Monthly Archives: December 2005
Yes, it is that time of the year again. The end of the year stock story. The Dow Jones Industrial Average ended 2005 down slightly, while the S&P 500 and the NASDAQ were both up slightly. Virtually every business section I’ve looked at online this morning led with this story, and most of the business news web sites have also led with this story.
TheStreet.com’s story was a little better, taking more of a forward looking spin. You can read it here.
BusinessWeek’s online story about the markets was pretty typical of the coverage I saw. It can be read here.
I am typically a big fan of Floyd Norris in the New York Times, but his coverage of the markets in 2005 that appeared this morning was nothing spectacular. It can be read here.
Bloomberg News focused on the market’s worst drop — on a weekly basis — in nearly three months. Its story is here.
Why do I point all of this out? Because I believe that business journalism overall is not doing its readers a service by focusing on how the market does in a calendar year. That’s not how investors and the general public invest, so why should business journalism be talking to readers in a time frame that means nothing to them.
I understand the need for business journalism to be able to give readers a benchmark, but I think we’re overemphasizing what happens in the markets on a calendar year basis. Just my two cents.
Happy New Year to everyone.
Having spent the last three days at my parent’s house in suburban Atlanta, I was able to read the Atlanta Journal-Constitution on a regular basis once again. I worked on the business desk there from 1994-97, covering Home Depot and Coke.
Not much has changed, but one thing that I did notice was that all four days I saw the paper, staff writer Tom Walker’s daily story about what happened in the markets ran on the front page of the business section. I thought that it was odd because when I was there — and for much of the past decade — Tom’s daily story on the markets has typically run inside. I wondered if there had been a change in the mindset of the editors at the AJC and that they now deemed this story to be worthy of the front page on a regular basis. It’s not like the market moved dramatically earlier this week, requiring better placement.
I see different papers handle the daily stock/market story different ways. Some papers like Atlanta have a staff writer put this article together, while others such as the Cleveland Plain-Dealer carry a wire story. Some run the market story on the front page, while others typically run it inside. The Wall Street Journal’s daily market story is typically on C2 unless something dramatic happened in the market the previous day.
Is there a reason for this difference? One would assume that readers across the country would have pretty much the same level of interest in reading about stocks , bonds and commodities, with some variations depending on the market. But I’m not thinking there’s much difference between those interested in the market in Atlanta and those interested in the market in Cleveland, for example. Yet, the papers handle the market coverage much differently.
The New Year’s Eve/Day celebration is big business, but rarely do I see business sections writing about it. Now would be the time to write and publish some of these stories.
For example, here are New Year’s Eve/Day business stories that can be written, but rarely are:
1. The increase in champagne sales that state-run liquor stores see the week before Jan. 1. I bet they even have statistics to back this up.
2. The boost in business most restaurants and bars see around this time of the year by booking special dinners and parties. What percentage of their annual business comes from New Year’s?
3. Party stores like Party City USA — how do they keep up stock of noisemakers, hornblowers, and other New Year’s necessities? What percentage of their business for the month comes from this stuff?
4. Do attorneys specializing in DUI or public intoxication cases seen an increase in business around this time of the year?
5. The boost that workout centers, YMCAs and gyms see in increased membership shortly after Jan. 1 because of the people who have made New Year’s resolutions to exercise more or lose weight.
I’m sure there are many more, but these are the ones that I thought of today. Has anybody ever seen these stories done by a business section?
Yes, I am about to gag on all of the post-Christmas shopping stories that talk about the crowds on Dec. 26 and how retailers are trying to cut prices to entice customers. I think I have read the exact same story 100 times in the past 10 years.
Looking for a different way to write about post-Christmas retailing? How about this:
In total, an estimated $56B will be spent on gift cards in 2005. Retailers love the concept of gift cards because it simplifies the gift-giving process for some consumers and because they know that not all cards will be redeemed for their full amount. According to a recent study by the TowerGroup, 8.5% of the value of gift cards go unredeemed, accounting for approximately $4.8B each year.
If a person received a gift card this Christmas and do not think they will end up using it, there is hope. Several new web sites have popped up to help people monetize unwanted gift cards. Some analysts estimate the value of this secondary market in gift cards to be worth $1.5B and the end of the year is the best time of year to find good bargains on second hand cards. Each of the exchanges has its own set of rules, but most require a small registration fee, a transaction fee or both. On most sites you can find cards selling at a 10-15% discount to its face value. The discount can vary dramatically depending on where the gift card can be redeemed.
This story can be written in one of two ways. One is the profit retailers are making selling gift cards. And two is the secondary market.
As for myself, I’m sitting here with about $24 remaining on an American Express gift card that my mother in law gave me. I spent the rest of the card on books on Amazon.com — what I told her I really wanted for Christmas. But I hate American Express gift cards because they are so hard to redeem. Restaurants won’t take them, and neither will bars. And a lot of retailers just take MasterCard and VISA.
Another one I hate is when my kids get gift cards for retailers where they don’t shop. I told my older son to Target today with a $50 gift card he got for Christmas, and about halfway through the shopping trip, he turned around and asked if he could turn in the gift card and get the money and go somewhere else. When I explained to him that that’s not how gift cards work, I think he ended up buying a GameCube game he really didn’t want just to spend the money. And I’m betting the remaining $13 on the card doesn’t ever get used. So maybe I’m checking out one of those secondary gift card web sites.
Gift cards are a major deal now at Christmas, but I don’t think I’ve seen any business publication or business section of a newspaper cover this story. And that’s a shame.
