Tag Archives: New York Times
NYT names Murphy new biz editor
by Chris Roush
New York Times managing editor Jill Abramson sent the following staff announcement out on Wednesday afternoon:
I am pleased to announce that Dean Murphy will be the next editor of Business Day. Dean is one of our most accomplished editors, a staunch advocate for reporters and a fine writer himself. He has a wonderful eye for stories, from news to enterprise. His years of reporting from abroad and from both coasts as well as his role as deputy national editor brought heart and breadth to our already superb business report.
This year in Bizday Dean edited some of our most groundbreaking work, stories that reflect the ambition and imagination of Bizday’s reporting team — David Barboza‘s stories about the hidden wealth accumulated by the family of Wen Jiabao, the iEconomy series, and Degrees of Debt.
Dean came to The Times after working as a foreign correspondent for The Los Angeles Times, with postings in Warsaw and Johannesburg. After joining The New York Times in 2000, he covered Hillary Clinton’s Senate campaign and Michael Bloomberg’s “long-shot” run for mayor. As San Francisco correspondent, he covered the successful — and colorful — campaign of Arnold Schwarzenegger. Dean became deputy national editor in 2005, and moved to the business section in 2010, as a deputy.
Larry Ingrassia will take on a larger role at the paper, the details of which will be announced in the new year. But this is a good moment to stop and applaud a great business editor, who led his staff to three Pulitzer Prizes, and many other awards. Larry led the coverage of the country’s economic collapse, pushed the kind of accountablity journalism that has become a hallmark of The Times, and led a digital transition exemplified by the creation of Dealbook and the Bits blog. And he had great partners, including Winnie O’Kelley, one of our finest editors, and, of course, Dean.
Murphy has been a deputy business editor at the paper.
Trying to make sense of housing
by Liz Hester
There were two interesting stories in this weekend’s New York Times. One pointing out that mortgage lawsuits are still weighing on banks, and thus lending. The other talking about how large investors are moving into the real estate market.
Let’s take a closer look at the situation. Here’s the consumer and banking side, according to the Times.
The nation’s largest banks are facing a fresh torrent of lawsuits asserting that they sold shoddy mortgage securities that imploded during the financial crisis, potentially adding significantly to the tens of billions of dollars the banks have already paid to settle other cases.
Regulators, prosecutors, investors and insurers have filed dozens of new claims against Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and others, related to more than $1 trillion worth of securities backed by residential mortgages.
Estimates of potential costs from these cases vary widely, but some in the banking industry fear they could reach $300 billion if the institutions lose all of the litigation. Depending on the final price tag, the costs could lower profits and slow the economic recovery by weakening the banks’ ability to lend just as the housing market is showing signs of life.
The banks are battling on three fronts: with prosecutors who accuse them of fraud, with regulators who claim that they duped investors into buying bad mortgage securities, and with investors seeking to force them to buy back the soured loans.
The key to that is that it might hamper their ability to lend to individuals. But the Times also published a story that said large investors where increasing their bet on housing using the example of financier David N. Miller.
Today, he has slipped back through the revolving door between Washington and Wall Street. This time, he has gone the other way, in a new company, Silver Bay Realty, which is about to go public. He is back in the investment game and out to make money with a play that was at the center of the financial crisis: American housing.
As the foreclosure crisis grinds on, knowledgeable, cash-rich investors are doing something that still gives many ordinary Americans pause: they are leaping headlong into the housing market. And not just into tricky mortgage investments, collateralized this or securitized that, but actual houses.
A flurry of private-equity giants and hedge funds have spent billions of dollars to buy thousands of foreclosed single-family homes. They are purchasing them on the cheap through bank auctions, multiple listing services, short sales and bulk purchases from local investors in need of cash, with plans to fix up the properties, rent them out and watch their values soar as the industry rebounds. They have raised as much as $8 billion to invest, according to Jade Rahmani, an analyst at Keefe Bruyette & Woods.
The Blackstone Group, the New York private-equity firm run by Stephen A. Schwarzman, has spent more than $1 billion to buy 6,500 single-family homes so far this year. The Colony Capital Group, headed by the Los Angeles billionaire Thomas J. Barrack Jr., has bought 4,000.
