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The Conference Board Review® Article The Changing World of Business Journalism
Jay Stuller is a veteran of both magazine journalism and corporate communications, and a contributor to this magazine since the mid-1980s. Perfect Power, his seventh book, co-authored with ex-Motorola chairman Robert Galvin and Kurt Yeager of the Electric Power Research Institute, will be published in August. He can be reached via www.jstuller.com. "All of us learn to write in the second grade," basketball coach Bobby Knight once quipped, "but most of us go on to other things." While aimed at sportswriters, Knight's insult likely evokes empathetic laughter from executives, many of whom think much the same of journalists attempting to cover their company or industry. As someone who earns a living in the discipline of writing — and who in the past endured plenty of rants from high-school and college basketball coaches — I'm less amused. The dynamics behind Knight's remark, however, are fascinating. Americans may be reading fewer daily papers, and our attention spans may be shrinking, but we continue to rely on writers. Along with supplying citizens with useful information on vital issues, news organizations serve as a check on abuses of power that law enforcement might overlook, including misdeeds in government, by the clergy, and, of course, by business. An upbeat CNN spot about a new product can boost a company's reputation with customers and investors, while a Bloomberg exposé about toys colored with lead paint — or a revelation of suspicious disclosures buried in an 8-K that's filed late on the Wednesday before Thanksgiving — can do almost irreparable harm. It's no wonder that executives cast a gimlet eye toward business journalists and, like Knight, resent challenging questions and the power of the pen in the hands of lesser mortals who've never coached the game or taken responsibility for a bottom line. In turn, relatively few executives fully understand or appreciate a reporter's role, motivations, and responsibilities. Meanwhile, these same journalists are on the front lines of a multibillion-dollar industry that's currently undergoing profound change. Business sections of local and metropolitan newspapers are shrinking or disappearing altogether. Thinly staffed publications and local TV news departments now send general-assignment reporters to cover complex business developments, with little background or preparation. Rupert Murdoch's plans for molding his recently purchased Wall Street Journal into a daily paper that competes directly with The New York Times has reportedly left staffers at the august WSJ — which has long defined rock-solid business reporting — uncertain about what should be covered and how. One can rightly also ask whether the tsunami of raw and rapid-fire information on scoop-oriented "insider" business blogs and sound-bite-addicted cable TV channels is supplanting conventional journalism, and whether the emphasis on quantity and brevity compromises understanding. Has society and the profession unraveled to the point where Mad Money's manic Jim Cramer — arguably perched at a far end of the journalistic continuum — has an influence equal to that of the latest issue of Fortune? These are frightening thoughts indeed. Boo-yah, as Cramer might say. "Who'll Protect the Public?" In an attempt to offer informed perspective on questions that probably have few concrete answers, this article incorporates two somewhat different stories wrapped into one. The first deals with the state of business journalism in America, a field that is fragmenting like Pangaea, only in accelerated rather than geologic time. The second part addresses the often-contentious relationship between businesses and the media. I was asked to write this assessment mainly because of a career that includes more than thirty years in corporate communications, mostly at Chevron. That experience allowed me to see and craft features about operations around the world, write speeches for the chairman of the board, deal with outside journalists, and eventually sit on the leadership team of an operating company with 26,000 people and about $8 billion in capital employed, an exposure to the white-hot innards of the business. Over the same three decades, I spent nights, weekends, and vacations writing articles on a wide range of topics for the likes of Playboy, Smithsonian, Reader's Digest, Audubon, and this magazine. I even co-authored a book on the business of the wine industry. When it comes to business and the press, I've been on and appreciate the viewpoints of both sides. And it's critical that business reporting be both better and better-understood than ever before. As Northwestern University journalism professor George Harmon pointed out in a post on the website of the Donald W. Reynolds National Center for Business Journalism: "Sixty percent of the voters are now investors. They must manage their own retirement nest eggs. If companies' books are deceptive, if analysts are compromised, if mutual funds are sneaky, if the Securities and Exchange Commission is undermanned, who'll protect the public?" Well, it might be someone who learned to write in the second grade and failed to go on to other things — which would be worth