1947 and has been ever since. Of course, this will end if the sale of employee-owned stock to Bloomberg goes through. Bloomberg is offering BNA employees $39.50 a share, a boon for the current stockholders according to investment research firm Integrity Research. Some BNA employees may take the opportunity to retire. This may be an attractive option as industry observers have expressed concern about the cultural differences between New York’s Bloomberg and Washington’s BNA. Danielle Douglas of WashingtonPost.com, for example, observes that the deal “pairs Bloomberg’s non-unionized workforce with BNA’s unionized one. Officials at Bloomberg said the new subsidiary [would] remain unionized.”
Discussions with current BNA customers also reveal a concern about culture change. BNA has been heavily involved with the library community. One D.C. area academic law librarian said, “They’re one of us.” Bloomberg has been gaining exposure to the library world through its Bloomberg Law (BLAW) product, launched in December 2009 and redesigned this summer. That is not much of a past when compared with BNA’s history. Bloomberg launched another new product, Bloomberg Government (BGOV) earlier this year. BGOV is designed for the ultimate consumer of the information, not necessarily the librarian or researcher serving that consumer. Marketing language on the BGOV website says “Bloomberg Government helps everyone from congressional staffers and C-Suite executives, to government affairs professionals and sales executives do their jobs better.”
Common questions from current BNA customers who are also librarians include:
- Will Bloomberg renew BNA’s contracts with third-party providers such as LexisNexis once the existing contracts—which Bloomberg has pledged to honor—expire? (These contracts bring in substantial revenue for BNA, leaving current third-party customers some room for hope.)
- Will Bloomberg support BNA product lines that may not mesh well with their own, such as BNA Books? In its press materials, Bloomberg has stressed the synergies possible between BNA and Bloomberg’s news, government, and law online services.
- Will Bloomberg support the highly valued depth of expertise that BNA analysts and subject specialists bring to their reporting? Maintaining a high level of specialized expertise is challenging these days when everyone seems to want flexible utility players.
Why did Bloomberg pursue the acquisition of BNA? Those inside and outside of Bloomberg offer many good reasons. In an excellent Washingtonian media insider article ("Is Bloomberg Government the Next Washington Media Death Star?"), Shane Harris writes:
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.
BNA was also a natural choice for beefing up BLAW’s offerings with high-quality proprietary content. According to Robin Neidorf, author of an upcoming report on Bloomberg for FreePint.com’s VIP Magazine, “Bloomberg has already been making significant investments in non-financial areas, by developing Bloomberg Law to try to compete directly with the major legal publishers, for example. It is clearly a key part of their strategy to establish a substantive footprint in that industry.” BNA’s current customer base is a relatively small but premium audience. Along with CQ.com—a property Bloomberg once considered, according to Harris—BNA is a quintessential Washington brand. It is also a brand valued in the legal community where, as Neidorf notes, Bloomberg is making its first inroads.
In much of the speculation about the future of BNA, commentators note the value and difficulty of preserving BNA’s unique culture. In his blog post, David Worlock calls BNA “quite the most civilized publisher on the Planet.” He goes on to conclude that,
The values of the [BNA] founders were exemplified by their successors, and while employee ownership sometimes caused problems of its own, those who worked there were imbued well beyond the normal with a sense of purpose, and indeed, a lifetime commitment, to what they were doing, and a belief that their purpose was part of the public good. This cannot be bottled, so Bloomberg must be careful to preserve it.
Sarah Glassmeyer, director of content development at the Center for Computer Assisted Legal Instruction, commented for Newsbreaks that she has concerns but sees reason for a positive outlook on the deal:
While the continued consolidation of the legal information market concerns me (and I additionally have a weirdly sentimental sadness against an employee-owned business being swallowed up by a large company), I think this particular deal makes a lot of sense for Bloomberg and makes it a strong(er) competitor against Thomson, Lexis, and Wolters, and in a way almost makes for more competition which should be better for information consumers in the long run.