Tag Archives: BusinessWeek
I received a copy of “Wall Street vs. America: The Rampant Greed and Dishonesty that Imperil your Investments,” a new book by former BusinessWeek writer Gary Weiss, during the weekend, and went through the book and found some good points about business journalism.
Here they are:
1. Anything that was not covered by The Wall Street Journal and the New York Times was considered by other media as unimportant, particularly during the height of coverage about Enron, WorldCom and other financial scandals. Writes Weiss, “Even such grave and recurring investor issues as fraud involving microcap stocks — which still savaged thousands of investors every year, and which had once been large bore — had shrunk down to small bore in 2004.” Weiss’ editors at BusinessWeek passed on such a story. p. xx.
2. The medi a attacked NYSE chairman Dick Grasso in 2003 when his large pay package became known as retribution for bad treatment by the exchange in previous years. “It is fair to say that well into the Grasso era, the NYSE was still roundly despised by a great many people whose emploers bought ink by the barrel. Relations did not improve when the NYSE devoted a section of its Web site to press goof-ups. It was used as a bludgeon to bawl out such hotbeds of left-wing extremism as the Wall Street Journal and the New York Post. Such unauthorized use of the First Amendment was not to go unavenged.” p. 10.
3. Mutual fund companies have had a relatively unscathed relationship with the financial media until recent years. “The mutual fund industry was so virtuous in the eyes of the media that the Strong mutual fund group (later pilloried in the fund scandal) and the ICI both sponsored journalism awards for years and no one in the press blinked an eye. No brokerage could have gotten away with putting its name on a journalism award. Mutual funds were different. Every financial journalist knew that mutual funds wre virtuous, scandal-free, boring.” p. 56.
4. When former SEC chairman William Donaldson began to back off some of his reforms after Wall Street began to balk, his flacks went on the offensive, and the business media still gave him fawning coverage. “This produced the usual glowing coverage and a particularly orgiastic outburst in Business Week. The nation’s leading financial weekly was so overjoyed by its access that it went a little overboard. BW portrayed Donaldson in the kind of terms no flack would dare to use, as it would be too embarrassing: ‘crusader,’ ‘activist agenda,’ a ‘zealous enforce’ who ‘set a blistering pace,’ and last, but not least, the man who ‘cleaned up the mutual-fund mess.’” pp. 105-106
5. Microcap fraud had been ignored by the financial media throughout the 1990s. “The low point in the media’s coverage of 1990s microcap fraud was probably reached in December 1995. The Wall Street Journal wrote about Wall Street boiler rooms — then at their peak — as if they were kind of a cute, Runyonesque, slightly overenthusiastic bull-market phenomenon,” writes Weiss. p. 168.
In the April 10 issue of BusinessWeek, which just came out, there is an article titled “The Secret Lives of Short-Sellers” that goes into detail about how hedge funds and research firms that specialize in finding companies whose stocks are going to fall are increasingly doing battle with the companies, namely Overstock.com and Biovail.
Most of you in the business journalism world are familiar with this fight because it involves business journalists who use these hedge funds and research firms as sources. Some of these journalists were subpoenaed last month by the Securities and Exchange Commission, while subpoenas sent to the firms request details of their communication with business journalists.
What I find shocking is that the BusinessWeek article gives no mention of the role that the business journalism community has been playing in this issue of using hedge funds and research firms as sources of information. It’s especially shocking considering this all blew up earlier this year when BusinessWeek writer Timothy Mullaney sent a list of questions to Overstock.com President Patrick Byrne, who responded by answering the questions and posting the interview on the Internet so that everyone could read it.
The BusinessWeek article makes a brief mention to the media, noting a private investiagtor has been hired to “help prove that a group of short-selling hedge funds are fraudulently collaborating with analysts and journalists to push down stocks.” Later, there is this mention: “Public relations campaigns related to the suits have drawn intense media interest, with CBS’s 60 Minutes featuring a sympathetic segment on Biovail. The Securities & Exchange Commission, meanwhile, is investigating allegations about abusive short-selling concerning the two companies, as well as potential underlying problems at both.”
Yet, there is no mention of the bigger issue here that involves business journalism.
If business journalists don’t protect their own turf, then no one will. I realize the article may have wanted to focus on the battle of the shorts vs. the companies, but I don’t see how that can be done without mentioning that the shorts are sources for journalists and that the SEC is trying to interfere with that relationship.
Go here to find the article. The article is for subscribers only.
