Tag Archives: Commentary
by Chris Roush
One of the continuing arguments about the quality of financial journalism is that in the past it wasn’t as tough as it should be in uncovering unscrupulous companies and fraud.
However, new research by a British professor — James Taylor of Lancaster University — shows that the financial press during the Victorian era played a more active role in exposing and reporting fraud than what has been previously thought, lending credence to the argument that business journalism has a long history of serving as a corporate watchdog.
Taylor’s work, published earlier this week by the Institute of Historical Research at the University of London, focuses on coverage of the Independent and West Middlesex Fire an Life Assurance Company, which was exposed as a Ponzi scheme 80 years before the Boston media discovered Charles Ponzi. The company collapsed in 1841, and its executives disappeared, after critical coverage
“No reader of the nineteenth-century press can fail to be struck by the sheer volume of coverage given to the subject of white-collar crime,” writes Taylor.
Taylor notes that some British newspapers did not write laudatory articles about the insurance company, which was a large advertiser in its issues. But many papers did examine its operations, including one — the Scotch Reformers’ Gazette — that hired detectives to investigate the company and then ran a series of articles in 1839 based on what was discovered.
The insurer tried to quiet some of the journalists by offering bribes, which were refused. It also began libel proceedings against some papers. But after The Times sent a clerk to its offices to collect payment on an advertising bill and found the office empty in early 1841, most of the London papers wrote extensively about the company’s demise.
By 1843, after exhausting its investigation into the insurer, writes Taylor, “There is evidence that the mainstream London press was already beginning to envision a more active role for itself in tackling company fraud.”
He found stories that called companies “a worthless bubble” and a “jobbing company.” The Times became especially aggressive, found Taylor.
“In the aftermath of the I.W.M., London’s financial journalists staked a claim to respectability and status not so much on the strength of their knowledge, their contacts or their literacy skills, but on their willingness to expose fraud,” concluded Taylor.
I’ve long argued that there’s plenty of evidence that business journalism in the United States has been a watchdog for much longer than people are willing to admit, dating back to Ida Tarbell’s writing about the Standard Oil Co. in the first decade of the 20th century and Henry Demarest Lloyd’s writing in the Chicago Tribune in the 1870s about robber barons.
Taylor’s research pushes the beginning of watchdog financial journalism back to an even earlier time.
by Adam Levy
If political reporters are behind the curve and missing the real story, what about business journalists? Are they, too, remiss in reporting what really is going on at the companies they cover?
This past Sunday, Sasha Issenberg presented a strong argument in The New York Times: political journalists aren’t even good at covering what’s devolved into a horse race — let alone the issues, ideas and basis for what it takes to govern. The Slate columnist quoted Terry Nelson, who served as John McCain’s campaign manager in 2008, on how easy it is for campaigns to obfuscate real issues in an election: “The ability of campaigns to run circles around journalists in some places is strong, and it’s not healthy.” Nor, as Issenberg posits, is it likely to improve.
I started thinking about whether financial journalists were any different. As a financial journalist for two decades, my defense of business-news reporting was swift and steadfast: Sure, political reporters can be duped, but not business journalists. But that sentiment didn’t last long.
Companies are not more naïve than political campaigns. Both corporation and political strategists have mastered the ability to shape their message and reveal only as much information as they need or want to disseminate. My years of reporting on businesses have been counterbalanced by almost seven years of working with companies and executives to help them find their voice, and articulate their message – or at least the message they want to articulate.
The dynamic between journalist and campaign is not fundamentally different than journalist and company. Executives, like candidates, have been prepped. They know how to pivot away from controversial topics and talk about the things they want to talk about. They know what to reveal and what not to talk about.
Reporters might think they know a company and understand its inner machinations. I doubt it. I hazard a guess that most company profiles capture a sliver – say 10-20 percent — of what really happens at a company.
