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By Elizabeth M. Lynch, April 13, 2014

In June 2012, Bloomberg News’ China coverage was considered cutting edge.  It’s China team had published  an investigative piece that unmasked the enormous wealth accumulated and hidden by current Chinese President Xi Jinping and his family.  For its courageous China coverage, Bloomberg won a prestigious George Polk Award here in the U.S.  But back in China, the accolades were less than forthcoming.  Instead, Bloomberg received the Chinese government’s retribution with its website blocked, its journalists experiencing increasing difficulty renewing their visas, and its computer systems penetrated by Chinese hackers.  Evidently it’s coverage hit a nerve.

Fast forward a little over a year and last November, allegations of self-censorship regarding its China coverage engulfed Bloomberg News.   According to unnamed Bloomberg reporters, editor-in-chief Matthew Winkler killed what would have been another investigative piece exposing the deep and corrupting ties between one of China’s wealthiest men and the top leadership of the

Matthew Winkler, Head of Bloomberg News

Chinese Communist Party.  Allegedly Winkler  feared that if the story was published, Bloomberg journalists would be kicked out of China and its China offices effectively closed.   Winkler denied the allegations, informing the New York Times that the piece had in fact not been pulled. Even with these denials, Bloomberg quickly suspended the lead reporter on the story and the executive editor of  Bloomberg’s investigative news division who also was an on its June 2012 China story, Amanda Bennett, left the company shortly thereafter   Coincidence or sign that journalism takes a back seat to business?  Recent events point toward the later.

Should We Be Surprised That Bloomberg’s Priority is Its Bottom Line?  

By early 2014, it appeared that things had died down for Bloomberg’s beleaguered China team.  But in March,  the accusations of self-censorship re-emerged.  First was Peter T. Grauer’s, chairman of Bloomberg News’ parent company Bloomberg LP, admission that some China stories it “should have rethought” when discussing Bloomberg LP’s China business.  Then, only days later, longtime Bloomberg employee and editor-at-large for Asia news, Ben Richardson, vocally departed from Bloomberg and explained to media critic Jim Romenesko that “[he] left Bloomberg because of the way the [November 2013] story was mishandled, and because of how the company made misleading statements in the global press and senior executives disparaged the team that worked so hard to execute an incredibly demanding story.”

Working at a Bloomberg Terminal

But while self-censorship – if that is what is going on Bloomberg – is always disappointing, in Bloomberg’s case, it shouldn’t come as a surprise.  Bloomberg News is only a negligible part of Bloomberg LP, at least revenue-wise.  Instead it is the Bloomberg Terminal, a computer that delivers real-time stock quotes, provides an electronic trading platform, and a widespread instant messaging service, that is king.  Bloomberg Terminals are ubiquitous at investment banks and hedge funds; those organizations would not be able to function without them.

At $20,000 a terminal a year, it is the sale of these terminals that account for the vast majority – around 80% – of Bloomberg’s revenues.  According to Dean Starkman, an editor at Columbia Journalism Review and author of The Watchdog That Didn’t Bark: The Financial Crisis and the Disappearance of Investigative Journalism, Bloomberg News was always meant to play a supporting role.  When Winkler founded the news division in the early 1990s, “Bloomberg was explicit about creating a new model, integrating business and editorial, where the two would work together” Starkman told China Law & Policy in a phone interview. In fact, according to Starkman, it was only in the last five to ten years, with the financial crisis, that Bloomberg News started to get more serious about journalism and rose in prominence.  It was in that period that Bloomberg News won various awards for its coverage in many parts of the world.

But when a company gets 80% of its revenue from a single product it is important that its other lines of business do not hurt that

Trader in Shanghai, not working on a Bloomberg Terminal

product.  Here, Bloomberg’s China coverage most likely violated that business tenet.  After the June 2012 publication, sales of the Bloomberg Terminals in China came to a halt.  But China, unlike the United States which accounts for 37% of Terminal sales and Europe which accounts for 35% of sales, is far from a saturated market.  In fact, China only accounts for a mere 3,000 Bloomberg Terminals (the tiny island of Hong Kong accounts for more than 20,000 Terminals).

To be shut out of China would jeopardize Bloomberg’s ability to increase its revenue, all at the time when its main competitor, Thomson Reuters, is gaining market share.   In 2010, Thomson Reuters sought to take advantage of the financial crisis by creating the Eikon, a cheaper competitor to the Bloomberg Terminal.  Although Eikon had a shaky start, its growth more recently has been phenomenal (but many in the industry still view it as inferior).  In 2013 it tripled the number of Eikon subscriptions to 122,000.  A scary prospect for Bloomberg.

