Champagne flowed last week as Hong Kong's business elite gathered with top Bloomberg executives at a dinner for 100 guests.
Daniel Doctoroff, the company's chief executive and the steward of the business empire behind the wealth of New York mayor Michael Bloomberg, had flown in to toast a corporate milestone. In 20 years, sales of Bloomberg's financial data terminals in Hong Kong had ballooned into a business bringing in more than US$500 million a year.
But behind the celebration last Monday were some troubling developments. The growth of Bloomberg's terminal sales worldwide had actually softened over the past several years, and had dropped significantly in the past year in mainland China, a vast untapped market.
Bloomberg News' tough reporting last year about China had prompted officials to cancel subscriptions for the lucrative terminals, frustrating the company's Beijing sales staff.
And, just blocks from last week's celebratory dinner, at the Hong Kong bureau of Bloomberg News, anxious journalists were still dealing with the implications of a decision by top editors weeks earlier not to publish a hard-hitting article about a Chinese tycoon.
Bloomberg employees had asserted in published reports that Matthew Winkler, the editor-in-chief, had justified killing the piece, citing concerns that Bloomberg journalists would be expelled from China.
Later that night, just hours after Doctoroff raised his glass, the company confirmed that one of the writers of the article was no longer an employee.
Video: Taiwanese animators poke fun at Bloomberg’s apparent self-censorship on China
Against this backdrop, some top executives have begun to insist that short bursts of market-moving news, not prize-winning investigative journalism, were what Bloomberg's paying customers wanted.
"To the bankers that run the place, you have a redheaded stepchild that is a rounding error in the scheme of things that is managing to create a lot of trouble," one news employee said.
In an interview last week, Doctoroff said the backlash this spring over reporters' monitoring of clients "did prompt self-reflection".
Last Monday, Bloomberg began to lay off about 40 people, about 2 per cent of its news staff. Coverage of culture and sports would be scaled back, and the investigative unit experienced losses as well. "We must have the courage to say no to certain areas of coverage in order to have enough firepower in areas we want to own," Winkler wrote to the staff.
Bloomberg said it would add about 100 newsroom positions next year, many in a division called First Word, that produces a Twitter-like burst of news that consists of headlines of market-moving importance.
Journalists make up about 15 per cent of the company's 15,580 employees, and, according to Burton-Taylor International Consulting, bring in just 4 per cent of the company's total revenue.
The tough choices facing Bloomberg arose in early 2011 when it reported on an online movement in China to stage a peaceful "Jasmine Revolution"-style protests modelled after the uprisings in the Middle East.
Angry Beijing officials told top editors in Hong Kong that Bloomberg's information distribution licence permitted it to publish only financial news in China, not political news, according to employees with knowledge of the discussions.
Editors ordered the article deleted from the website. "A lot of people were angry they would just cave in like that without much discussion," one employee said, adding that the editors "didn't want to get Bloomberg kicked out" of China. A Bloomberg spokesman declined to comment on the matter.
Early this year, top editors in New York approved reporting for an investigative project examining Wang Jianlin, China's wealthiest man, and his financial ties to the families of party leaders.
But last month, after senior editors in New York expressed concerns, Winkler told reporters and editors in Hong Kong that it would not be published because Bloomberg needed to maintain journalistic access to China.
Winkler insisted officials in China would not tolerate coverage on the assets of the country's leaders, according to employees, whose accounts were reported in The Times and The Financial Times.
Winkler declined to comment on internal discussions.