Why so little? Issenberg writes “journalists tend to mistake the part of the campaign that is exposed to their view … for the entirety of the enterprise.” Her point is that the travel, speeches, and TV ads, aren’t the whole story. Same with financial news. It’s fascinating to read about the hedge fund manager who booked his wedding at Versailles, or the company founder who has six homes, a vintage car collection, a vineyard or a hoodie-wearing predilection. Who cares? It may be slightly insightful to read about where a CEO went to school and what sport he excelled in despite his height or speed – telling signs about his competitive drive.
I’m not sure this information will help any reader decide whether to buy or sell a stock or provide insight into whether this executive is equipped to run the company. Instead, it’s just creating the cult of personality around the CEO, not the promised inside look at whether he or she is right to run the company.
Issenberg finished up her article in the Times by stating that we might be spending more time than ever covering elections, but we’re covering the wrong things. “We’re looking at the wrong part of the track and don’t know how many legs are on a thoroughbred.”
That’s what financial journalists need to do: count the legs. In business journalism, it’s all about the numbers. That’s what separates financial journalists from the rest: they have at their disposal a huge array of numbers that can help them shape their coverage, their interviews and provide revealing, nuanced, informed insight into companies.
I’ll forgo the anecdote about a CEO’s wedding or putative boardroom dust-up (the information is bound to be one-sided and lacking the perspective from the other side). Yep, I’ll take a pass on the next lead about how CEO X was a Yale rower or a Michigan shot-putter and the lessons learned from the blisters on his hands.
Instead, give me a cash flow analysis. Show me that a company overpaid for its recent acquisition. Walk me through the thought process of how a hedge fund manager profited from the collapsing Euro.
Political reporters may be doomed to reporting fluff. Financial journalists do so by choice.
Levy is a partner in 30 Point Strategies and a former Loeb Award winner as a business journalist for Bloomberg News
by Liz Hester
Bloomberg Insider, the political convention print publication by Bloomberg News, has an interesting opinion piece by “The Editors” (whatever that means) analyzing if the country is better off than it was four years ago.
The story (full version here) is a thoughtful and a wide-ranging depiction of the current economic state and outlines the many different factors that must be considered when thinking about the question. Topics touched on include: the state of the housing market, response to the financial crisis and government debt.
The central argument is this:
The most important answer to the “better off” question is this: Americans on the whole are better off than they would have been without the stimulus. But (yes, there’s always a but) many are worse off than they were four years ago, and that means more work needs to be done. The recovery remains weak and long-term unemployment is threatening to impair the country’s growth potential. Median household income stood at a seasonally adjusted $50,964 in June, according to economic-consulting firm Sentier Research. That’s down an inflation-adjusted 8 percent from December 2008.
The story then takes a look at several of the factors people use to gauge the economy. But one two-paragraph section on financial safety was interesting, pointing out that Dodd-Frank reform was still pending and that the six largest U.S. banks account for more of the system than before the crisis.
The New York Times’ Mark Landler and John Harwood did a similar story, agreeing that the verdict in the case is complicated:
But if Mr. Romney believes the “Are you better off?” question will be political kryptonite for President Obama, he will have to reckon with an economic scorecard that is more mixed than he and other Republicans are claiming on the campaign trail. American voters, too, have more complicated feelings about their fortunes, and those of their children, than they did when Mr. Reagan first posed the question.
The half-full argument, which the Obama campaign will promote at the Democratic convention here this week, holds that the economy is far stronger than it was at the depths of the recession in early 2009 when it was bleeding 800,000 jobs a month.
Tepid though it may be, the pace of this recovery is on a par with the aftermath of other post-World War II financial crises, like those in Asia and Latin America.
While blaming Wall Street for the nation’s troubles has been easy fodder for both Democrats and Republicans, the industry continues to dominate and many firms continue to attract more money. No matter how you feel about banks, greater consolidation likely won’t hurt too much if they’re properly regulated. But seems like that’s a big if at this point.
It’s also interesting to note that corporations are still sitting on record amounts of cash. Some of this can be blamed on political uncertainty, worries over the Euro-zone crisis and the fact that those with more marginal credit are finding it hard to get loans.
But hoarding cash means most businesses aren’t hiring, building new plants or developing new products as quickly. It also means they’re not earning anyting on that money with current rates near zero. As inflation comes back into the picture, companies are no only losing out on the opportunity to invest today, but also on potential investment ability in the future.