a chuckle were it not for the fact that business is now front-page news. After all, it was a young Fortune magazine writer named Bethany McLean who, back in 2001, began poking around the numbers of a high-flying Houston-based corporation and at first thought it inconceivable that the company's executives would engage in fraud. But when she wrote a feature headlined, "Is Enron Overpriced?", that corporation's subsequently spectacular, criminal, and now iconic flameout not only dominated business reports but resonated throughout North American culture and beyond. The thing is, we are not only a nation of investors but active participants in a highly competitive global economy that in some dimensions seems to be running askew. We're acutely aware that the fortunes of an individual industry matters to far more people than its employees, since the ripple effect of, say, a mortgage crisis cuts deep across economic sectors and through entire regions. Moreover, there's a pervasive dread concerning what will happen next, and a hunger for someone prescient to hand out clues. Unfortunately, the press hasn't done well in the early-warning department. After all, why didn't the business press catch on to the dotcom bubble before it popped? Where was the reporting on the risks of subprime lending, which in retrospect seem obvious? Why didn't journalists ask whether diverting corn crops to motor fuels might hit global food supplies harder than any climate change? The truth is that even well-trained reporters get just as excited — and as blinded — by novel trends as any entrepreneur or investor. An Entropic Devolution Was it ever different? Was there ever a Golden Age of business journalism, perhaps when Peter Drucker and Ed Murrow combined to deliver timely reports replete with truth, justice, and the American Way of earning an honest profit? Not in this part of the known universe. "But there was a time in the 1980s when business journalism in the United States was a growth area," says Tom Rosenstiel, a former Los Angeles Times media critic who now heads the Project for Excellence in Journalism, affiliated with the Pew Research Center. "The business sections of newspapers were profitable and growing. Journalism schools were packed with students who wanted into the field, and for a time the profession flowered. And then things stagnated." The 2001 recession put a huge crimp in the personal-finance field, which had funded advertising that supported newspapers and business magazines, suggests the University of Missouri School of Journalism's Martha Steffens, who holds the school's Society of American Business Editors and Writers chair in business and financial journalism. As online services and TV channels devoted to business developed, the need for stock listings in newspapers faded, eliminating a major component of the section's reason for being. "The entire business model for newspapers changed," Steffens explains. "Reporters were either sent packing or were moved into the metro section. What we're really seeing now is a shifting of jobs, away from conventional business sections and journals and into more specialized jobs, such as narrowly focused newsletters and business-to-business information sites." In its 2008 overview analysis of the news media, the Project for Excellence in Journalism found these trends both promising and deeply troubling. Newspaper circulation has dropped 2.5 percent within the past year, with advertising revenue falling about 7 percent. Some daily papers have dumped their business sections altogether. And why not, since readers are turning to television, websites, and blogs where they can get the "same" information faster and for free? Some press critics contend that websites and blogs have democratized reporting, busting a centralized iron grip of elite editors and reporters. Consumers can now turn to thousands of niche information sources. Even traditional publications such as BusinessWeek have robust and financially healthy websites, built on articles written by well-trained and well-paid professionals and sufficient advertising to support them. The problem is, without local reporters out on beats — working contacts and attending meetings — a great deal of original news is simply not being uncovered. "In this sense, there really is devolution in business reporting, and entropy throughout the industry," Rosenstiel says. "The real downside of this trend is that local papers don't have the staff or finances to report on business developments. People are stretched thinner and pushed toward general-interest areas. But the business sections are where the warnings of emerging financial issues would first appear. The mortgage-crisis story is something that would have arisen in North Carolina long before it reached New York and national status. The national media is very dependent on local reporting and what's found on the wire services." In fact, as the Pew Foundation report added, "More effort keeps shifting toward processing information and away from original reporting." In other words, bloggers and TV reports tend to simply repackage and recycle information that's developed by the remaining conventional newsgathering organizations. And their lively presentation puts pressure on traditional media to eschew reportage