These retailers like to report certain numbers to show the strength of their business. And business reporters often use these numbers in stories about these companies. I’m specifically talking about sales per square foot and same-store sales.
But are these retailers playing with these numbers, either intentionally or unintentionally? The reason I pose the question is that I’ve increasingly noticed that these retailers will set up products in their parking lots and get sales from these products. The home improvement retailers take over thousands of square feet in their parking lots for these products. I visited the parking lot of the home improvement retailer near my parent’s house just this morning, and about one-third of the lot was overtaken with products such as sheds and lawn equipment.
I made an inquiry to a friend in the industry, and he says that the square footage used for such purposes does not count when the companies measure sales per square foot. In other words, the sales get counted, but it artifically inflates the number because the square footage used to make these sales doesn’t.
I’d imagine that these sales have a bigger effect on the sales per square foot number than the same store sales number. Still, it’s something to ask about the next time you’re talking to that Big Box retailer. It might even make for a nice story if your market is saturated with such retailing efforts.
Do you regularly quote people in your business stories that you think are independent consultants or experts in the field and have unbaised opinions?
Think again. The New York Times, on Dec. 23, exposed a person quoted often in drug stories. The story can be read here.
“Susan Finston of the Institute for Policy Innovation, a conservative research group based in Texas, is just the sort of opinion maker coveted by the drug industry,” writes Philip Shenon. “In an opinion article in The Financial Times on Oct. 25, she called for patent protection in poor countries for drugs and biotechnology products. In an article last month in the European edition of The Wall Street Journal, she called for efforts to block developing nations from violating patents on AIDS medicines and other drugs. Both articles identified her as a ‘research associate’ at the institute. Neither mentioned that, as recently as August, Ms. Finston was registered as a lobbyist for the Pharmaceutical Research and Manufacturers of America, the drug industry’s trade group. Nor was there mention of her work this fall in creating the American Bioindustry Alliance, a group underwritten largely by drug companies.”
Just when you think that covering the drug industry couldn’t get any worse.
If you’d like to find out more about such spin tactics by major corporations and industries to prevent yourself from quoting an embarrassing source, then I recommend you subscribe to The Weekly Spin, an e-mail that is sent out once a week.
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That’s the prediction of Peter Newcomb at Forbes, who writes today that he thinks that the Bancroft family, which controls the majority of stock in the company, will sell Dow Jones, including the Wall Street Journal. Read the entire posting online here.
Here is his prediction:
“The Bold Prediction
The Bancroft clan finally throws in the towel on its languishing newspaper fortune and sells Dow Jones (nyse: DJ – news – people ), publisher of The Wall Street Journal. News Corp. (nyse: NWS – news – people ) owner Rupert Murdoch would love to get his hands on the vaunted broadsheet, but the winning bid comes from the dark horse tandem of Berkshire Hathaway (nyse: BRKA – news – people ) and The Washington Post (nyse: WPO – news – people ). ”
My take: The WSJ and the Dow wire would be in better hands journalistically with Berkshire Hathaway and the Washington Post as the owners. I would imagine that nothing would change at the operation if they were the new owners. If Murdoch was the new owner, then there might be changes — at least in the news content, but not in the Journal’s editorial page, which is conservative.
According to a recent report from the Audit Bureau of Circulation, business magazines Forbes and BusinessWeek fell short of their stated circulation promised advertisers. You can read about it in Jon Fine’s On Media blog.
To date, the circulation scandals had been primarily confined to daily newspapers, so these revelations are not too good for the magazine business and for business journalism. When biz magazines don’t deliver the circulation that they promise advertisers, then they can’t charge as much for advertising as they had in the past. And when they can’t charge as much for advertising, the revenue falls. When revenue falls, the bean counters get nervous and want to cut costs. And we all know how they’ve been cutting costs recently — by cutting reporters and editors.
I also wonder if the circulation drop at BusinessWeek, where I used to work, had anything to do with the announcement earlier this month that they were dropping the Asian and European editions.
Oh yeah, Merry Christmas.
If you’re a fan of Newsweek Wall Street column Allan Sloan – and every business journalist should be — then you’re likely to get a kick out of his column in this morning’s Washington Post. The column can be read here.
Let me excerpt the best part, the section about his reporting tactics. This sums up what every business journalist should be doing:
“Even though I certainly have sources, I’m heavily into numbers, documents and doing my own research. Highly placed sources are great, but getting too close to them can lead you into error because the sources can be wrong or they can be trying to deliberately mislead you. Or both.
“So I run what my sources tell me through my skepticism filter. I don’t act as their stenographer.
“I get a kick out of reading financial filings, which are never unavailable for comment and don’t get testy if you access them in the middle of the night. I’ve had a ball reading all the filings by billionaire takeover artist Kirk Kerkorian, who is — or maybe was — making a run at GM. He’s secretive, he has never spoken to me and probably never will, but his filings speak for themselves.”
My students think I’m crazy when I tell them about some of the great SEC filings that I’ve read over the years during class and show enthusiasm for the information that I found. But you either get a kick out of finding great information in documents, or you don’t. And so many of the great business reporters like Sloan get stories this way.
When does a former business reporter sue his former newspaper? When he feels as if he was fired because of his battle against cancer.
That’s the situation at the Columbus Dispatch in Ohio, where a former biz writer, Phil Porter, is suing the paper, claiming that it fired him because of his mounting medical claims, not his alleged plagiarism.
The story can be read here. Go to the second item.