As for housing, it’s getting better, but not quite where it needs to be. According to a recent Wall Street Journal story, sellers’ asking prices are rising and time on the market is declining:
Not including foreclosed properties, asking prices were up 3.8% from a year earlier, Trulia said. The biggest gains were in the Southwest, which has been rebounding from the housing bust, with asking prices up by more than 24% in Phoenix.
With housing demand recovering and home construction lagging, buyers are getting impatient for fear that they have missed the bottom of the housing market, said Jed Kolko, Trulia’s chief economist. However, sellers may be still holding off putting their homes up for sale in hopes that they can get a better price in the future as the housing market gradually climbs back.
This appears to be great news, but how strong is the recovery? The article didn’t account for the nearly impossible-to-quantify numbers of people delaying buying or selling. It looks like the asset of the past will likely continue to have some challenges.
There are some indicators that confidence is returning to the economy as well. As the Times story reported:
In July, the United States added 163,000 jobs. The economy, which contracted 6.7 percent in the first quarter of 2009, expanded 1.7 percent in the second quarter of this year. Stocks rose too: the Wilshire 5000 market index rebounded from 9,087 in January 2009 to 14,258 last month.
So, the answer to the question, “Are you better off now than you were four years ago?” continues to be complicated. Businesses are grappling with regulatory uncertainty (potential reversal of health care being a large one), political turmoil and looming national debt coming up for renewal.
It’s no wonder that business journalists can’t figure out the answer.
by Chris Roush
Because most American business journalists are not working this Labor Day, we’re going Down Under to Ian Verrender, the business columnist for the Sydney Morning Herald who is leaving the Australian paper.
Verrender’s goodbye column is on the demise of the business journalist. He writes:
Because, unlike politics or sport, those running big business have a great deal of power. Veer too far from the press release, question a little too aggressively and the mighty weight of a corporation suddenly is hovering above, threatening litigation, demanding your dismissal. The chief executive probably knows a few people on the newspaper company’s board.
Little wonder then that most business reporters default to the easy option. And many begin to believe they are part of the business world, that the reason they are being squired to upmarket restaurants, to corporate boxes and offered trips to exotic places is that they are part of the team.
The stories become ever more technical to impress their contacts. Every sentence is littered with impenetrable jargon. In the end, there’s so much wood, they forget a forest is even in the vicinity.
Eventually, the industry starts leaking ”scoops”. It’s a mutually beneficial relationship, a wonderful symbiosis, where the bankers boost their deal-making prowess and bonuses and their pet reporters become gun news breakers.
It speaks volumes that one of the best pieces of journalism about the events of this decade came, not from The Wall Street Journal, but from Rolling Stone.
by Chris Roush
Yvette Kantrow, the executive editor of TheDeal.com, writes about why business journalists were not excited when Gawker posted documents from Bain & Co. related to presidential candidate Mitt Romney.
Kantrow writes, “Their nonchalance — and Primack’s admission that he possessed the same documents but didn’t think they were newsworthy — got some of their colleagues in the more mainstream media into a lather. In addition to a Twitter spat between Marketplace’s Heidi Moore and Primack over the latter’s news judgment (a spat that, amazingly enough, was covered by The Huffington Post), The New York Observer ran a piece by Foster Kamer headlined ‘Gawker Exclusive Reveals Financial Journalists at Their Most Jaded.’ According to Kamer, ‘Besides the totality of the ‘Bad Look, Sour Grapes Flavor’ on display here,’ Primack’s and Weisenthal’s reaction ‘serves to further demonstrate a level of remove on the part of journalists who regularly come into ostensibly unsurprising information that would otherwise be relevant if not downright compelling to people who don’t regularly come into contact with that kind of information. In other words: to the public, the entire reason for the existence of a fourth estate.’
