We are gathered together today to review two ancient foundations of Business Press Maven thought, as they apply to this week's news.
The first is that when a business issue or event crosses over to the popular press -- especially the tabloid press -- there is often a lot of overreaction, inexperience and sensationalism at play, which can lead to investor opportunity.
It's called a Tabloid Trade. It can be a long or short.
Sirius and Stern
On that dark and stormy night when we first met, The Business Press Maven
explained how this was happening with Howard Stern and
. Stern is perfect fodder for the popular press and tabloids. When Fart Man went from terrestrial radio to satellite, he also went from the business pages to the tabloids, and it was covered like the moon landing ... only more so.
The tabloid trade was to short the spread between business reality and the tabloid portrayal
From a business perspective, Stern's $500 million presence was going to do nothing but raise costs and expectations while not doing enough to save a flawed technology. Even assuming he and the technology would succeed, the wide and cacophonous coverage meant there was a spread between reality and the perception of the press ... something every investor has to have a keen eye for.
Tabloids Body Slam WWE
Today's tabloid trade involves
World Wrestling Entertainment
. This week brought tragic news: Chris Benoit, a WWE wrestler, apparently killed his wife and son, before hanging himself.
This was a horrific event with, in the end, some modest business implications. We must, unfortunately, look at everything in cold terms of their effect on business, and the WWE had some issues on its hands, ones that should have unfolded in a containable fashion over a long period of time as the investigation progressed.
By then, fans, who don't seem to be concerned with this sort of stuff anyway, would have essentially forgotten.
But this business news jumped to the tabloids quicker than anything has since Stern was parading drunk, angry dwarfs in front of
Wall Street Journal
Papers were buzzing all week with sensationalistic glimpses of the crime (real and otherwise), innuendo, blame-shifting and headlines, headlines, headlines. Here is a sampling just from the
New York Post
. Notice how steroid rage was instantly blamed, and then there were purported new clues, with murder/suicide then put in quotes. We also had endless loose threads and intriguing details adding up to God-knows-what when a Wikipedia page on Benoit may/may not have been altered to reflect the tragedy before it had actually been discovered.
"Wrestle Maniac's 'Roid Rage"
"New Clues in Benoit 'Murder-Suicide'"
"Nancy Benoit's Death Reported Online Before Police Found Bodies."
You would think that WWE would try to let this all pass. But under pressure from all this nonsense, they made one of the larger mistakes in the history of press releases.
The WWE released
this press release along the Business Wire, which actually contained clues and a suggestion about what might have transpired.
Cue up another round of tabloid action.
The larger point (the only sane one here) is that with tabloid action comes the involvement of both amateur investors and false business assumptions. In Stern's case, a lot of inexperienced investors were throwing money at the notion that Howard would drive satellite radio to instant heights. With WWE, it is that the business has enormous troubles on its hands -- in terms of steroids and off-kilter employees -- and this will affect the loyalty of its fan base. (As all these problems are known quantities, I don't think so.)
A Little Perspective, Please
While we are on the subject of tabloid trades, let's talk the King of Tabloids, Rupert Murdoch. As he closes in on his pursuit of
The Wall Street Journal
, let's review the second ancient foundation of Business Press Maven thought: Even the best business publications have a thin and faulty relationship with numbers.
Even if Rupert transforms the
into a publication that covers the financial implications of the Paris Hilton jailing, he could improve it if he'd just require the reporters go to real-life numbers school.
A big story in Thursday's paper provided yet another good example.
Here was a five-column, top-of-the-page headline on A8:"
China Shuts 180 Food Plants in Safety Push." Systematic problems, we are told in the subheadline, are acknowledged by the government. We are told about a nationwide sweep, tons of unqualified food and a lack of national standards. But we are not told the only thing that matters, the one number someone with any basic sense of them needs to know ... how many food plants are in China?
reporters who worked from home to protest Rupert's impending purchase missed a callback. But if there are 1,000 plants in China, then this is truly a nationwide sweep. If there are 1,000,000 plants in this vast country -- then this looks like a hollow gesture, not evidence of any emerging national problem or standard.
Heed the Oracle?
Finally, The Business Press Maven has gone against two of his own ancient foundations of thought in perhaps my worst call ever, so far. I never go against one of the few geniuses in American business -- Larry Ellison. And I never compound a mistake by holding to my opinion, despite the numbers. Let's see how this one plays out, though, because I still feel that
acquisition binge (a word that if oft-used but does not capture its scale)
will be hard to integrate, organize and manage. The business media portrays Ellison as able to walk across the water he famously sails across, but let's wait and see. ...
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.