Given that Bloomberg’s cash cow – sales of its Terminal – took a major hit after the publication of the article on Xi Jinping’s family wealth and that its battle with Eikon will be on mainland, it is not surprising that Bloomberg potentially killed another news article that would have hurt its bottom line.

Should We Be Concerned That Bloomberg is a Harbinger?

It’s no secret that the titans of the media world have taken huge hits with the influx of the internet.  The Graham family’s recent sale of the Washington Post to Amazon founder Jeff Bezos is one such example.  For the business side of journalism, it’s not just about the bottom line, it is about survival.  With this mindset, will every media outlet that covers China soften its coverage?

Dean Starkman, editor at the Columbia Journalism Review

“No” Starkman emphatically told China Law & Policy.  “[Bloomberg] is different from other media companies.  Other than Reuters, no other media company has as much to lose in China.”  Even when raising the issue of the New York Times and its Chinese language website which is blocked in China, Starkman was still optimistic.  “The New York Times doesn’t have to be there as a business; it’s just there as a newspaper.  There is no critical need for them to grow in China.”  Bloomberg on the other hand, very much has a need to grow its Terminal business in China.

For Starkman, the decline in ad revenue is precisely the reason why media organizations will be forced to provide hard-hitting coverage of places like China:  “The fact that news organizations rely more on subscribers [for revenue] makes it all the more imperative that. . . their news coverage remains uncompromising.”   By relying on subscribers, the game comes down to credibility – if you publish less than the truth, you will no longer be credible.  For the traditional media outlets like the New York Times and the Wall Street Journal credibility is paramount.  But as Starkman pointed out, if readers doubt Bloomberg News’ articles, it ultimately does not affect their business because they still have Terminals to sell.

For Starkman, it is this need for credibility that could potentially drive newspapers to do more investigative articles, not less.  “Investigative pieces cover something everyone knows about but it hasn’t been documented” Starkman told China Law & Policy.  Corruption in China was one example that he provided; it’s well-known fact but few have been able to document the evidence as powerfully as the New York Times and Bloomberg News.  “As the gap between what everyone knows and what you cover becomes wider, you lose your credibility.”

And it is true.  When it comes to China coverage, the go-to newspaper is increasingly the New York Times.  Why?  Because it is able to provide the in-depth, uncompromised coverage about what is really happening in China.  Part of this of course is resources.  As Bloomberg’s former editor-at-large, Ben Richardson told CNN, these type of investigative pieces are extremely expensive and difficult to produce.  Large media outlets like the New York Times and Bloomberg have these resources.

Another entity that has the money and expertise to publish investigative pieces on China’s corruption would seem to be the Wall Street Journal.  But they have yet to publish anything on China as in-depth as what the New York Times and Bloomberg covered.  Starkman did not blame this on self-censorship but rather a changed model of news reporting where shorter pieces predominate.  As the Columbia Journalism Review has documented, since Rupert Murdoch took control of the Wall Street Journal  in 2007, longer pieces have precipitously plunged.  “What’s the good of covering small incremental things if miss the one big thing”  Starkman mused.

Bloomberg’s apparent self-censorship is disheartening especially for the reporters who likely worked really hard on the piece that appears to have been killed (six months later it still has yet to be published).  But the Bloomberg Incident itself doesn’t signal the death knell for investigative journalism in China.  To maintain its monopoly on China credibility, the New York Times will likely continue its hard-hitting pieces for as long as China allows it to have journalists there.  It is that credibility that impacts the Times‘ bottom line.  Until of course Bloomberg purchases it.

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By Elizabeth M. Lynch, December 23, 2013

Former WashPo Executive Editor Marcus Brauchli

After publishing an article concerning the Washington Post‘s 2010 decision to pull author Peter Manseau’s 8,000 word magazine piece on Washington D.C.’s  Falun Gong  community, the Post‘s former executive editor, Marcus Brauchli, returned China Law & Policy‘s call. Brauchli, executive editor in 2010, denied insinuations of self-censorship: “The Washington Post did not nor would it ever have killed a piece of journalism because of concerns about getting visas for its reporters.  The Post made its [publication] decision, and as far as I know always makes its decisions, based on journalistic merit” Brauchli said.

But Brauchli, with decades of experience reporting from China, was far from ignorant of the China visa issues.  As of last Thursday, many but not all of the New York Times and Bloomberg China correspondents received press cards from the Ministry of Foreign Affairs, enabling them to apply for their renewed visas with the Public Security Bureau.  But that does not mean the crisis is over.  As Brauchli noted to China Law & Policy, Beijing’s current approach to journalists’ visas appears to be a much more organized effort compared to the past.  Quite a number of individuals share Brauchli’s feelings, with many believing thatafter 2008, the Chinese government has been more inclined to use the journalist visa renewal or visa application process to intimidate and possibly censor foreign journalists.