and move straight to analysis and opinion. "Ask the thousands of business journalists who have lost their jobs to newspaper cutbacks and they'll tell you the Golden Age is not only over but has been burned and pillaged," says Jon Hindman, former managing editor of California CEO and currently editor of bizSanDiego Magazine. "The Internet is the major culprit. Why wait for the morning edition when you can see the same news online shortly after it happens? Luckily, business owners, executives, and entrepreneurs are well-read and have insatiable appetites for knowledge. Magazines still have the ability to fulfill those needs and go in depth into stories, versus blogs and other media that just scratch the surface." Augmenting the obvious first-tier publications — The Wall Street Journal, Fortune, Forbes, BusinessWeek, The New York Times — are excellent magazines that have a more specific focus, including Wired (technology) and Fast Company (leading-edge firms). Inc. fills a void on entrepreneurs and smaller companies, while regional publications such as the Seattle-based Washington CEO serve particular areas with business analysis and reporting. In terms of raw newsgathering, the new Thomson Reuters, created in April, offers a powerful combination of journalism and data for which traders and corporations pay good money. Thomson began its life publishing newspapers seventy-eight years ago, while Reuters got its start in 1851, transmitting stock prices from London to Paris via a telegraph cable laid on the floor of the English Channel. Reuters alone brings 2,400 journalists to a merger that should have revenues of about $13.4 billion, twice as large as its next biggest competitor. That would be Bloomberg and its vast offerings of paid information services and free news found on radio, the Internet, publications, and television. These two operations bring vast amounts of material to those who have the appetite to look for it. Sorting out what it all means is another matter. Emotion vs. Analysis Charles Fombrun, a former professor of management at NYU's Stern School of Business and now CEO of the New York-based Reputation Institute, believes that the quality of business journalism has deteriorated, but he agrees with Hindman about a bifurcated industry. "The problems are not so much in writing," Fombrun observes, "as in the emphasis on the sound bite." Television news is, almost by definition, more about emotion than analysis. And yet: Walk into any trading house or corporate trading department, and CNBC or some other news-oriented station will be playing on screens. Again, there's a segment of the business audience that needs raw information, and CNBC now reaches about 95 million U.S. households. (The nine-month-old Fox Business Network channel is available in 35 million households, but the most recent official count turned up only 6,300 weekday viewers.) While occasionally useful, TV coverage of business is little more comprehensive than what's found in wire-service reports, and thus faces questions about its gravity and relevancy. "There's too much in business that's happening too quickly for a sound bite to convey enough information," Fombrun says. "There are high-quality journalists out there, obviously. It's just that for each good one there seem to be about a dozen who are not." In fairness, not everyone in a competitive field gets a job that can showcase his or her skills. And there are two prime reasons — money and time — that excellent financial journalism can be found in almost every issue of The Economist, Fortune, BusinessWeek, and The Wall Street Journal. These publications pay competitive salaries and give skilled journalists — some of whom have MBAs — weeks and even months to pore over 10-K and 10-Q filings, analyze proxy statements, and speak with a couple dozen sources before writing an article. Editors and fact-checkers ensure that each piece is accurate and readable. Leaders in businesses or industries that are covered may or may not like what's revealed, but the product is undeniably high-quality. Still, that quality is hardly permanent, and many see an erosion even at venerable mainstream publications. "I'm just not seeing the same appetite among business journalists to tackle complex stories," says a friend who works in media relations at a large industrial firm. "A complicated story is going to take lots of time to develop and more space to tell than advertising can support. We still pitch the kinds of ideas that journalists like to tackle. But today, their editors often just say no." Where Are the Gatekeepers? This brings us to a segment of the business press where there are few editors to serve as gatekeepers and enforce quality and accuracy: the world of bloggers. As Hindman observes: "Mark Twain once said, 'If you don't read the newspaper, you are uninformed; if you do read the newspaper, you are misinformed.' Insert the word blog in place of newspaper, and you know my exact stance on the blogosphere." Bloggers unaffiliated with mainstream media are like paparazzi. Their "take" on any given company or topic is a snapshot that may generate passing interest, not unlike the latest photo of Britney Spears. As my media-relations friend explains, "Bloggers tend to focus on very narrow issues that are of personal