“Ah, the public. Both Primack, who specializes in private equity and venture capital, and Weisenthal, who is obsessed with markets and what moves them, serve audiences who represent a small, specialized segment of the so-called public. This fact explains why they yawned at Gawker’s Bain dump — there was likely no news in it for their insidery readers — and why the rest of the media is so irked by them. The argument against them goes something like this: They are uniquely qualified to explain private equity to the public but chose not to, undoubtedly because they’ve been corrupted by their sources. Even worse, they scoff at those, like Gawker, attempting to fill that role. As Gawker put it in a follow-up post: ‘Those who understand the operations of equity firms abdicate a responsibility to the public when they handwave away the details of stuff like those 950 pages of Bain files.’
“That idea was also touched upon by Kevin Roose, in a well-reasoned piece on the value of the documents on New York Magazine’s Daily Intel blog: ‘Gawker’s trove of documents could theoretically narrow the knowledge gap, if journalists who do understand how private equity works are willing to explain what it means (and why it’s not an all-out scandal) to laymen, and if those laymen are patient enough to sit through the explanation.’ From where Roose sits, largely three groups understand Romney’s investments: ‘those who work in the financial sector and those journalists who cover either private equity or the Romney campaign.’”
by Adam Levy
Your news organization has enticed you with a tempting boondoggle. Go to Davos, Switzerland, and report on the comings and goings of some of the biggest names in business, politics and entertainment.
Or, perhaps, the destination is Sun Valley, Idaho. Ah. A summer week in Sun Valley during the investment firm Allen & Co.’s annual get together.
The answer is a no brainer: you go. After all, this offer is too tempting to refuse. For starters, there’s the belief that you’ll have unfettered access to the biggest news makers in a secluded locale. And — let’s be real — there are the perks: hiking in the Sawtooth Mountains, mountain biking down the slopes in Sun Valley, skiing in Davos, and cocktail parties, concerts, and more. I should know. I’ve been to both (to be fair, the World Economic Forum I attended was in New York in early 2002 because of the security concerns that followed 9/11).
While I had a blast at both events, I’m not sure there was much if any news value in covering these events. In fact, I think that the news coverage provides the event planners with more free publicity than anything else. But that hasn’t stopped the breathless reporting. As I read the coverage this summer from Sun Valley, I smiled, and thought that the game still is being played to the benefit of the event planners and the lucky reporters.
One headline — actually it was a punctuation mark in the headline — that brought back the memories of covering these events. The Daily Mail, a British daily, previewed Allen & Co.’s summer gala in its the online headline (I don’t get the print edition): “Summer Camp for Moguls!”
What’s it really like to cover Allen & Co.’s mogul summer camp? Well, one year I stayed at the Lodge and in a condo another year. My neighbors were Haim Saban, Buzz Aldrin (he lives there, wasn’t attending the conference. I had drinks in the lobby bar at the same time that Rupert Murdoch and Paul Allen were nursing beverages. I saw Michael Dell have a picnic lunch with his kids. I saw Oprah chatting up Bill Gates for a long time. I took the chair lift up Sun Valley ski resort and rode a mountain bike down. I found an awesome natural hot springs not too far from where Ernest Hemingway took his life. I ate and drank well.
Sure I filed stories. But they weren’t really worth much. Most of Sun Valley was cordoned off as “private.” Lots of ropes, closed doors and security guards. Me and my fellow reporters would hang around, excluded from the presentations, and wait for some luminary to gently break Herb Allen’s dictum of keeping the meetings secret. Here and there, we’d get a crumb. John Malone would tell us a little something about a presentation. Nothing controversial, but it was uttered by an A name quoting another A name. Phil Knight would say the bare minimum – and we’d get a headline.
The meetings weren’t closed to all the press. Some celebrity journalists — Ken Auletta, Tom Friedman, Anderson Cooper, among them — sat in the audience or moderated a panel and honored the code of silence. Of course, my then boss Mike Bloomberg was in attendance as was Rupert and other media barons who owned the television networks, magazines and newspapers that all of us on the other side of the ropes worked for.
The story line was that SOMETHING big was happening, or might happen, and it happens here. After all, Disney’s Michael Eisner and Capital Cities/ABC’s Tom Murphy were in Sun Valley when they cooked up their deal to merge their companies. But that was 1995.
