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'Distractions' Crushed Sallie? Lord, That's Lame

Don't buy the excuse that the rest of the media apparently did.

How am I? Don't ask. The Business Press Maven's soul feels like it's lost in a howling desert. If you think the business media is ridiculous for constantly parroting the excuse by retailers that "the weather ate my sales," we've now seen worse.

The new reigning most creative excuse maker is

Sallie Mae

(SLM) - Get Report

, the troubled student-loan lender. When reporting a net loss of $344 million vs. a profit of $263 million a year ago, its chairman said at a shareholders meeting that ... the pending buyout made him lose his concentration.

"It's clear that the deal distractions are significant," said Albert L. Lord. "They cost us earnings momentum."

The Business Press Maven will now pause for a moment for comic effect. Heck, let's give it two moments.

Out of the greater than half billion dollar swing between last year's profit and this year's loss, actual expenses related to the contentious merger drama with J.C. Flowers and others ran in the teens. So a half billion minus less than 20 equals ... uh, about a half billion dollars.

So, uh, the actual mental distractions involved must have been pretty heavy, huh? Chairman Lord must have been forced by these distracting circumstances to take his hand off the company wheel, which promptly careened into a ditch.

Even taking this excuse as legitimate (and I'll do it only to make a point), what does it say about the concentration ability and basic competence of Lord that he can even pretend to make the claim that distraction contributed at a level that was even worth mentioning toward a half-billion-dollar profit swing.

He would have been better off blaming student loan problems on the warmer-than-usual September. I can see it now: "It's clear that the warm September meant that more students were out at beaches with no access to the stamps they needed to send in their loan payments."

Anyhow, I don't want to dignify such self-justification with too much space, even to stomp on it with stamp jokes. But it is highly instructive to look at just about all the coverage of the Sallie Mae meeting that I can find. The vast, vast majority reports this excuse straight. It does not take issue, poke a hole, raise an eyebrow or otherwise let investors know that this is just plain ridiculous.

And if you report the ridiculous as a straight story, well, guess what? You are ridiculous too. And you've misled investors.

People often ask me why trust in the media -- business and otherwise -- is so low. This, more than any scandal and as much as any Paris Hilton sensationalism, is why. The act of talking to the public, especially in the business world, has become completely systematized. Everyone is rehearsed, scripted and prepared to within an inch of their lives. And then the business media ambles in to report, with the same old, just-the-fact-ma'am methods they used before public- and investor-relations ruled the earth.

And that is not enough. It simply means that CEOs can too often get away with any old excuse.

The business media, constricted by tradition, can't use humor or ridicule or anything other than an on-the-one-hand-on-the-other-hand method of criticism. And when you play a game of on-the-one-hand-on-the-other-hand with a hustler, you are that much closer toward being hustled. And people lose trust, because you are acting as little more than an extended mouthpiece.

While we are on the subject of hustles, don't get me started on

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retailers and the weather again. They manage to blame any manner of weather for bad sales, and the business media, with typical lack of fight and perspective, plays dutiful stenographer.

Not that weather never has any impact, but even the few times it does, the subtlety is lost in coverage.

For one of the few times ever, I'll agree that the warm September contributed in a slight and small way to disappointing September sales. Just as customers are girding up to by winter clothes ... it's really hot.

But check out how differently these two articles look at the issue.

Although the headline fell too much for the weather excuse:

Warm weather leads retailers to reduce forecasts,

The Financial Times

did a decent job in its lead setting the warm weather against other contributing factors right from the outset. Reporter Jonathan Birchall wrote, in good service to investors: "A dozen leading US retailers lowered their earnings forecasts on Thursday after unseasonably warm weather combined with the continuing housing market slump to slow September sales." I would have put gas prices in there, too, and mentioned both gas and homes before warmth, but check out this

(lack of) effort from



Their lead only mentions the weather, after which they go into a historic breakdown of weather patterns. Gas and housing don't rear their ugly heads until more than halfway through and that, my friends, puts my soul back into a howling desert.

But, dear readers who love to write, help lift me back out. I will be speaking on Oct. 20 at the University of North Carolina's School of Journalism and Mass Communications. Since that is Tar Heel land, I'll be on a panel with Hubert Davis, former Tar Heel and New York Knick at the fall meeting of the Society of American Business Editors and Writers. Hubert will talk on sports media. And as I also write on sports, I'll talk on the difference between sports and business coverage. Which is where you come in. I want to feature some thoughts from readers in my talk. If you are a sports fan in addition to a business wonk, tell me -- which better serves you and why? The business media or sports media? Do tell. And if you are down in Chapel Hill, come by and say hi.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;

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