interest to themselves. They rarely travel and investigate a topic in person or in depth." Journalists working for mainline outlets and posting shorter versions of stories on their employer's website probably shouldn't be lumped in with the general bloggers, who contribute more background noise than original music. That noise can, however, irritate and even provoke changes in corporate behavior. After a particularly distasteful encounter with Dell customer service, Jeff Jarvis devoted a great deal of space on his BuzzMachine blog to blasting the company. He and other bloggers with similar experiences kept after Dell for nearly two years. Last year, the company began assigning technicians to work directly with bloggers, followed up quickly and publicly when problems arose with some computers' batteries, and launched a site that facilitates interactive dialogue with customers. Then again, some of the noise is original, although it's worth questioning whether any particular site is really reporting news. Last year, the London Times rated "the 50 best business blogs," and one of its choices was Wal-Mart Watch. Waging a highly transparent jihad against the world's largest retailer, Wal-Mart Watch has clearly had some influence on its target's environmental and business practices. But dubbing an anti-corporate advocacy site a business blog seems to blur purposes and intents — even if readers interested in business and finance are savvy enough to parse advocacy from neutral reporting. The Instant Information Age Yet another criticism of legitimate mainstream journalism is that the national press focuses unduly on the large corporations that make up less than 2 percent of American businesses. As retired BusinessWeek managing editor Mark Morrison told Reynolds Center writer Kanupriya Vashisht: "High-profile companies like Apple, General Motors, or Home Depot have broad followings and get high readership. They are also easier stories to do than finding that interesting story about a smaller business and demonstrating its urgency or usefulness." Morrison believes that business coverage has never been better. "[B]usiness used to be the backwater of coverage, with only a few organizations covering it in depth," he told Vashisht. "There was no real television coverage to speak of either, other than the nightly news reporting that the stock market was up five points or down five points. That's history. . . . These days you have full-time business coverage on television; local newspapers are putting some of their better reporters on the business beat and giving the subject more attention and space. The Internet is full of business coverage. Almost anything you want to know, it's out there." But will it always be there? Remember the shrinking pool of media outlets doing original work. As the 2007 Pew Report states, "There are growing questions about whether the dominant ownership model of the last generation, the public corporation, is suited to the transition newsrooms must make. Private markets now appear to value media property more highly than Wall Street does. More executives are openly expressing doubt, too, whether public ownership's required focus on stock price and quarterly returns will allow media companies the time and freedom and risk taking [needed] to make the transition to the new age." Any prediction about how the entropic devolution of the mainstream business press will shake out is no more than a guess. The fragmentation of forums that cover business may fit well with mindsets and emerging habits of an Instant Information Age. So long as business leaders and investors have a hunger and will pay for journalistic analysis — the audience of which Hindman speaks — it will be provided. While business people rely on the press for information, few are enthralled with the Fourth Estate. In fact, a fundamental mutual mistrust frequently exists between business reporters and executives, the latter of whom like to read about other CEOs but not so much about themselves. Direct contact is where the relationship can get messy. Extraverted Equanimity For good reason, journalists are taught to create stories that carry a tension of positive and negative points. To a neutral audience, a one-sided piece comes across as either pabulum or mean-spirited; neither a totally positive or negative slant carries a ring of truth, simply because life is never that simple. Granted, there are happy exclusives about businesses fulfilling a Make-a-Wish request, just as there are opinion columns that slam a company for its apparent misdeeds, proven or not. But a little balance signals authenticity and impartiality. Much reporting in recent years comes out of a tradition that the Pew Foundation calls the "Argument Culture," in which journalists pose mock debates about issues in television and in print, posing polarizing viewpoints that leave out the middle. In its Project for Excellence in Journalism report in 2008, Pew suggests that media is moving toward an "Answer Culture," in which the likes of Bill O'Reilly and Anderson Cooper combine news and analysis into a fairly one-sided narrative. Their comforting — or enraging, depending on your politics — interpretations are a form of branding. Still, conventional balanced journalism has existed since night watchmen