Perhaps no investment company is staking more on this strategy, and asking stock-market investors to do the same, than the one Mr. Miller is involved with, Silver Bay Realty Trust of Minnetonka, Minn. Silver Bay is the brainchild of Two Harbors Investment, a publicly traded mortgage real estate investment trust that invests in securities backed by home mortgages.
The story goes on to say that Silver Bay is going to become a publicly traded REIT focusing on properties in some of the hardest hit states like Nevada and Arizona.
So taken together, banks could have less reason to lend to consumers, while big time investors are putting money into the sector. That means that in five years, we could have a lot more people renting homes from large investment firms and fewer loans on banks’ books. The downside is the loss of a generation of homeownership and the equity they could potentially earn.
Either way, the housing market is still trying to find its new normal.
Bloomberg is logical buyer of New York Times
by Chris Roush
Douglas McIntyre of 24/7WallSt.com believes that Bloomberg is the most logical buyer of The New York Times.
McIntyre writes, “Bloomberg would be the steward of the editorial independence of the Times that the controlling Sulzbergers want. He has not meddled in the editorial activities of the huge Bloomberg News operation or those of Bloomberg BusinessWeek, which Bloomberg bought from McGraw-Hill Companies Inc. in 2009, despite the magazine’s dilapidated financial situation.
Many members of the Sulzberger clan likely want out of the family’s ownership of the company. Only a few members benefit much from their stakes — mostly Arthur Sulzberger Jr., the chairman of the Times. His hefty compensation package has brought him about $6 million a year for each of the past three years. A sale would spread the wealth to a number of other family members.
The revenue of the Times continues to contract, and only the paywall that the Times has erected around its flagship has helped the drop from being more dramatic. In the third quarter, revenue for the company fell 0.6% to $449 million. Newspaper advertising results were much worse. Advertising revenues fell 8.9% for the period. Even digital ad revenue, which is supposed to offset the drop in print, contracted by 2.2%. Paid subscribers to the Times online division rose again, but there is a natural limit to the number of people who will pay to get the Times digital edition.
Who got the story right on the Bangladesh factory fire?
by Adam Levy
Last Wednesday, on a flight to Washington DC, I read an article in both the Wall Street Journal and New York Times about the horrific fire in Bangladesh two weeks ago in which 112 people died in a factory producing clothes for Wal-Mart.
Both articles were respectful of the tragedy and the magnitude of the disaster. That’s where the similarities end — and left me thinking one publication dropped the ball on reporting this crucially important story.
I read the Journal first and my takeaway was that poor ol’ Wal-Mart is almost an innocent bystander in this tragedy. The article seemed to point fingers at the retailer’s supplier, which, reportedly, skirted the rules for informing Wal-Mart that it was subcontracting some of its work.
Here’s what the Journal wrote:
Wal-Mart, for instance, says that it is the suppliers’ responsibility to use factories approved by the company, and it warns in an extensive manual that suppliers can be banned from doing business with it if they fail to get that approval.
Simco (the supplier) was familiar with those rules, because it has been making clothes for Wal-Mart for more than a decade and sells 70% of its production to the company, the senior Simco executive said. Yet he said Simco sent the girls’ shorts order to Tuba Group without Wal-Mart’s prior approval.
Many of the Journal’s assertions were sourced to documents on various companies’ websites. The story wrapped up with an old comment by a Wal-Mart executive saying it isn’t financially feasible to help improve fire safety in Bangladeshi factories. A Wal-Mart spokesman said that comment was taken out of context.
The Times’ coverage was markedly different. It was direct and damning. “Documents Indicate Walmart Blocked Safety Push in Bangladesh” was the headline. It cited documents showing that a Walmart official in 2011 played the lead role in blocking an effort to have global retailers pay more for apparel to help Bangladesh factories improve their electrical and fire safety.
And it left me convinced that Wal-Mart knew that the subcontractor had been producing clothes for the company. Here’s a paragraph from the Times article:
“It was not a single rogue supplier as Walmart has claimed — there were several different U.S. suppliers working for Walmart in that factory,” Mr. Nova said. “It stretches credulity to think that Walmart, famous for its tight control over its global supply chain, didn’t know about this.”
