The 5 Dumbest Things on Wall Street: Oct. 1

(5 Dumbest article updated with information on the SEC's preliminary report on the May 6 flash crash.)
5. BP CEO and Safety? It's Déjà Vu All Over Again

A new BP ( BP) CEO has arrived and he has an important message -- his middle name is safety.

Errr, wait a second. That can't be right. BP CEO Tony Hayward is out as of today, and that whole safety thing was his talking point, wasn't it? But new BP CEO Robert Dudley is making big waves about safety too. This is downright confusing. Is Dudley reading off Hayward's index cards, or are the index cards just interchangeable? Maybe it's just some oil-sector version of Freaky Friday, with the safety talk swapping bodies regardless of which CEO, incoming or outgoing, is mouthing them.

Unfortunately, history has proven that when it comes to BP and safety, the words-versus-deeds dichotomy has never been more pronounced.

Indeed, new BP CEO Bob Dudley is emboldening an internal affairs division of BP, and giving it "sweeping powers" over safety in every aspect of BP's operations. And who's the head of the new BP safety SWAT team? None other than Mark Bly, author of the 200-page BP oil spill report, which in the words of Congressman Ed Markey (D. Mass) drew the conclusion that BP deserved one-half of the blame for just one out of eight factors that caused the oil spill.

BP stressed in its management restructuring that there would be a thorough audit process for third-party contractors -- which sounds like tough talk from a company finally taking operational safety seriously, doesn't it? Of course it does, until you realize that the statement amounts to little more than the ongoing spin that BP is pursuing in the oil-spill legal game, spreading the blame to other companies, most notably Halliburton ( HAL). Halliburton's "bad cement job" was Bly and Hayward's summation of the oil spill incident.

At a larger level, Dudley's restructuring of the exploration and production division of BP, its bread and butter, into three divisions with three direct reports to Dudley instead of one, looks good on paper, like all management theory doodling. Which means it's just as likely to devolve into Office Space-esque corporate absurdity, and be scrapped by BP before long. It's like the baklava of management theory: when things start to crack, just add more layers and at least it covers up the mess beneath.

TheStreet Says: Maybe the "sweeping powers" of the new BP safety SWAT team aren't so hard to understand: Bly and his squad will be vigorously sweeping under the rug any BP safety lapses.

4. Discovery Gets Crabby

Discovery ( DISCA) set out to strike crab gold a second a time with a spinoff of its hit show The Deadliest Catch. Instead, the network has ended up tangled in a legal battle that threatens to send both the spinoff and one of its flagship series down a ratings abyss.

After six seasons of The Deadliest Catch, Discovery looked to break out captains Johnathan and Andy Hillstrand in their own show, appropriately titled Hillstranded. Sounds great on paper, but anyone who has seen the show, much less produced it, may have gleaned that Bearing Sea fisherman are reliable when it comes to pretty much one thing -- fishing. After that, not so much.

When the Hillstrand brothers allegedly didn't complete the spinoff, Discovery decided the best way to deal with quite possibly the toughest guys on the planet was to file a $3 million lawsuit against them. Even if Discovery was in the right, the company's legal team may have failed to comprehend the difference between these reality stars and, say, the cast of Jersey Shore.

Captain Johnathan and Andy are no Snooki and JWoww. They do not require the presence of television cameras to confirm their own existence. Cameras or no, they'll be fishing next month, next year and likely five years from now. And the presence of cameras on deck and in the wheel house does nothing to get more crab on the boat and pay the crew.

On Tuesday, Captain Sig Hansen, probably the most well-known of the captains, sided with the Hillstrands. In a joint statement, the three fishermen said they will be "unable" to continue with the show due to the litigation. Hansen added that he has not reached an agreement with Discovery regarding next season, but that he still plans to go fishing on Oct. 15, cameras or no.

So, Discovery's lawyers may win the day in court, but Deadliest Catch won't likely be near the draw without the Hillstrand and Hansen clans on board, so to speak. Last season's episode chronicling the death of Captain Phil Harris drew 8.5 million viewers, the largest for Discovery since 2000 and third-largest in the network's history. Next season, those numbers may sink faster than a crab pot. Advertisers and investors should love that.

TheStreet Says: We've got five words of advice for Discovery: Captain Mike "The Situation" Sorrentino. You can thank us later, Discovery.