But are these feelings accurate?  Even if the Times and Bloomberg journalists’ visas are renewed with full year ones – not the month to sixth month temporary journalist visas given to Paul Mooney and Melissa Chan before they were effectively barred from China – Beijing will probably continue its approach. It came fairly close to shutting down the China offices of two major news organizations.  As a result, it is imperative that the changed dynamics – both in U.S. newsrooms and in China – are understood.

Things Fall Apart: The John Pomfret, Ian Johnson & Andrew Higgins Visa Experiences

John Pomfret is perhaps the most famous American journalist to be expelled from China.  As a 30-year-old Beijing correspondent for the

John Pomfret reporting from Tiananmen during the 1989 protests

Associated Press, Pomfret found himself in the middle of the 1989 Tiananmen Square protests, protests that would bring as many as a hundred thousand people to the Square, that would shake the Chinese Communist Party to its core and that would culminate in the massacre of hundreds on the night of June 3 and into the early morning hours of June 4.

Ten days after the crackdown, Pomfret was  expelled from China.  The Chinese government accused him – along with Voice of America correspondent Al Pessin who also was expelled –  of stealing state secrets and violating martial law.

Pomfret’s journalist career would take him to other places and other crises, but eventually it would come back in China.  As Pomfret recounts in his book, Chinese Lessons: Five Classmates and the Story of the New China, in 1997, the Washington Post, his employer at the time, sought to elevate him to Beijing Bureau chief.  But the Chinese government had not forgotten his coverage of Tiananmen eight years earlier; the Chinese Embassy told the Washington Post: “please try another name.”

Pomfret would be approved for a journalist visa but not without great effort on the part of the Washington Post.  Fortunately for Pomfret, Katharine Graham, head of the Washington Post at the time and a powerful force in her own right, got involved.  She invited the Chinese ambassador to tea and made sure that her friend Henry Kissinger mentioned Pomfret’s case to the Vice Premier Qian Qichen.  Additionally, according to a source close to the Washington Post, managing editor Bob Kaiser and Beijing Bureau chief Steve Mufson raised Pomfret’s visa directly with then President Jiang Zemin in an off-the-record conversation during their October 1997 interview.  As he recounts in Chinese Lessons, Pomfret himself decided to write a “self-examination” about his prior attitude in response to a Chinese government official’s request that Pomfret write a letter applying for the Washington Post position.  On Christmas Eve 1997, Pomfret received word that his visa was approved.  Since then, Pomfret has never had a visa problem.

Journalist Ian Johnson

If Tiananmen was Pomfret’s roadblock to China, Falun Gong was Ian Johnson’s.  Between 1997 and 2001, Johnson was one of the Wall Street Journal‘s China correspondents.  Like Pomfret, he was covering China during a major crackdown, this time on a burgeoning spiritual group that was able to amass tens of millions of followers in less than ten years: Falun Gong.

In the beginning, Falun Gong, which uses traditional qigong exercises and draws upon the teachings of Daoism and Buddhism, was ambiguously tolerated by the Chinese government.  But on April 25, 1999, in response to a negative article published in a state-run magazine, an estimated 10,000 Falun Gong followers conducted a day-long silent meditation protest outside the Chinese government headquarters.  As Johnson recounts in his book, Wild Grass: Three Portraits of Change in Modern China, the fact that one group could amass so many people in one place without the State Security knowing, horrified the leadership.  Falun Gong – now perceived as a threat to its rule – would no longer be tolerated.  In July 1999, Beijing banned Falun Gong and began a violent crackdown against members of the group.  As Johnson recounted in his Pulitzer Prize-winning series on the crackdown for the Wall Street Journal and later in Wild Grass, Beijing permitted the crackdown to be enforced by all means necessary, even if that meant that many would die, a fact that Johnson recounted in his reports.

In 2001, Johnson left China to cover Europe for the Wall Street Journal.  But in 2007, the Journal sought to bring him back to China. Again, prior China coverage would prove problematic in obtaining a visa and would require the powerful resources of his news agency. According to an individual who had been involved in the matter, the Chinese government initially told the Journal that Johnson would never get back into China.  But as this source told China Law & Policy, the Journal began its lobbying in earnest with senior editors meeting with the Chinese ambassador to the U.S. and eventually Rupert Murdoch raising the issue directly with the Chinese government in Beijing.  Johnson also had to write a self-criticism.  But by 2008, right around the time Beijing was to host the Olympics, Johnson’s journalist visa was informally approved and was issued in early 2009 according to the source involved in the matter.