Since then, not much has happened. And Sun Valley has morphed into a business version of Cannes. And the reporters are playing right into. And Allen & Co. is benefitting, grabbing countless breathless headlines touting the importance of the conference, punctuated, even if occasionally, by an exclamation point!
Here’s my thought: what if the media decided not to cover it? What if all the reporters and film crews just didn’t show. That would deflate the self-importance that permeates Sun Valley.
Of course that would also ruin the summer vacation for some journalists!
Levy is a partner in 30 Point Strategies and a former Loeb Award winner as a business journalist for Bloomberg News
by Liz Hester
Progressive Corp.’s insurance division has been under fire lately for a public relations disaster, which started with a blog post that quickly spread through the Internet.
Matt Fisher, fed up with his family’s treatment by Progressive in the wake of his sister’s death, wrote this post detailing his side of the story. In it, he talks of their struggle to get Progressive to pay a claim after his sister was killed in a car accident in 2010. The blog post was picked up and the story spread.
Progressive, which has a $12 billion market value, was trying to avoid paying $75,000 to the Fisher family. Under Maryland law, the Fisher’s couldn’t directly sue Progressive but instead had to take the other driver to court to prove negligence and hope to force Progressive to pay the claim.
Progressive’s response was this statement, claiming it did not act as the defendant’s lawyer. This prompted Fisher to update his blog pointing out that Progressive had a lawyer in court sitting at the defendant’s table. The Huffington Post later reported that Progressive provided counsel at the trial and only represented the company, not the defendant.
This is the first and possibly the largest mistake Progressive made in its public relations debacle – hiding behind a technicality. While Progressive’s statement wasn’t false, it was misleading. Any goodwill they would have received by a show of sympathy was negated by how it looked when more details of their actions came out.
Besides the statement, the Progressive machine took to Twitter to respond to some of the comments. What it didn’t do was actually respond. Progressive posted the same, canned response using the TwitLonger app to exceed the 140-character limit:
“This is a tragic case, and our sympathies go out to Mr. Fisher and his family for the pain they’ve had to endure. We fully investigated this claim and relevant background, and feel we properly handled the claim within our contractual obligations.”
CNN Money’s Brian Patrick Eha said it best:
Pro tip for big brands: When talking on Twitter about how you handled a customer’s tragic accident, the phrase “contractual obligations” is unlikely to play well.
This clearly shows that Progressive didn’t fully appreciate how quickly a story like this can go viral and do some serious damage to its reputation. They also seem to have little understanding of how to phrase responses.
One of the biggest mistakes a large brand can make is sounding like a big company run by corporate drones, particularly under the harsh glare of the business media. There’s nothing in the tone or phrasing of this statement to indicate a person is behind it. What many brands have trouble with is taking a well-evolved corporate tone and putting it into the “voice” of social media.
The appeal of social media is that it’s real people talking about issues, opinions, politics and lunch. You can turn to Twitter to find out where your favorite food truck is parked and the latest official statement from the Romney campaign. But many large corporations struggle with sounding less corporate and earning the trust of those who get their information from social media.
It sounds simple, but once you get layers of lawyers, communicators, product and marketing people in a room trying to come up with a Tweet, the outcome sounds insincere. There’s no magic formula, but as Eha said, the phrase “contractual obligations” sounds cold in the face of a family grieving for a lost daughter.
What’s also shocking is the lack of public apology to the Fisher family. Progressive responded after the verdict with this statement explaining its version of the case’s facts and saying it’s working with the family. The tone is again corporate and technical. The “sympathies” conveyed seem hollow and perfunctory.
Comments on the company’s site indicate that many find this explanation lacking in empathy. But, Progressive should get credit for leaving the unflattering comments up. This indicates it does understand the basic principle that transparency is always best.
I’m sure that the public relations department is under a lot of fire for their handling of this case. Having watched many other PR disasters unfold publicly it is surprising the company would try to defend themselves with nuanced legal arguments instead of admitting wrong and trying to fix it.
