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One of the ancient foundations of Business Press Maven thought is that the media has a liberal bias, but investors take heed: This does not play out as you might expect, that is, in clear preference of Democrats over Republicans. Rather, there tends to be a larger, ongoing and overriding thread of confidence in the competence of government, one that can cut across party lines.
The bias takes many forms, including the notion that America can go to war in Iraq, remake its complicated society and be home by dinner. From the investor's perspective, of course, this media bias is part of the underlying reason that each round of government statistics on, say, GDP is reported as if handed down from the mount on a tablet, even though the government is the gang that can't shoot straight on these numbers, which are revised repeatedly. And, it bears mentioning today, there is often the awed thought that if the government cracks down on an industry, that industry is instant and permanent toast.
Reality, of course, plays out differently. A government crackdown is often done for show or political expediency, and bureaucratic concentration (or competency) on any particular issue does not last long.
In fact, when President Bush rammed through surprise legislation banning online gambling, the business media gave the industry up as being permanently dead, causing The Business Press Maven to
implore investors to keep their eyes on a revival.
Though things looked grim, what with online gambling officials being carted off to American jails and the business media talking about the activity (literally) in the past tense, The Business Press Maven was pointing to the historic incompetence and temporary nature of government crackdowns. Said me: "History is on the side of a comeback, from alcohol in the time of Prohibition to healthcare in the waxing years of Clinton." To online gaming in the reign of Bush?
Look at these recent headlines and tell me if this ain't true. And even if you are not interested in investing in the stocks of
, which have seen signs of life lately (though they are only for the super-aggressive), you must realize that once again the media have been wrong in assuming the government was right.
Here is a basket of recent -- all encouraging -- headlines and leads on the topic. Note to readers: I look forward to resuming my online poker career.
, this ace:
: "Signs that the U.S. may reconsider its 2006 online gambling ban offer European operators hope for reentry into the lucrative U.S. market."
, we have a pair:
US lawmaker gives online gaming hope of repealing ban
: "Shares of online gaming companies jumped yesterday after a powerful Democratic lawmaker gave the industry a glimmer of hope that the internet gaming ban passed in the US Congress last year might be repealed.
"Barney Frank, the Democratic chairman of the House financial services committee, said in an interview with the
that the ban, formally known as the Unlawful Enforcement Gambling Act, was one of the 'stupidest laws' ever passed."
: "PartyGaming has begun talks with US justice authorities in an attempt to lift the threat of any possible action against the online gambling company for its dealings in the US."
What a reversal from those obit-style headlines we were seeing last fall. No surprise for one who isn't taken with the competency of governmental action and crackdowns.
As an aside, please notice how the business media also thinks in absolutes. Online gambling companies? They are all doomed. Wait, no -- they are saved. Same story, twice the headlines. You can afford to ride a story one way and the other when you aren't locked into a stance by putting your money where your mouth is, which should be food for thought for every investor who doesn't want to be misled by the business media.
On the issue of bias, there is clearly one against Rupert Murdoch. For his tabloid ethics and rank boosterism of one political side over another, The Business Press Maven has plenty of his own issues with Rupert.
But look at how bias against Murdoch has warped coverage of the
( DJ) saga in the last day or two. Workers at Dow(n) Jones, who tend to think of Murdoch as one might a particularly bad plague, have approached supermarket magnate, leveraged buyout biggie and failed newspaper acquirer Ron Burkle about the possibility of aligning for some sort of counteroffer.
It appears to be the introductory phase of talk that won't go anywhere. With Dow(n) Jones' interconnected assets, there's little to sell off in order to finance a big leveraged buyout. In other words, unless the buyer is completely nuts, the company itself has to be used as leverage, a loss leader for other related products. And union rank and file will never risk their retirements on the long-term viability of a newspaper alone.
About half the coverage reflects this. The
of how Burkle is helping the union "explore options" in an appropriately perfunctory vein.
But the thought of a collective of business journalists banning together to defeat Murdoch makes others lose their heads: "
And look at this
, followed by the lead, "The bidding for Dow Jones has just become a lot more interesting."
Uh, no. Earliest stage talks that will go nowhere do not amount to competition and are not interesting. Biases are not interesting, either. But they can be treacherous to investors who get fooled by them.
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 Fertilemind.net, 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;
to send him an email.