But less than a year later, Andrew Higgins’ attempt to obtain a journalist visa would end with a different outcome.  In 2009, the Washington

A group of nationalist Inner Mongolians protest in front of the Chinese Embassy, seeking the release of a Mongolian activist.

Post hired Higgins ostensibly as its Beijing Bureau chief and again the Post would need to lobby to get their chief into China as prior reporting had put Higgins on a blacklist. In 1991, Higgins was a Beijing correspondent to the British Independent newspaper, covering the Chinese government’s secret crackdown against ethnic Mongolian intellectuals in the Chinese province of Inner Mongolia.  According to a Human Rights Watch report, after being found in possession of a top secret Chinese Communist Party (CCP) document that ordered the harsh crackdown(a.k.a. Document 13), Higgins was expelled from China.

This time the Post was not able to overcome Higgins’ past.  According to a source involved in the Higgins negotiations, the Post raised Higgins’ visa issue in every high-level meeting with  Chinese officials, including the Chinese Ambassador; then executive editor Marcus Brauchli and publisher Katharine Weymouth went to Beijing to meet with China’s foreign minister about Higgins visa; and Don Graham, head of the Post at the time reached out to influential Americans, including Henry Kissinger, to assist with getting Higgins a visa.  But the Post‘s efforts failed.  Unable to obtain a residential journalist visa to China, in 2012, Higgins left the Post to cover Europe for the New York Times.

Since the Higgins’ incident, at least two other journalists – Paul Mooney and Melissa Chan – have been effectively denied journalist visa and many others, including Philip Pan and Chris Buckley, both of the New York Times, have been waiting more than a year for their visa request to be approved.

The Center Cannot Hold:  China’s Visa Policy Demonstrates its Continued Insecurity

Was Higgins the harbinger of China’s changed and harsher foreign journalist policy?  Another source familiar with the Higgins’ negotiations did question the strategy of the Post, noting that there were certain missed opportunities, that the Post did not bring in top people, like a Katherine Graham or a Rupert Murdoch, to close the deal, and Higgins’ alleged crime – being found in possession of top secret CCP documents – was inherently harder to overcome than Pomfret or Johnson’s issues.  But the source did tell China Law & Policy that the Higgins’ debacle reflected a China taking a harder line against foreign journalists.

Jim Sciutto, Former Chief of Staff to Amb. Gary Locke

Some, such as Jim Sciutto, former chief of staff to Ambassador Gary Locke, have argued that the Chinese government’s current attempts to censor foreign journalists through the visa process reflect a “more confident Chinese government.” Certainly, in 1997, when the Washington Post was seeking Pomfret’s visa, China was desperate to be in the good graces of the U.S. government as it anxiously awaited WTO entry.  In 2008, when the Wall Street Journal sought to get Johnson back, China was attempting to pull off its first Olympic games with as little criticism as possible.  But Higgins visa application came after these events, when China has made it through the 2008 economic crash and in 2010, surpassed Japan to become the world’s second largest economy.

But the type of reporting the Chinese government is currently trying to suppress does not reflect a Chinese Communist Party secure in its rule; instead, it demonstrates a government cognizant of the fact that its power is more vulnerable now than ever before.

The Chinese government’s current targets are the New York Times and Bloomberg, two news agencies that wrote hard-hitting articles exposing the corruption at the highest levels of the Chinese government and the CCP.   According to one source that China Law & Policy spoke to, these articles represent more of threat to the CCP’s legitimacy than Tiananmen, Falun Gong or any other taboo topic.  Tiananmen, Falun Gong, and Tibet are not issues that are necessarily on the minds of every Chinese person.  But corruption is.  If the media, even the foreign media, is able to prove that the Chinese leaders are corrupt, these allegations go to the very core of the government’s authority.

For the leaders of China, this threat is not theoretical.  In a September 2013 People’s Daily editorial, Li Congjun, the head of the state-run Xinhua News Agency, used particularly harsh language to  lambast the foreign press.  Referring to certain unnamed foreign media outlets as “hostile forces,” Li went on to criticize these outlets for smearing the CCP and China with made up stories which further weakens China’s interests and national standing.

In the introduction to his 2004 book Wild Grass, Johnson described the Chinese government’s message to current threats to its rule as “we are nervous, possibly even weak, but do not meddle; we can still crush you.”  In 2004, that message was for Falun Gong practitioners.  Today the message is still the same, but this time it is for foreign media companies and their reporters.

