Tag Archives: CNBC
The Securities and Exchange Commission decided on Wednesday that it will only subpoena journalists to gather information for its investigations in rare cases, according to published reports this morning.
The SEC earlier this year had subpoenaed three reporters in its investigation into allegations against a hedge fund and a research firm for giving information about companies such as Overstock.com that caused the stocks to fall.
In the New York Times Thursday, reporter Stephen Labaton writes, “Under the policy, commission investigators must initially try to obtain information from other sources and determine whether the information in a journalist’s possession is ‘essential to successful completion of the investigation.’ The policy also encourages investigators to talk informally with journalists and their lawyers to seek to avoid a showdown.
“If the agency decides that the information is essential and cannot be obtained elsewhere, the policy states, then investigators must seek permission from the director of the enforcement division to issue a subpoena. If the director, in consultation with the agency’s general counsel, approves the subpoena, then the chairman of the agency must be notified as well.
“The policy statement also calls on investigators to tailor the subpoenas narrowly and says they should generally be ‘limited to the verification of published information and to surrounding circumstances relating to the accuracy of published information.’”
The MarketWatch story by Robert Schroeder notes that SEC Chairman Christopher Cox “himself was surprised by the issuance of the subpoenas to MarketWatch columnist Herb Greenberg and Dow Jones Newswires columnist Carol Remond. The agency also subpoenaed CNBC commentator James Cramer. Cox said in a statement that neither he nor the agency’s chief attorney nor the office of public affairs knew about the action.
As a business journalist, I’m still not 100 percent happy with the new regulations. It means that there is still the potential that reporters can be subpoenaed when they use Wall Streeters as sources.
The full guidelines can be found here.
Robert Lutz, a General Motors executive and one of the most outspoken auto industry executives in the past 25 years, said on CNBC’s “Closing Bell” today that he believes that some analysts with short positions are the impetus behind negative stories about the automaker recently.
CNBC, in it’s infinite wisdom, is running an online poll on the issue. See here. As if an online poll, the results of which will be shown on the air later this week, has any credibility.
The fact that Lutz is simply repeating the same allegations made by Overstock.com President Patrick Byrne and others claiming that business journalists are being duped by short sellers is humorous if not downright sad. He’s implying that the decline in the stock price has nothing to do with the fact that GM has lost billions in the past year, has been forced to renegotiate with its union and its parts supplier for more favorable terms and failed to anticipate the interest in alternative fuel automobiles. Wake up to reality, Mr. Lutz. Business journalists don’t need shorts to write negative stories about your company. It’s a negative story all by itself.
As former BusinessWeek reporter Gary Weiss mentioned on his blog recently, business journalists haven’t been getting such a bad rap since the 1970s, when Barron’s legend Alan Abelson was basically accused of the same thing.
In 1977, a lawsuit brought by a Technicare Corp. shareholder accused Abelson of providing tips to these short sellers in advance of negative articles about companies. Abelson denied the charges, which were never proven. â€œBack in the 1960s, people used to threaten to punch me in the nose when I said something negative about a company,â€? responded Abelson to the Washington Post. â€œNow we live in different times. The suit is obviously an attempt to keep me quiet.â€?
Today’s business journalists should take the same tactic. Don’t be intimidated by the bullies of corporate America.
Maybe Lutz is still smarting from his negative portrayal in New York Times’ business writer Keith Bradsher’s “High and Mighty,” which heavily criticized the auto industry for making unsafe SUVs.
There is a blog called Highbrow Revelry written by two unnamed men that I find entertaining. Recently, they analyzed why CNBC’s Jim Cramer is so attractive to the general population.
Highbrow Revelry writes, “Thursday evening, Jim was in typical form. In the mere two hours after the markets closed, Jim and his merry band of esoteric staff writers had managed to distill down the incalculable activity of the global equity markets into a single transcendent on-screen graphic: a dancing cartoon bull (FYI, there is no f***ing way that anyone can cover every stock with any sort of authority). But apparently, the bull speaks the truth. As Cramer delivered a diatribe on the first quarter sales growth of Federated Department Stores, he threw hand gestures that would make the Latin Kings (a burgeoning demographic in the financial news sector, as it were) cower.
“Don’t fool yourself, though; Cramer isn’t nuts. Far from it. He is a brilliant entrepreneur with the most popular TV show on the most otherwise straight-edge channel on basic cable. The Hamlet of the investment world, Cramer’s “antic disposition” is exactly what draws 380,000 viewers every weeknight. He’s an embarrassment to the mahogany dÃ©cor of the financial advising industry, and after Thursday, I’m hooked.”
Read the rest here. Their analysis about Cramer’s success is much more lucid than the half-dozen profiles of Cramer written by the media in the past year.
Bill Fleckenstein, who runs a hedge fund in Seattle and writes a column for MSN Money, believes that some hedge fund managers are no longer willing to talk on the record to business journalists because of the recent push by some companies to threaten hedge funds with litigation when they are discussed in a negative light.
Fleckenstein writes, “That’s the chilling part of what Biovail is apparently attempting. As a measure of its “success,” columnists Gretchen Morgenson of The New York Times and Herb Greenberg of MarketWatch.com, two friends who do great investigative work, tell me that they both have sources who are no longer willing to go on the record when discussing corporate chicanery.
“What we don’t want to see is the routine silencing of naysayers by managements with something to hide. This is intimidation masquerading as victimization.”
Read the rest of his column here.
CNBC’s first original prime-time series, “American Made,” which focuses on U.S. business leaders, will debut at 8 p.m. eastern time Monday, April 17, the network announced Thursday.
Hosted by Internet entrepreneur Ingrid Vanderveldt, the six-part series will open with a profile of Starbucks Chairman Howard Schultz, who grew up in the Brooklyn projects.