and town criers gave oral reports on the doings of ancient towns and cities. It will likely continue to include negative and positive material for as long as there are open societies. Consequently, this is where the collision of journalism and business resembles two cars after a head-on impact. When Hewlett-Packard chairwoman Patricia Dunn hired private investigators in 2006 to determine which directors were leaking information to the press, the gumshoes talked their way into acquiring the phone records of nine journalists who regularly covered the company. After California's attorney general busted the company, the general consensus of a stunned media and business community was that this was an aberrant deviation. Personally, I was about as shocked as when Captain Renault found gambling going on at Rick's. In an interview with JournalismJobs.com, Bethany McLean explained that her view of corporate behavior changed in the years after her Enron reporting, as she came to appreciate the pressures upon corporations to paint financial pictures that supported stock prices. Mental-health statistics pretty much guarantee that there are a few asocial executives who from the get-go will lie, cheat, and steal to succeed. Others crack under profound stress, and to me it's never all that surprising when humans misbehave in response. Moreover, corporate leaders have always been sensitive to what's printed about them and their operations. "Early in my career, I wrote a story on a company that shall remain nameless," Jon Hindman explains. "Eager to show my research and writing abilities, I dove in and engrained myself in the company's past, did extensive interviews with the CEO and several analysts, and told what I thought was a completely interesting and unbiased tale. I even patted myself on the back for possibly pointing out some things that other companies could learn from, even the company featured in the story. But I learned the hard way that many companies do not fully understand what the media can offer them. This firm took what was an almost entirely positive article and threw it back in my face, complaining that because of a couple of negative comments they could not present the piece to its board, and that participating was a complete waste of time. Since then, I've found people in many companies over the years with a similar attitude. If all the facts aren't 100 percent correct or if the company is not shown in a completely positive light, then they want retribution." Or there's an implicit threat that a reporter just might not get an invitation to a company's next big product release — something that, when issued by a rock-star firm such as Disney or Apple, a tech reporter can't afford to miss. "I find it completely frustrating when public-relations people attempt to control every message and the direction of every story you attempt to do about their employer," says another friend who is a veteran TV reporter in the San Francisco Bay Area, a crack general-assignment journalist who brings a fresh and fairly well-informed mind to business stories. "Some are worse than politicians. And they don't really know what constitutes a legitimate news story. If you offend their superiors, there's always the possibility that they'll cut off access, which puts the reporter in an awkward position. If people at these corporations only understand the concept of takeaway value — which is the general feeling a viewer holds, and is much different from the one or two facts upon which executives angrily fixate — they'd interact with media with much more equanimity." Public Engagement Companies are understandably sensitive about their treatment by journalists, since media reports can ultimately influence analysts, investors, consumers, and even the price of a public firm's stock. Just ask the owner of a new restaurant, or the producer of a Broadway show, what a bad review does for business. And it's plainly evident to me that news organizations all too often headline stories critical of a company or industry with an assertion made by a plaintiff's lawyer or activist group, while burying the company's response many paragraphs below. Whether the charge is real or manufactured — and make no mistake, there are cases in which flimsy claims are no more than organized shakedowns — the fallout is real. In turn, corporations continually court media attention in an attempt to get the kind of coverage that serves as a third-party endorsement of the firm's product or service. While serving as executive editor of the now-defunct California CEO, I received dozens of press releases each week from PR firms, asking that we interview this or that CEO or write about a project or product. There probably isn't a company of any size out there that doesn't have someone tracking its media coverage. And it's the rare executive who doesn't regularly read The Wall Street Journal, several of the major magazines, and a daily clip file with copies of stories about her company or industry, information that's essential for running a business. Ignoring press coverage is like failing to brush your teeth before a date. While I've seldom done much muckraking journalism — or at least stuff that could put people in jail — I know that I've angered a few executives and delighted others. In my