The Falcon Cannot Hear the Falconer: The Weakened State of US Media Companies

The Chinese government may be weak, but as its threats to the New York Times and Bloomberg demonstrates, it may very well still have the power to crush.  In elaborating on allegations of self-censorship, Brauchli was adamant that such a thing would not happen.  “Our credibility has always rested heavily upon the depth, quality and accuracy of our reports.  Any type of self-censorship could have impaired our success as a journalistic enterprise.”

This is likely true on the journalist side of the enterprise, but as news agencies find it harder and harder to turn a profit, at what point is the business side able to unduly influence editorial decisions.   Two weeks ago, Margaret Sullivan, the New York Times public editor, reported that with its Chinese website blocked, the Times had $3 million in lost revenue (the Times‘ 2012 revenue was $2.32 billion).  Similarly, Bloomberg News’ parent company, Bloomberg L.P., makes 85% of its profit through the sale of its stock-trading Bloomberg terminals.  With only 3,000 terminals throughout China, the market is undersaturated (compared with 10,000 terminals in Hong Kong and 100,000 in the United States).  Finally, even the Washington Post appears to rely on China for revenue.  Since 2010, the China Daily has paid for “China Watch” to the supplement section of the Post‘s website.

As Evan Osonos, former New Yorker China correspondent pointed out at some point business considerations must come into play: “the prospect of taking an expensive stand against a foreign state is unappealing, especially when it might mean giving up their dreams for future growth in China.”

Max Baucus, will be dealing with more than just trade as new Ambassador to China

The Higgins visa incident and subsequent incidents might indicate more than just a scared China; it might also represent news agencies no longer powerful enough to fight on their own for the principle of freedom of the press.  As a result, even if the immediate crisis with the Times and Bloomberg journalists pass, there is still a pressing need for the U.S. government to remain vocal on this issue especially as it seeks to bring a new ambassador to China.

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By Elizabeth M. Lynch, December 10, 2013

In response to the precarious situation of U.S. journalists in China where approximately 24 New York Times and Bloomberg reporters may not have their visas renewed, the Congressional-Executive Commission on China will host a roundtable discussion on the issue, tomorrow, December 11 at 3:30 PM.  The event will be held in Washington, D.C. at the Capitol Visitors Center, Room SVC 203-202 .

Panelists will include Paul Mooney, who was outright denied a journalist visa to work as Reuter’s Beijing correspondent, Edward Wong, current New York Times China correspondent, Bob Dietz, Asia Program Coordinator at the Committee to Protect Journalists and Sarah Cook, Senior Research Analyst for East Asia at Freedom House.

Because of the demand for this roundtable, an RSVP is required.  Please RSVP, no later than 10 AM on December 11 to Judy Wright at judy.wright@mail.house.gov

The roundtable will also be broadcast live on the web at: http://www.cecc.gov/events/roundtables/chinas-treatment-of-foreign-journalists

Since Vice President Biden’s visit to Beijing where he met with U.S. journalists and publicly raised the issue of press censorship, there have not been any reports of any New York Times or Bloomberg correspondents receiving their visas.  To the contrary, in a series of Twitter posts, New York Times China correspondent  Ian Johnson stated that the first reporters will be forced to leave on December 17, presumably the expiration date of their current visa, with all to leave by December 31.

Yesterday, the Foreign Correspondents Club of China (FCCC) released its 2013 Year-End statement, noting yet another year of negative trends.  The FCCC found “…that the Chinese authorities are increasingly using the denial of visas, or delays in their approval, in an apparent effort to influence  journalists‘ coverage. No correspondents for the New York Times and Bloomberg have yet been able to renew their annual residence visas, which have been subject to unusual and unexplained delays this year.”

The FCCC also noted that potential censorship goes beyond China’s borders, giving credence to author Peter Manseau’s belief that in 2010 the Chinese embassy contacted senior editors at the Washington Post to kill his story on Falun Gong in DC.  Although Manseau’s incident was in 2010, the FCCC reported that in 2013, “…[o]n at least two occasions this year Chinese embassy staff in foreign capitals have approached the headquarters of foreign media and complained about their China-based correspondents’ coverage, demanding that their reports be removed from their websites and suggesting that they produce more positive China coverage.”  One wonders how many other occasions there have been.

If you are in DC tomorrow, this should be an interesting and important event.  Again, RSVP is necessary by 10 AM tomorrow to judy.wright@mail.house.gov.

For those interested in learning more about foreign journalists’ visa troubles, please see China Law & Policy‘s three-part series with Part 1 here, Part 2 here, and Part 3 here.