Time Warner's Loss Due to Writedown

Beware business media headlines that fail to mention hefty writedowns in their earnings coverage.
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Wall Street Journal, you alarmist little devil, you should know better. Almost everyone else did.It all started when Time Warner (TWX) reported this morning, falling into the red because of a watermelon-sized writedown.

As we all know, when a loss is the product of a write-down, the business media, in the interest of avoiding the even-more-harmful implication that continuing operations caused the earnings beat-down, should mention the writedown right there in the headline. Right?

Well, not according to today's

Journal

, which, admittedly, is usually more responsible with this sort of thing. Here's its headline: "

Time Warner Falls Into the Red

."

The

Journal

mentioned the (ouch) $24.2 billion in write-offs in the first sentence, but by then the damage was done to those (and there are so many) who get their news and notions by skimming the headlines.

While the stately

Journal

earned an incomplete, the wire cubs at the

Associated Press

managed to earn an A. They mentioned the writedown in both the headline and subheadline, lest you got the wrong idea: "

Time Warner swings to 4Q loss on hefty writedown:Time Warner swings to 4th-quarter loss, weighed down by $24.2 billion writedown

."

How did our own

TheStreet.com

fare this morning? I really wish you hadn't asked that. It went the alarmist route: "

Time Warner Posts $16 Billion Loss

."

Look, there is enough to worry about in Time Warner's report that I wouldn't touch the stock with a 30-foot pole. But without the charge, it did earn 23 cents a share. This fell below expectations (again, that 30 foot pole), but it's better than the billions upon billions in losses that headlines implies. Moreover, the company announced that it was going to take the loss last month, so it couldn't have come as a surprise to the business media.

Still, here was

MarketWatch

at 6:30 a.m., echoing

TheStreet.com

: "

Time Warner reports $16 billion loss

."

I much preferred, ironically enough,

MarketWatch's

6:08 take: "

Time Warner reports $16 billion loss on write-offs

."

Maybe the reason so many members of the business media got it wrong on Time Warner is that the earnings were generally crummy. By contrast,

The Wall Street Journal

managed to get it right this morning with its coverage of

Alcatel-Lucent

(ALU)

, which also posted a loss due to a writedown but beat expectations on an operational basis: "

Alcatel-Lucent's Net Loss Widens on Hefty Write-Down

"

With the

Journal

now tied at one headline mentioning a writedown and one not, Let's take a look at its coverage of

Kraft

(KFT)

.

On an operational level, Kraft was about in line, maybe a penny light on the earnings side. It said cautionary things going forward, but as far as operations go, its report was only slightly disappointing. So what happens?

MarketWatch

went with the alarmist: "

Kraft Foods fourth-quarter profit plunges 72%

."

The

AP

, once again, distinguished itself by working the writedown into the headline so that investors wouldn't lose their breakfast over the apparent scale of the loss: "

Kraft Foods 4th-quarter profit falls: Kraft Foods 4th-quarter profit falls due to restructuring costs

."

And how did the

Journal

break its tie? Well, it had the wherewithal to mention the writedown in the lead, but look at this headline: "

Kraft Posts 72% Drop in Net, Cuts Outlook

."

We might not have gotten an upset in the Super Bowl, but in writedown reporting this morning, the

Associated Press

knocked off

The Wall Street Journal

.

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

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven� column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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