“‘American Made’ is CNBC’s own ‘Behind the Music’ meets Fortune magazine,” said Susan Krakower, vice president of strategic programming and development for CNBC. “We thread a story of a company and how its leader inspired success. Our goal is to inspire in our viewers a renewed determination to go for it. These stories have an emotional connection to our audience.”
USA Today financial markets reporter Matt Krantz said he recently asked the producers of Jim Cramer’s “Mad Money” show for a list of Cramer’s stock picks so he could review their performance.
Krantz writes, “CNBC, after considerable prodding, provided a spreadsheet with Cramer’s picks from two of the five segments of each show, excluding the lightning round, in which he answers questions from viewers.
“Based on this incomplete list, Cramer’s picks have gained 16.2%, on average, from the show’s launch March 14, 2005, through March 27, 2006. That makes the Standard & Poor’s 500 gain of 7.3% look pretty sad. Cramer says he’s made his viewers lots of money. ‘I’m very proud of my record,’ he says.
“I provided CNBC’s list to third-party research firm Investars.com, which said, based on the incomplete list provided by CNBC, that the S&P 500 stocks picked by Cramer have performed much better than the S&P 500 at large and his picks of stocks in the small-cap Russell 2000 index have outperformed that index. Investars also found that small-cap stocks recommended by Cramer soar after being mentioned on Mad Money.”
Krantz also writes that Cramer’s performance should be judged against other benchmarks and should consider the commissions that would have been paid.
Read his analysis here.
MarketWatch media columnist Jon Friedman laments what is happening on CNBC, particularly the stock portfolio contest that is being launched. Friedman argues that the stock contest takes away from the business cable network’s serious approach to covering news.
Friedman writes, “But I contend that CNBC is playing a dangerous game by messing with its image as a serious news channel.
“CNBC has distinguished itself from the likes of Bloomberg TV and the defunct CNNfn over the years because it’s far more ambitious than its competitors, based on its distinctive daytime programs and thought-provoking documentaries.
“Maybe it boils down to a question of style and tone.
“CNBC’s business-news coverage is generally solid and sober (except, as I’ve noted in past columns, for its proclivity for annoying happy talk on Squawk Box and other programs).
“CNBC officials may feel inclined to pooh-pooh my arguments by insisting that their promotions have nothing to do with the network’s editorial integrity.
“Not so fast. That Squawk ad went on to say (in convenient small type): ‘Winners appear live on the program.’”
Read his column here.
Ray Unger, who writes a business column for The Capital Times in Madison, Wisc., wishes that the people talking about the economy in the media had a scorecard to determine when they were right and when they were wrong — kind of like the NCAA tournament.
Unger writes, “If only the stock market had a March Madness season, where all the eloquent talking heads could be proven right or wrong over a short time span. For example, last week on CNBC’s ‘Squawk Box,’ the early morning TV business show, co-hosts Joe Kernen and Mark Haines interviewed two economists on the state of today’s typical consumer. They first blustered with an incredible lexicon of economic ‘facts’ that left no doubt that we’re heading for the abyss – consumers are so up to their eyeballs in debt that it’s a foregone conclusion that wholesale bankruptcies are right around the corner followed by collapsing retail sales and GDP. The next economist – almost like a ‘Saturday Night Live’ skit, but with only slightly more tact – said something like, ‘You fool, don’t you see this, this and this and how incredibly wrong you are?’
“If these guys were sports writers at least the outcome of their predictions would quickly determine who was right and wrong. Unfortunately in the business world we have to live with this stuff day in and day out with no game buzzer to end the debate. And you wonder why professional money managers have such a hard time beating the averages.”
Read the column here, and remind me never again to pick Gonzaga for the Final Four.
Scott Collins, who writes the TV industry blog “Channel Island” for the Los Angeles Times, has unearthed a study by some Northwestern University students who say that “Mad Money” host Jim Cramer’s stock picks aren’t helping viewers.
Collins writes, “Essentially, the researchers argue in their March 15 report that the countless fools who rush to act on Cramer’s picks at the start of the next trading day pump up the volume and the price of the share in question, which after a few days will inevitably fall like raindrops in Hana. The only folks who make money are those trading sophisticates who ‘short’ Cramer’s picks â€” i.e., make bets that the stock price will fall. The short-sellers also get a good laugh. What’s more, information about a Cramer pick on ‘Mad Money’ seems to leak out before the 6 p.m. broadcast, so that ordinary traders are virtually guaranteed a higher-than-normal price at the next day’s opening bell.”
Collins also reports, “Asked for comment on the report, a CNBC spokesman complained of ‘huge holes and serious inaccuracies’ and then followed up with this statement, which Channel Island is running in its entirety:
“We welcome academic consideration of the impact of ‘Mad Money w/ Jim Cramer.’ However, while we have not had sufficient opportunity to review this paper fully, we noted several serious flaws.
“First of all, Kellogg has informed us that this is not a Kellogg-sanctioned paper. It is a ‘working paper’ and a posting from three students on a chat site.
“The writers seem completely unaware of or fail to take into consideration that during the time period they examined, Jim Cramer had a nationally-syndicated radio show, available in over 70 markets nationwide beginning at 2 p.m. ET and available globally on the Web at 4 p.m. ET every business day.
“Jim would often mention stocks on the radio show and in his columns throughout the day on TheStreet.com that could later be discussed on “Mad Money.”
“Additionally, Jim does not choose stocks in a vacuum â€” he, like other professional investors, reacts to various news in the marketplace, such as a good quarter, a mention in other media, an analyst upgrade or a settlement of a lawsuit.
“Most importantly, CNBC has instituted stringent policies and procedures designed to prevent the dissemination of the content of ‘Mad Money’ prior to broadcast.”
Read the Channel Island posting here.
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.