The Society of American Business Editors and Writers selected Carol Junge Loomis, a journalistic fixture at Fortune magazine who’s often regarded as the best business writer in the United States, as this year’s recipient of the group’s Distinguished Achievement Award.
Loomis, 76, has worked at Fortune for 52 years and has kicked corporate shins for most of those years. Last year, for example, her scathing cover story about Carly Fiorina’s tenure as Hewlett-Packard’s chief executive was followed by Fiorina’s ouster a few days later. In this February’s cover story, Loomis explains why she thinks General Motors is headed for bankruptcy court.
Her fans include her long-time friend and subject, legendary investor Warren Buffett. “She’s the best business writer in the world, bar none, she’s so good she’s lapped the field,” Buffett recently told journalist Allan Sloan.
Loomis is Buffett’s editor, too. Since 1977, she’s been editing his famous annual letter to Berkshire Hathaway’s shareholders.
Sloan asked Buffett what is Loomis is like as an editor. Buffett thought for a few seconds. “She’s unreasonable,” he said. “But she’s the best.” This despite the fact that the first time she mentioned him in print, she misspelled his name “Buffet.”
Loomis will get the SABEW award at a ceremony in Minneapolis on April 30 at SABEW’s annual conference. Her SABEW honor will be Loomis’ fourth lifetime career award. The others come from the Loeb Foundation (1993), the Women’s Economic Round Table (2000) and from Time Inc. (the first-ever Henry R. Luce Award, 2001).
Past recipients of SABEW’s Distinguished Achievement Award include: the late Hobart Rowan of the Washington Post; Myron Kandel of Cable News Network; the late Larry Birger of the Miami Herald; Chris Welles of BusinessWeek; Cheryl Hall of the Dallas Morning News; Marshall Loeb with CBSMarketWatch.com; John Cuniff of the Associated Press; Chet Currier of Bloomberg News; Ernest Holsendolph of Atlanta Journal-Constitution; Allan Sloan of Newsweek; Byron “Barney” Calame of The Wall Street Journal; Randy Smith of The Kansas City Star; James K. “Jimmy” Gentry of the University of Kansas; Linda O’Bryon of Nightly Business Report and Steve Shepard of BusinessWeek.
The New York Post is reporting Tuesday that a subpoena to research firm Gradient Analytics asked for records of all e-mail and phone contacts Gradient has had with approximately eight financial reporters.
The eight reporters are Marketwatch’s Herb Greenberg, Mad Money host Jim Cramer, Dow Jones Newswire’s Carol Remond, Bethany McLean of Fortune magazine, Jesse Eisinger of the Wall Street Journal, Elizabeth MacDonald of Forbes Magazine, former Barron’s editor Cheryl Strauss Einhorn and Roddy Boyd from The Post, who wrote the article.
Boyd wrote, “An individual familiar with the situation said Gradient planned on seeking the permission of the reporters’ news organizations before complying with the order.”
In February, Greenberg disclosed that he had been subpoenaed by the SEC and criticized the action. Afterward, SEC Chairman Christopher Cox backed off the subpoenas, saying the regulatory agency needed to develop a policy on when it would seek information from financial reporters.
The investigation centers around Gradient and Rocker Partners LP and their alleged attempts at driving down the price of online retailer Overstock.com. The president of Overstock, Patrick Byrne, has been criticizing the actions of reporters for using information from short sellers in their writing.
Former BusinessWeek writer Gary Weiss posts on his site about the latest subpoenas. He writes, “So it stands to reason that, being singularly ineffective at punishing real transgressions, the SEC would do an outstanding job of wasting its time. Thus the current witch hunt against the handful of journalists who engage in tough financial journalism.”
Media Life, in reporting on the appointment yesterday afternoon of John Micklethwait to become the new editor of British-based The Economist, notes that the new editor’s experience here in the States will be essential to the future success of the publication.
Heidi Dawley writes, “The U.S. has been the Economist’s growth market for some years now, with recent strong circulation gains, and under Micklethwait it will continue to build its U.S. presence, adding new bureaus as it strives to further expand its subscriber base.
“The U.S. now accounts for almost half the magazine’s total circulation, at 515,480 of just under 1.1 million total, and well more than the 160,000 it sells in its home market. Though so unlike U.S. weekly newsmagazines, the Economist has crafted a mystique in the U.S. as a must-read for its global view, especially among business executives, and that led to a doubling of U.S. subscribers in the last decade.
