Maven: When Stories Don't Add Up

The media mix it up with numbers on newspaper ads and stents.
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You don't have to be a forensic specialist in the ways of the business media like The Business Press Maven to realize that most reporters are more comfortable with words than with numbers. Almost all go into journalism because they like writing and have a knack for framing issues in an efficient manner. But they drift sideways, at best, once the subject matter goes from A B C to 1 2 3.

The end result is not usually gross miscalculation but small oversights and misunderstandings that are just subtle enough, if left unexamined, to confuse the pants off investors who then lose their shirts. That's especially due to the subliminal power of a well-written article. You hardly notice the numbers are wrong, because the words sound so good and move so fluidly.

I've found a couple of examples on this average Monday, starting with

The New York Times

,

still covering

the debacle that was February advertising numbers for the newspaper business a week after they were reported. But what was eye-catching here was a third-paragraph highlighting of a piece of good news. The mere mention of good news in the newspaper business gave The Business Press Maven goose bumps.

As I've mentioned repeatedly, no one wants newspapers to survive more than I do, because I get paid by them, I believe they serve society well, and I enjoy nothing more than a counterintuitive turn of fate. Plus, think of my kid's hamster cages.

But those goose bumps, it turns out, were just hives: "And while there was one piece of good news for the industry -- ad spending on newspaper Web sites rose." And later: "On the bright side, says the Newspaper Association of America, ad spending on newspaper Web sites jumped 31.5 percent last year compared with the year before, to $2.7 billion."

With The Business Press Maven's skin red and blotchy, you probably want to know, were these inaccuracies? Not technically. Taken at face value, both claims were true: Ad spending on newspaper Web sites was, in technical terms, up in February. And it was up over last year.

But anyone with a horse sense for numbers and what they truly signify could tell that this purportedly "good news" was actually the worst of all, even more damaging than those super-lame classified numbers. Look at how they've fallen from last year to this!

Ad spending on newspaper Web sites appears to be slowing on a sequential basis. If newspapers are to be a viable business in the future, this is way too early in the cycle to see such a slowing. Never mind that classified ad revenue is falling way out of proportion to subscription loss (that's another unexamined relationship between basic numbers). Here: Web site revenue will never make up for what is being lost on the eroding newspaper side of things, with sequential growth rates in apparent free fall.

Start by getting out

The New York Times

(NYT) - Get Report

February revenue press release

: "Year-to-date Internet revenues at the

Times' three media groups increased 20.5%." That's less growth than they showed a year ago. And in January, that growth was up by 26.2% over the year-ago figure; February showed an increase of only 14.3%.

But let's get back to the article at hand. "Online spending is projected to continue to grow," the paper goes on to tell us. Sure, but growth trending from the 40s a while ago to the 30s to the 20s and now into the teens will not cut it -- even if, to the untrained eye, absolute growth does seem to exist.

"The bad news," we are told, "is that online spending accounted for only 5.4 percent of all newspaper ad expenditures in 2006."

No. The bad news is that online spending is only a sliver of the whole, and it already appears to be slowing. In its release, the Times said the timing of certain advertising revenue skewed the online numbers, already explaining away the weakness. Investors, take this cue and not the declaration that 14% or 12% or 2% or any old evidence of growth stands as good news.

Speaking of good news,

Abbott Labs

(ABT) - Get Report

had some in an important trial for its drug-coated heart stent. These drug-eluting stents have been controversial lately because of the use of numbers in certain studies, so I read about Abbott's promising news with interest. I don't have much to say here, besides "the news looks good." But if you have a moment, compare the way

The Wall Street Journal

does a

nice job

of putting the numbers at play in perspective, comparing results in detail, while

Business Week

writes about the same issue

yet stays clear of all but the most basic numbers.

Anyhow, part of the upside to an understanding of numbers is that they reveal basic truths, which is the key element to lively writing. That doesn't mean you'll read knee-slappers about heart stents. You'll just gain a more complete understanding. But sometimes good use of numbers can lead to increased humor, and anything that makes business journalism bore less enamel off teeth is welcome.

I don't often highlight lines from

TheStreet.com

, if only to avoid appearances of favoritism. But this is a fitting example from

Marc Lichtenfeld's column on the struggles of

Barnes & Noble

(BKS) - Get Report

. In a tough quarter, the company showed an improvement in gross margins. Did Lichtenfeld write of "one piece of good news" or "a bright side"? Uh, no. That's because a major factor in the improved margins was an unprecedented decrease in shrinkage, or theft.

Wrote Lichtenfeld: "So not only are the customers avoiding the stores, so are the thieves."

Too bad fewer business writers do this. When it comes to business journalism, with apologies to the Jackson Five, A B C is not as easy as 1 2 3.

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;

click here

to send him an email.