I don’t know if the Times nailed this story and the WSJ was too soft. But that’s the impression I got from reading both. And this is no ordinary story. This is important and newspapers of record and influence HAVE to get this right. Why? Because getting this story right can raise pressure on Wal-Mart and other global retailers to help fund fire safety measures throughout the world, and, hopefully, avert a tragedy like this from ever happening again.
Watching CNBC is bad for your health
by Chris Roush
Add Paul Krugman of the New York Times to the list of people unhappy with CNBC‘s “Rise Above” campaign about the fiscal cliff.
Krugman writes, “No, this is what the audience wants. And it’s what they want even though the Austerian stuff the network peddles has been wrong, wrong, wrong, wrong (have some fun with Chittum’s hyperlinks on Larry Kudlow). Never mind that the Keynesians have been right about interest rates, inflation, austerity, and more; the audience wants to hear about the debt crisis and hyperinflation coming any day now unless we cut taxes on the rich, or something.
“Actually, you see a lot of that in the comment threads whenever Joe Weisenthal says something reasonable about macroeconomics; what you see isn’t just disagreement, it’s blind, spluttering rage.
“It is, I believe, a tribal identity thing; the consumers of business news want to see themselves as part of the economic elite, although they mostly aren’t. And Chris Mooney wins again: we’re talking about personality types who aren’t responsive to evidence. Indeed, the more often you show them that their hard-money, anti-spending prejudices have been proved wrong, the more deeply those prejudices become entrenched.
“So what’s the moral of the story? Maybe it’s this: don’t spend much time watching CNBC. It’s bad for your financial and intellectual health.”
Read more here.
New York Times unveils hidden wealth for Chinese leaders
by Liz Hester
The New York Times’s David Barboza published an incredible story Friday, Oct. 26 on the hidden wealth of Chinese prime minister Wen Jiabao’s family. In the magazine length piece, Barboza details the power, business dealings and wealth the prime minister’s family has amassed during his political tenure.
The story is an impressive piece of journalism, especially given the Chinese government’s censorship, lack of business disclosure and that top party officials and their families are exempt from disclosing their holdings. That’s right, Barboza pieced together all the information in a country that actively hides and covers up stories.
From the story:
Many relatives of Wen Jiabao, including his son, daughter, younger brother and brother-in-law, have become extraordinarily wealthy during his leadership, an investigation by The New York Times shows. A review of corporate and regulatory records indicates that the prime minister’s relatives — some of whom, including his wife, have a knack for aggressive deal making — have controlled assets worth at least $2.7 billion.
In many cases, the names of the relatives have been hidden behind layers of partnerships and investment vehicles involving friends, work colleagues and business partners. Untangling their financial holdings provides an unusually detailed look at how politically connected people have profited from being at the intersection of government and business as state influence and private wealth converge in China’s fast-growing economy.
Unlike most new businesses in China, the family’s ventures sometimes received financial backing from state-owned companies, including China Mobile, one of the country’s biggest phone operators, the documents show. At other times, the ventures won support from some of Asia’s richest tycoons. The Times found that Mr. Wen’s relatives accumulated shares in banks, jewelers, tourist resorts, telecommunications companies and infrastructure projects, sometimes by using offshore entities.
That is an impressively long list of industries and sectors. No one can accuse these investors of not diversifying their holdings. The story goes one to chronicle how members of the family made money and the influence they wield to get ventures through the notorious Chinese bureaucracy.
History is full of leaders and their families using power and control to amass personal fortunes. The extent to which Wen’s relatives have made their fortunes is impressive since they’ve done it during a time when China is allowing more and more private investment.
That means they’re not only manipulating the system, they’re also taking advantage of mutual funds, pensions, private equity firms, banks and other global financiers. Everyone wants a piece of China, which is poised to become the world’s largest economy and continues to post impressive growth while the rest of the globe is stagnant at best.
The Times makes it clear there is no direct link between Wen and his family’s investments. In fact, it’s unknown how much he knows, but:
Because the Chinese government rarely makes its deliberations public, it is not known what role — if any — Mr. Wen, who is 70, has played in most policy or regulatory decisions. But in some cases, his relatives have sought to profit from opportunities made possible by those decisions.
The prime minister’s younger brother, for example, has a company that was awarded more than $30 million in government contracts and subsidies to handle wastewater treatment and medical waste disposal for some of China’s biggest cities, according to estimates based on government records. The contracts were announced after Mr. Wen ordered tougher regulations on medical waste disposal in 2003 after the SARS outbreak.