Most PR people will tell you that if you made a mistake, admit it, apologize, and fix it. This can help quell the outrage, silence the opposition and allows the company to take control of the story and its place in the news. By owning up to mistakes and following through with fixing them, company’s can appear more human.
If Progressive had simply apologized and worked to fix the issues with the Fisher family, it’s unlikely that Matt Fisher’s blog posts would have been shared more than 10,000 times. And many of those outraged by their response, may have been talking about their ability to own up to mistakes and be transparent when fixing them – something that most people have come to expect.
And if that doesn’t work, send in Flo.
by Chris Roush
Reuters announced Wednesday that policy analyst Reihan Salam will write a weekly column for Reuters Opinion.
Salam is currently a policy advisor at e21 and will continue to serve as lead blogger for the National Review’s “The Agenda” and as a contributing editor at the National Review, where he writes on politics and policy, economics and culture.
“I’m delighted to add Reihan Salam to the list of distinguished Reuters Opinion contributors,” said James Ledbetter, opinion editor, in a statement. “Reihan is a bright, fresh, thoughtful writer with wide expertise and a keen mind, and I’m confident that his insights about politics, business, and culture will enlighten and challenge Reuters readers, both in the U.S. and throughout the world.”
Born in New York and raised in Brooklyn, Salam attended Cornell University and later transferred to Harvard, where he concentrated in social studies. Upon graduating in 2001, he launched a career in journalism at The New Republic, after which he held positions at the Council on Foreign Relations, The New York Times, NBC Universal’s “The Chris Matthews Show,” and The Atlantic Monthly before accepting a fellowship at the New America Foundation.
He now holds his positions at e21 and the National Review, and is also a CNN contributor, an interviewer for VBS.tv, and has appeared on a variety of television and radio programs both in the United States and abroad. Salam is co-author with Ross Douthat of the 2008 book “Grand New Party.”
“Having admired Reuters Opinion since its inception, I’m very eager to start writing for its large and growing audience,” said Salam in a statement. “This is a moment of roiling economic change and cultural conflict that is shaping our politics in a number of weird, unpredictable, and often contradictory ways. My column will be an attempt to make sense of it.”
by Chris Roush
Doug Kass writes on Real Money, an online publication of TheStreet.com, about how some business journalists have turned into political commentators.
Kass writes, “I have very strongly held political beliefs, but I feel as strongly that my platform in my diary on Real Money Pro is an inappropriate forum for me to deliver and voice my views.”
He later notes that business journalists should follow the model set forth by broadcaster Marty Glickman, formerly the voice of the Knicks and Giants:
“Glickman emphasized that the most important roles of a broadcaster were to repeatedly tell the score and to visually and lucidly describe the game’s plays and action. A good broadcaster, he said, doesn’t coach; he lets the game tell the story.
I bring this up, in part, because some of the business media has and will continue to voice their political views, and similar to my political views, no one should be interested in their political stands and/or opinions.”
Read more here. A subscription to Real Money is required.
by Chris Roush
TALKING BIZ NEWS EXCLUSIVE
On Sunday, The (New Orleans) Times-Picayune and its website, NOLA.com, announced the new management team that will oversee the paper and website’s editorial content.
There is just one problem — no one was named to oversee business news coverage. It’s a glaring omission and it shows how far business news has fallen in a newsroom that once produced top notch business and economics coverage, particularly in the aftermath of Hurricane Katrina.
I’m sure that the paper, and its website, will continue to cover some business stories. But without an editor devoted to business news, I believe coverage will suffer. The Times-Picayune is basically allowing the two weekly papers and the Baton Rouge daily to come into New Orleans and cover whatever business news it wants.
Unfortunately, this is happening across the country. Many dailies have given up on being the newspaper of record for business news in their cities. Their business news desks are emaciated and can not possibly cover all of the business and economics stories that need to be covered.
That is why the weekly business newspaper will grow in prominence in cities such as New Orleans and the broadsheets will now be an afterthought when it comes to business news.
Charlie Crumpley and Kim Quillen, the past two business editors for The Times-Picayune, must be disappointed that all of the work they did to build up business news in the Crescent City is now being thrown away.