books and freelance magazine writing, sources who treat me well usually receive commensurate coverage: honest interpretations, with less-than-flattering points put in appropriate context. Since I was a spare-time mainstream journalist, my former employers figured I could work with others of my ilk. For a brief time in the late 1990s, I was asked to lead a small group within Chevron's Public Affairs department that would proactively reach out to the media and offer the company's executives as sources for stories, so that through these relationships the public might come to better understand the intricacies of the energy business. The effort was a miserable failure. Publications were interested, but Chevron's executives were reluctant to step into the bright lights. It wasn't that they had anything to hide. It's just that the possibility of a wide-ranging interview that strayed from agreed-upon facts about Chevron and its specific place in the oil business ran against an inherently low-key and modest culture. To many at Chevron, Lord John Browne's speeches about BP going "beyond petroleum" were disingenuous, greenwashing before that term was even coined. I also think Chevron's executives saw the error-prone media in much the way Ohio State football coach Woody Hayes viewed the forward pass: Out of four potential outcomes — a drop, reception, interception, or sack — three were bad. Chevron's attitude toward the media has since greatly changed, as has that of chairman Dave O'Reilly, once as hesitant to spend much time with reporters as any of his colleagues. He is now an active voice in public discourse about the environment, energy, and social development. "We just weren't ready for that kind of engagement a decade ago," O'Reilly told me during a chance meeting in San Francisco a couple of years back. "Now it's clear that we need to explain ourselves and the consequences of producing energy. It's too important an issue for us not to participate in the discussion." This new behavior is what the Reputation Institute's Charles Fombrun calls the "extravert" model for dealing with media and other stakeholders. "The old style of refusing to comment, of tightly screening the media and attempting to control all interactions, is the introvert model," he explains. "Some firms can still get away with controlling all of their messages and access to executives. But given the changes in the journalism business, that strategy may no longer be so effective." The Visible Company With dozens of news outlets operating around the clock and bloggers who can magnify the implications of just about any report, controlling emerging issues is almost impossible, adds Tom Rosenstiel of the Project for Excellence in Journalism. The only remedy is to adopt what he describes as the "constituency" model, which is identical to Fombrun's extravert approach. "You need to be transparent about just about everything you can legally reveal," Rosenstiel says. "If you're open with the media and have a good message, they'll likely give you the benefit of the doubt when something goes wrong and push comes to shove." This is plainly what has transpired at De Beers, the world's largest diamond company — a firm that long operated with more secrecy than the National Security Agency. Battered by hostile NGOs, news exposés, and even movies about diamond-trade bloodshed, the company changed its business model, how it works with the country of Botswana — the world's largest diamond supplier — and, not least, how it deals with the press. As Time recently reported, "De Beers now has a small army of public relations experts keen to produce executives for journalists," and has opened its operations for governments, NGOs, and reporters alike to see up close. While this epitomizes extraverted behavior, it also appears aligned with Fombrun's assertion that a company can't just be open with the press "without having a number of systematically built programs in place to address a range of risks." The firms that most successfully manage their reputations, he explains, have professionals dedicated to corporate social responsibility, others to environmental issues, and still others to government policy. The best deal well with the media, since journalists are the conduit to all other stakeholders, adversaries, and potential friends. While oil companies are convenient scapegoats for all sorts of things outside the control of individuals and governments and thus always walk on shaky ground, Chevron today has all of those systems and relationships that Fombrun mentions — as well as a willingness to take the bruises and grudging agreement that comes from openly interacting with journalists. Sure, most of us learn to write in the second grade. But if there's any takeaway value from what's scribbled above, it's that there's a great difference in quality across the profession, just as there is in law, accounting, management, and college basketball. Moreover, savvy journalists don't require head-coaching or executive experience to be effective observers and critics. In fact, a bit of distance actually enables the writer to better select and interpret what's most important to the reader — even if it means telling the old coach to put a sock in it.
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