In 2004, after the State Council, a government body Mr. Wen presides over, exempted Ping An Insurance and other companies from rules that limited their scope, Ping An went on to raise $1.8 billion in an initial public offering of stock. Partnerships controlled by Mr. Wen’s relatives — along with their friends and colleagues — made a fortune by investing in the company before the public offering.
Much of that money for the Ping An IPO came from outside investors. It’s hard to compete on a field that’s so obviously tilted in favor of the home team.
But it’s not just foreign investors who are being harmed. It’s also the Chinese people in general. Many families still struggle to make ends meet while their leaders as amassing vast personal fortunes. As China modernizes and their economy grows, the once communist country is quickly creating the world’s widest income gap.
Using influence, information and connections to grow wealthy is as old as time. What’s concerning for investors and foreign businesses is that they can’t be sure of what they’re getting into and who actually owns it. It’s also concerning for a global economy that there’s a huge income and wealth gap being created in the world’s second-largest economy. It’s a shaky foundation in an already uncertain world.
NY Times names new investigative biz reporter
by Chris Roush
New York Times business editor Larry Ingrassia sent out the following staff announcement:
We’re pleased to announce the David Kocieniewski will take a new assignment in Business Day, as an investigative reporter covering multinationals and how they operate around the globe.
David has displayed his great reporting chops in various assignments at The Times, most recently as Bizday’s tax reporter, winning the Pulitzer Prize for explanatory reporting for his series on tax avoidance, “But Nobody Pays That.”
In his new beat, David will delve into a wide range of issues that have become increasingly important in the global economy – everything from how companies sell their products (and to whom), to how they tailor their products for different (sometimes lower) standards and regulations, to how they treat their workers, to how they decide where to locate their manufacturing plants.
David will continue to help cover tax matters through the election and the end of the year. But Bizday will be looking for a new tax reporter to fill his very big shoes. Yes, covering taxes can be mind-bogglingly complicated, but it hugely important and can be fascinating for a creative reporter who likes to dig deep. And did I mention that both of the last two tax reporters in Bizday (David K. and David Cay Johnston) both won Pulitzers for their coverage? Internal candidates only for this guild reporting position.
Who could be bidding for the FT?
by Chris Roush
Amy Chozick of The New York Times talks with deputy business editor David Gillen about what might happen to The Financial Times now that the CEO of Pearson, its parent, is stepping down.
NYTimes, USA Today and two North Carolina papers win Barlett & Steele Awards
by Chris Roush
The New York Times, USA Today and a joint project by The Charlotte Observer and The (Raleigh) News & Observer won gold, silver and bronze awards respectively in the sixth annual Barlett & Steele Awards for Investigative Business Journalism, the Donald W. Reynolds National Center for Business Journalism announced Thursday.
Named for the renowned investigative team of Don Barlett and Jim Steele, whose numerous awards include two Pulitzer Prizes, these annual awards funded by the Reynolds Center celebrate the best in investigative business journalism.
GOLD: “Vast Mexico Bribery Case Hushed Up by Wal-Mart after Top-Level Struggle,” by David Barstow of The New York Times, received the top gold award of $5,000. Barstow obtained hundreds of confidential documents and interviewed important players in the company’s internal inquiry. He discovered Wal-Mart had received powerful evidence that its Mexican executives used systematic bribery payments totaling more than $24 million to obtain zoning rulings and construction permits.
SILVER: “Ghost Factories,” by lead reporters Alison Young and Peter Eisler of USA Today, received the silver award of $2,000. The series involved a 14-month investigation that revealed locations of more than 230 long-forgotten smelters and the poisonous lead they left behind. Reporters used handheld X-ray devices to collect and test 1,000 soil samples to prove there was a serious threat to children living in dozens of neighborhoods.
BRONZE: “Prognosis: Profits,” by Ames Alexander, Karen Garloch, Joseph Neff and David Raynor, received the $1,000 bronze award for a joint project of The Charlotte Observer and The (Raleigh) News & Observer. Reporters dissected finances of large institutions through documents and sources to paint a compelling picture of nonprofit hospitals that function as for-profit institutions—often to the detriment of their care and charity missions. Discovered were inflated prices on drugs and procedures, lawsuits against thousands of needy patients and minimal charity care to poor and uninsured patients.
