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Business

Bank of America set to cash in on expiring Bloomberg terminal deal

By
Kevin Dugan
Published Jan. 14, 2016, 11:32 p.m. ET

This July, if you see former Big Apple Mayor Mike Bloomberg sweating, it may not be because of the usual summer heat.

A secretive slice of the $4.4 billion deal that sold Merrill Lynch’s 20 percent stake in the former mayor’s Bloomberg LP back to the data firm in 2008 — that bars the brokerage firm from cutting back on the number of $21,000-a-year Bloomberg terminals — is set to expire in about six months, The Post has learned.

The end of the eight-year lock-up opens the door for Bank of America, which bought Merrill several months after the Bloomberg deal was announced, to start cutting back on its $420 million-a-year Bloomberg terminal rental tab.

Like other banks, BofA is under pressure to cut costs in a time of volatile markets.

The bank, led by CEO Brian Moynihan, is weighing a move to pare the number of Bloomberg terminals by as much as 5,000, or 25 percent, sources said.

On Jan. 12, The Post reported exclusively that JPMorgan Chase, Bloomberg’s second-largest customer, is looking to rip out up to 20 percent of its 10,000-plus Bloomberg terminals over the next two years.

Bloomberg LP rings up about $7.7 billion a year in rental fees from the roughly 367,000 terminals in use worldwide.

If banks start cutting back, it could put tremendous pressure on Bloomberg LP.

“There’s probably as big a groundswell now as I’ve ever seen for users of Bloomberg to want to see changes,” Douglas B. Taylor, founder and managing partner of Burton-Taylor International Consulting, told The Post.

“Most of the things people are saying about Bloomberg now — perhaps arrogant, difficult to deal with, won’t negotiate price the way they should with other products — all of those things were being said about Reuters in the ’90s when they were No. 1,” he added.

Merrill Lynch was an early investor in Bloomberg LP. Like many Wall Street firms, it ran into financial issues as the economy soured in 2008 and looked to raise cash. The Bloomberg stake sale brought in $4.4 billion.

“Bloomberg is a valuable partner of ours,” Larry Di Rita, a BofA spokesman, told The Post. “Terminals are a big part of that partnership. We work with them on many different areas and definitely plan to continue doing so through this year and beyond.

“It is incorrect that this relationship will change in July of 2016,” Di Rita said.

A Bloomberg spokesman declined to comment.