“The Economist has been more successful in that regard than the other leading UK import, the Financial Times, whose U.S. circulation is around 125,000, or less than a third of its total circulation.
“To its credit, the Economist has also proved an able contender for advertising against both the U.S. newsweeklies and business titles, such as Forbes and Business Week, even with its much smaller circulation.”
Read the entire story here.
John Yunker, writing on Corante, hopes that the magazine doesn’t become too American under Micklethwait. He writes, “I just hope that this added US coverage doesn’t come at the expense of non-US coverage. After all, that’s why I read the magazine and why I suspect many of the other 569,000 American subscribers do. The US is now the magazine’s largest subscriber market, which I believe is due to the fact that US papers have closed their foreign bureaus over the years (a myopic error of epic proportions in this age of globalization).
“There is no shortage of coverage of the US, but if I want to know what’s going on in Tanzania, I first turn to The Economist. So here’s hoping that every new bureau the magazine opens in the US is matched by a bureau abroad.”
McGraw-Hill CEO Harold McGraw saw his bonus increase by about $63,000 in 2005, according to a Dow Jones story about the company’s proxy statement. McGraw-Hill is the parent company of BusinessWeek magazine, which late last year shuttered its Asian and European editions and laid off a number of employees.
The Dow Jones story reported, “According to a proxy statement filed with the Securities and Exchange Commission, the executive also realized $17.8 million in value from the exercise of stock options to acquire 946,000 shares in 2005.
“McGraw also received a salary of $1.17 million in 2005, up from $1.12 million in 2004.
“For 2005, the CEO also got 1.07 million securities underlying options, up from 728,630 he got for the previous year.”
Read the story here.
I briefly scanned the proxy this morning. I didn’t find anything that interesting other than what was mentioned in the Dow wire story.
Apparently a booking agent in London had been taking bets on who would be the next editor of The Economist magazine, but the bookie shut down the business after receiving a large number of bets on a certain internal candidate.
The London Times reports, “SOMEONE at The Economist knows something we donâ€™t. Paddy Power, the bookmaker, has been offering odds on the new editor, to replace the departing Bill Emmott. Several punters this week started to put large sums ranging up to Â£500 on Ed Carr, the business and financial editor, at 6-1.
“The bookie yesterday suspended all bets, after even more tried to open accounts. Any of them e-mails with “theeconomist” somewhere in the address? ‘We havenâ€™t seen anything quite that unsubtle. Theyâ€™re more intelligent at The Economist. Mind you, when we ran a book on the editor of The [Daily] Mirror . . .’”
Earlier, the Press-Gazette in London had reported, “Journalists with the inside track on who is to succeed Bill Emmott as editor of The Economist could cash-in at the bookies.
“Paddy Power has offered odds on what it sees as the ten front-runners. It has Economist US editor John Micklethwait as even-money favourite followed by the million-selling magâ€™s UK editor Emma Duncan.
Betting on whether a business journalist will get a job. Now, that’s a new concept. I wonder if we can convince a Vegas casino to start accepting bets on who will replace Wall Street Journal managing editor Paul Steiger?
I also think it’s be very cool if the general public could place bets on other business journalism concepts, like how soon will it be before new Fed chief Ben Bernanke appears on the cover of BusinessWeek, Fortune or Forbes? I am setting the over/under on that one at four months.
Barry Ritholtz, who is president of a money manager in New York and writes a blog called “The Big Picture,” has an interesting comment today about using the covers of major magazines as indicators of how to invest.
Ritholtz notes that there are 56 covers of major magazines with Apple’s Steve Jobs on the front. Writes Ritholtz, “So the key question for afficianados of the magazine cover indicator is simply this: Which cover was your sell signal?
“The collage above shows why the cover indicator is not really applicable to single companies . . . ”
Ritholtz argues that the magazine cover indicator is more applicable for trends, such as the stock market, or the boom in industries like the Internet or nano-technology. He states, “In my experience, the Cover Indicator is useful for determining when large social phenomena are reaching an emotional crescendo. Oftentimes, emotions take over at the extremes, as things become either giddy or bleak.”
I’ve got to agree with him. Business magazines are notoriously bad when it comes to predicting trends, especially in the stock market. I recently came across a stock chart from Ned Davis Research that superimposed famous magazine covers with the Dow Jones Industrial Average.
To give you a sample of how bad the predictions have been, here are a few examples:
1. BusinessWeek’s Nov. 2, 1968 cover called “The Boom that Just Won’t Stop” came out when the Dow was at 975. By the middle of 1970, the Dow was at 660.
