Foot-stomping is not an official form of applause, but The Business Press Maven is in no mood to cheer -- unless it is in the English style of the disdainful slow-hand clap.
At issue is an article from Friday's
Wall Street Journal
, which earns this week's dreaded Business Press Maven "Back of the Hand" award. It is also an important article to kick in the head, as it serves as evidence of how far the business media overreaches just to pile onto the latest market sentiment.
If things are good, they all but will good story lines into existence. If a few bad days pass -- even after three consecutive months of good -- they begin to will negative story lines into existence. Even, in the case of both positive and negative, when the facts don't quite match.
This week, for example, was a bit grim, so the
ran with an alarmist story on the health of LBOs -- leveraged buyouts to the uninitiated. Were they also trying to send some sort of subliminal message to their future boss, Rupert Murdoch? Well, let's not fall into a fit of paranoia, although there is such a forced quality to the story, you just can't help but wonder.
Granted, there have been so many deals in the past few years that the law of averages alone means that a good number will fail. (Jim Cramer and George Moriarty offer some data and opinion on this
Wall Street Confidential video
.) And as The Business Press Maven, no advocate of the pace or quality of many recent deals, has said, there have been some real bad ones put together where debt is way too high or the companies bought out operate in industries The Business Press Maven would not go near with a 39 ½-foot pole.
But so far, most of the recent private-equity buyouts have held up nicely or are at stages where it is too early to judge them. How am I certain? Well, that line about how most of the recent deals have held up nicely and, besides, it is was too early to know -- was lifted from the
story, where it made up the entire third paragraph.
And what was its headline of this decidedly negative story? "Boom Aside, Not All LBOs Look So Hot."
Never mind that the sports equivalent of this headline, during the Cleveland Cavaliers' unlikely run into the NBA Finals might be: "Finals Run Aside, Not All Cleveland's Shots Go In."
The lede presses the point, pointing out more of the obvious: "Not everyone's making money hand-over-fist doing leveraged buyouts lately." Should they be? Is the fact that they are not indicative, then, of anything? I'd actually be more wary of a market in which they were. That is the definition of a top-heavy market.
So what's the grand total of the sample here, justifying the existence of the article?
Uh, four. And one is a newspaper, which means it would be struggling pre-LBO, post-LBO or no-LBO. None of this sample is even tanking (though they very well might, given time). They are just showing signs of what the article terms strain and struggle.
For an article that implies a turn in the pace and fate of LBOs (did I mention the graph titled "Less Breathing Room"?) there needs to be more and better evidence. To make a point in journalism, you do not need the rigors of a scientific sample. Daily journalism simply has to move faster than that.
But, savvy investors, that's exactly why you do have to notice that when things are going well, the business media roll out any excuse for a positive article. And when the prevailing winds are grim, you get this sort of thinly reasoned crud.
Speaking of willing story lines into existence, I mentioned earlier in the week how
Rupert Murdoch is viewed as an ogre by much of the business media. (Not undeservedly, if you ask me.) Journalists have been working overtime forcing alternate bidder story lines into existence. (Undeservedly, if you ask me.)
It got worse as the week progressed. Or regressed, as the case might be.
To demonstrate a point, then, I am going to make an announcement.
"If there is a formalized bidding process," for Dow(n) Jones, "it would be," The Business Press Maven's "intention to participate." However, he "wouldn't do it alone."
And I've never, just so you know, bought anything that cost close to as much. And I already have my hands full. But I kind of sort of intend to bid -- if there is a bid -- and if enough people pony up $6 billion so all I'll have to put in is my bicycle and pair of 15-year-old housecats.
Now sit back and watch the headlines appear about how The Business Press Maven might ride to the rescue, keeping the world safe from Rupert. That is essentially what happened when Brian Tierney, a former public relations honcho, who knows how to issue statements that get him in the news but have lots of wiggle room, started to get spoken about -- in legitimate terms -- as possibly making a superseding bid for Dow(n) Jones. (Those were his words and circumstances I was aping above.)
I think the probability of an outside, higher bid for Dow(n) lies somewhere in that vast space between zero and nil. But look around at these story lines taking this nonsense seriously from the end of the week, willed into existence not by blind trend-followers (like above) but by personal preference:
The New York Times
even gives Sumner Redstone a tweak for not "stepping into the fray." Is this a fray? Or just Rupert and a few fakers?
, owned by Rupert, notes in a kicker to an article on the potential takeover that "shares of Dow Jones slipped 16 cents to $60 a share, a sign investors didn't think much of the new expressions of interest."
How funny that Rupert's outfit is one of the few who pointed that out. Think they might be operating in an environment where willing a different story line into existence is the smart move?
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.