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Let it be known that the business media can be readily distracted by a Beatle.
The Business Press Maven, little ingénue that he is, sat down to the news coverage of
recent annual meeting, fully expecting to read more about
the famous memo and just where Starbucks, the great though possibly stalled retailer, actually stood.
Almost all I read about was Paul McCartney.
For those of you who are late to this latte story, it started on Valentine's Day, when Starbucks Chairman Howard Schultz wrote a scathing letter to upper management, saying that the company had lost its focus and was running the danger of watering down its brand.
The memo, as these things go, was leaked, and Schultz was put on the defensive. He was
psychoanalyzed, praised for his forthrightness and questioned to the point where he had to come out and say that the memo was not meant as criticism.
But if making detailed remarks down to the lack of fresh coffee smell does not amount to criticism, then The Business Press Maven wears a girdle. (For the record, I don't. I just suck it in.)
At any rate, with this memo kicking him in the shins, Schultz, who had never faced an annual meeting with the stock price below where it was in the previous one, must have known he had some issues to address.
And reporters should have been lying in wait, ready to pounce, prod and, in the end, write about what larger issues this -- once more -- great though possibly stalled retailer must have faced. I couldn't wait. Schultz is as skilled in managing a company as he is in managing himself in front of Wall Street. Unfortunately, too, he is as skilled in managing the press as anyone capable of a transparently distracting gesture has ever been.
Cue Sir Paul.
The coffeehouse chain announced that it would be getting into the music-production business -- and at a high level, with the ex-Beatle's next album its first effort.
This is interesting, worth mentioning and could probably, if it works, help the company a bit. However, the real issue of whether its brand is on the run remains.
So how did the business media handle the balance?
You really didn't ask that, did you?
Take a bunch of baby boomer reporters, wheel McCartney out in front of a camera so he can wave to them on a television screen and, oh boy, do they lose what should have been the major focus of the meeting.
The Wall Street Journal
headline the day after the annual meeting: "Starbucks Signs Paul McCartney To Music Label."
The lead? "In a coup for its music business, Starbucks Corp. said it had lured rock icon Paul McCartney to the new Hear Me Music label it has formed with the Concord Music Group. The company has signed an exclusive agreement with the former Beatle and plans to release a new album from him this summer." Then Schultz is quoted, nearly hyperventilating with excitement.
Five paragraphs later is the single paragraph about the memo, with Schultz allowed to say that he has no idea why it was even news. Then it's back to Mr. Penny Lane and a recent wrap-up of his career.
When business journalists get the chance to write about something sexy like music, they pounce.
But say this about
The Wall Street Journal
: At least it deigned to mention the memo, even if it did not go into all the serious long-term potential issues for investors it brought up. In "
Sir Paul signs Starbucks record deal," the
did not even touch on it.
Neither, incredibly, did
The New York Times
McCartney Signs With Starbucks for His Next Album." The
put the issue in larger terms, remarking on
deal with Garth Brooks. Oh wait, there is a mention of recent performance meeting with mixed results. Oh, right. It was talking about McCartney and his last two albums.
Helter skelter, dudes.
, to its credit,
got it right. It ran with the headline: "Latte Questions for Starbucks' Execs: At its annual gathering, the coffee chain dealt with concerns about a leaked memo, a sagging stock, and a fair-trade tussle." The article was about the memo, the issues it brought up and other issues.
Investors, I'd be careful here. Schultz, though the definition of competent, is running away from this seemingly forthright and spot-on memo like there is no tomorrow. I do not trust that.
Sir Paul? He merited a very appropriate single line in the
piece: "And at the end of the meeting, Schultz confirmed that Sir Paul McCartney will be the first artist to join Starbucks' Hear Music record label, which was announced last week."
Investors, despite what the business media are feeding you, there are more serious issues here for Starbucks, a great company entering a challenging era. Sir Paul is nothing to get hung up on.
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.