2. The Barron’s dated Jan. 8, 1973 had the headline “1,200 on the Dow” when the index was at 1020. By the end of 1974, the Dow had dropped to below 600.
3. Then there is BusinessWeek’s infamous Aug. 13, 1979 cover called “The Death of Equities,” which came out when the Dow was at about 800. We all know what happened to the Dow in the next two decades.
4. The Fortune magazine dated Oct. 26, 1987 had the headline “Why Greenspan is bullish” and came out just days before the crash that lopped 25 percent off the market in one day.
5. After the crash, U.S. News & World Report’s Nov. 9, 1987 cover was titled “How to Ride out the Bull Market.” The Dow was at 2,000, and would rise to 11,000 in the next 14 years.
6. BusinessWeek’s Dec. 24, 1990 cover title was “The New Face of Recession.” The country was about to enter the longest time period of economic prosperity it has ever seen.
The point here is that the business media have been incredibly bad in predicting the economy and the stock market. There are lots of investors out there who look at covers such as these and do the opposite with their money.
As mentioned earlier, I took a group of students in my “Business Reporting” class to New York during Spring Break last week and met with people from the business journalism world. Here are some of the things that the students heard and saw that I thought were most important:
1. At BusinessWeek, they met a relatively young Roben Farzad, who is the magazine’s Wall Street editor and has been with the magazine less than a year. Roben has worked on Wall Street and recently completed an MBA. The question the students were asking afterward was whether the MBA was standard for biz journalists today. I don’t think it is, but I do see it becoming more common. In addition, they got to here from another writer, Arlene Weintraub, how she put together her March 20 cover story on the $56 billion anti-aging industry.
2. At WSJ.com, the online operations of the Wall Street Journal, editor Kate Schlegel and writer Worth Civils explained to them how the online operations differs from the print side in that it is increasingly offering readers the opportunity to massage statistics online to fit their needs. One nifty item we were shown was how you could click and add — or takeaway — specific retailers to look at same-store sales for certain categories over a specific period of time.
3. Although these weren’t business journalism specific visits, I think it was important for the students to see the Bear Stearns trading floor, which we visited on Thursday, and the opening of the New York Stock Exchange, which we saw Friday morning. There was a PR person from the NYSE there who was able to tell them about their media operations, and they were able to see CNBC’s Bob Pisani do his morning report from the exchange. In addition, we saw where CNN did its market reports, and the locations for Bloomberg radio and Marketwatch. A number of media outlets have small offices at the exchange.
4. In contrast to some of the huge biz media operations we visited, the students got to see tiny MarketNews International, which follows the bond and fixed income market and has about 75 reporters overseen by managing editor Tony Mace. He explained how their news operations attempts to fit a niche that others in the business are avoiding. For example, MarketNews is well known among traders for its coverage of the Treasuries market and of international banks such as the European Central Bank.
5. A visit to Bloomberg’s new digs on Lexington Avenue was simply overwhelming for the students. The interior is quite impressive, and the free snacks and drinks were enticing. The students got to see the main newsroom on the fifth floor, as well as one of the few curved escalators. They talked briefly to New York bureau chief Frederic Wiegold, who joined the operation a couple of years ago from the Wall Street Journal, and met with a current intern from the Northwestern program, Elizabeth Hester, who has been writing IPO stories.
6. Lastly, the students had a beer with the Wall Street Journal’s Dennis Berman, who covers M&A for the paper and had the most bylines in the Journal last year. Berman, who had broken his hand the night before playing basketball, was constantly checking his Blackberry and his cell phone, and I made it a point to ask him about working on the weekends in front of the students since that is when most M&A stories break.
Conclusion: It’s good for students interested in a career in business journalism to see it living and breathing in the epicenter of business news. They got a lot of different perspectives and ideas about what it’s like to be a business journalist.
I am in New York today with some of my “Business Reporting” students. We visited BusinessWeek, the Wall Street Journal’s online operations, and the Bear Stearns trading floor.
While at BusinessWeek, I learned that longtime chief of correspondents Jim Ellis has a new job. He is now the Ideas and Opinions Editor, which means he oversees all of the columns in the magazine.
The new chief of correspondents is Joe Weber, who has been the Chicago bureau chief. Weber will remain in the Chicago bureau.
Ellis was a temporary editor of the editorial page for the past seven months, so the change is nothing new for him. He had been chief of correspondents for more than a decade.