Read more here.
Advertising Week! Cats and dogs living together!
by Liz Hester
It’s Advertising Week 2012! Ok, so no one’s actually jumping out of a chair to run to New York, but Tanzina Vega and Stuart Elliot do have an interesting story in the New York Times about the five-day event.
As the world relies more on digital, companies are trying to figure out the best way to reach more segmented audiences, sometimes with shrinking budgets. This year’s conferences are increasingly focused on social, mobile and digital media – a far cry from the “Mad Men” days of beautiful print ads.
It was also a chance for social media companies like Facebook and Twitter to help advertisers better understand the value of advertising on social networking sites. From the story:
Facebook took the opportunity of a session at the Mixx conference to answer questions about the efficacy of buying advertising on its site — questions that were widespread even before the company’s disappointing initial public offering.
Brad Smallwood, director of pricing and measurement at Facebook, discussed the findings of a study the company hoped would change advertisers’ minds about depending on measurements like clicks to determine the success of campaigns on facebook.com. The goal is to have them perceive the social network more as a medium akin to television for branded advertising.
“If you ran a campaign in the last five years, you focused on clicks,” Mr. Smallwood said, but “demand fulfillment is only one piece of the marketing puzzle.”
“We have to provide a solution for the brand marketers of the world,” he added.
The study was conducted with a new Facebook partner, Datalogix, a company that measures in-store purchases. Fifty campaigns on Facebook were measured, for brands from giant marketers like Nestlé, Procter & Gamble and Unilever. When purchase data from stores was combined with data about ad impressions on Facebook, the study found that 70 percent of the campaigns enjoyed three times greater return on their budgets, and 99 percent of the sales came from consumers who did not interact with the Facebook ads.
I’m not sure that last part proves the point (unless it’s an error), but needless to say, advertisers are definitely looking for more engagement and better ways to measure their success.
I’m bringing this up since the topic of advertisers was discussed by one of the more interesting panels at last week’s Society of American Business Editors and Writers conference last week. The person with some of the most radical ideas: Bloomberg Businessweek editor Josh Tyrangiel.
Web advertisers are struggling and seem to be constantly chasing two-year-old trends, Tyrangiel said. For example, right now the hot buy is video and video pre-roll, but adding a 30-second advertisement to the beginning of every video is bad for advertisers and creates a terrible user experience, he said.
Tyrangiel said he’d like to see advertisers spend more money and not just slap the same banner ad up on every site. Companies who spend more to create a custom ad experience on different sites will “nail it on engagement.” With the rise in specialized content and people willing to pay for the information they want to receive, advertisers will have to consider a different approach to their online and mobile campaigns, Tyrangiel said.
And if customization is the key for online advertisers, then companies need to figure out how to better use social media tools to engage customers. From the Times story:
At another Mixx presentation, Joel Lunenfeld, vice president for global brand strategy at Twitter, shared data about the relationships people have with brands on twitter.com.
Nine out of 10 people on Twitter follow at least one brand, Mr. Lunenfeld said. Although most said they did so for promotions, coupons and free products, he said that 87 percent said they followed brands for fun and entertainment and 80 percent said they did so for access to exclusive content.
Among the examples presented by Mr. Lunenfeld were how brands like Panasonic and Procter & Gamble use Twitter. Perhaps most interesting was Mr. Lunenfeld’s connection between Twitter posts and television commercials.
“Twitter is the EKG of action for television,” he said, adding that 50 percent of people who use Twitter do so while watching TV.”
I find this factoid about TV and Twitter staggering. Smart companies don’t just slap a Twitter icon on the bottom of advertisements; they’re finding a way to engage the audience. And another key question for companies is how to integrate all these platforms to create a cohesive experience.
Forbes.com contributor Rhonda Hurwitz wrote in a recent post that companies typically fail with social media in one of three ways. They either outsource too much, put the department responsible for social media off to the side or don’t engage employees in the process.
As companies spend more on social advertising – it’s expected to more than double during the next five years to 18.8 percent of total marketing spend, Hurwitz said citing CMOsurvey.org.
That’s a lot of people throwing money as something not fully a part of the business. And for those who write about advertising and marketing, it’s important to pay attention.