3. NFL to Fans: "Drop Dead"

The NFL is on pace to break a record this season, but not one that many fans are likely to celebrate.

As we head into the fourth week of the season, the NFL is on pace to break a five-year high reached in 2009 of 22 games being blacked out in their home television markets. Uh, go team!?! The beleaguered Tampa Bay Buccaneers have had all of their home games blacked out, while the San Diego Chargers and Oakland Raiders have each triggered the blackout by failing to sell out their stadiums

NFL rules dictate that games are to be blacked out in the home television market if it doesn't sell out within 72 hours of kickoff. Heading into this week, San Diego and Oakland have been blacked out and the St. Louis Rams -- who needed a 24-hour extension from the league to sell out Edward Jones Stadium last week -- are asking for the same this week.

So why does the NFL's attendance continue to drop (down from 17.3 million in 2008 to 16.7 million last season) while its TV ratings rise (up 15% last season)? Sports pundits blame poorly performing teams, the NFL blames the markets, the fans blame fickle followers, economic instability and myriad viewing options. All of the blame, however, rests with the NFL and its almost suicidal approach to shoring up its revenue stream.

The NFL sure ain't hurting for money, with Team Marketing Report reporting a 4.5% hike in the NFL's average ticket price this year to $76.47, as 18 teams raised the cost of attending a game in 2010. The average cost for a family of four to attend a game this year eclipses $420 -- or $95 more than the average cost of DirecTV's all-inclusive NFL Sunday Ticket package.

Ticket prices aren't the lone scapegoat, as teams in blacked out markets this year have either maintained last season's ticket prices (Oakland and San Diego) or actually lowered them (-2.9% in Tampa). If St. Louis is blacked out this week, it will be in spite of a 6.3% cut in ticket costs -- the second steepest in the league after the Atlanta Falcons' 8.1% discount.

Part of the explanation is the economy, which has hit both Florida and California especially hard. But a bigger part of it, however, is the NFL itself. The league's deals with Fox, CBS, NBC and ESPN bring hours of content into homes each week in high definition and, for the most part, for free. Cable subscribers can thank the NFL for helping to make ESPN a whopping $4.10 of their cable bill each month and its own NFL Network the fifth-highest-priced channel in cable, according to figures from SNL Kagan. However, those offerings and the NFL's exclusivity deal with DirecTV ( DTV) that offers all its Sunday games in HD (though still subject to local blackouts), its rebroadcast of games on, and its increasing interest in its fantasy football operations -- which now include video highlights -- are taking their toll at ticket counters.

The NFL only piled on the problems this season by allowing fans with DirecTV, Comcast ( CMCSA), AT&T ( T) U-Verse, Verizon FIOS and a handful of other service providers access to its high-definition RedZone channel. By showing only scoring drives and big plays -- which is what most casual fans want to see anyway -- and not subjecting that coverage to blackouts, the NFL is slowly removing any motivation to for fans to attend games.

In fact, the revenue from attendance and television is roughly the same at $4 billion apiece. If fans can sit at home and watch all the games in HD and at better angles than they'll have at the stadiums, why are they going to pay the same price to sit in the nosebleeds and get hosed on concessions?

TheStreet Says: The blackout rule is a lot like Chris Berman: old, annoying and irrelevant. We suggest that both should be retired.

2. Investors Still in the Dark on Flash Crashes

There's been a lot of talk about "fat fingers" this year, what with all the mysterious flash crashes bedeviling the best minds of the markets. This week, after the latest flash crash hit shares of Progress Energy ( PGN), investors may have reached the point where the only fat finger they're thinking about is their own middle finger, being raised in the face of the SEC and the exchanges.

There were actually two mysterious news items this week about Progress Energy. On Monday, more than 4,000 Progress Energy customers were left without power after a snake slithered into a switch and shorted the circuitry. In the curious case of the snake and the circuitry, Progress Energy restored service in about two hours.

Investors, on the other hand, are still left in the dark about the latest flash crash, when shares of Progress Energy slid from $44.50 to $4.57 in a millisecond early Monday afternoon, making the company's stock chart look like a Robert Downey Jr. EKG printout during a night of partying.

These days, the slithering is coming from the exchanges and market regulators. There was much fanfare about the new circuit breakers after the events of May 6, yet the Progress Energy "mini-flash crash" shows that it's the markets breaking down and the circuit breakers still malfunctioning. Even the Securities and Exchange Commission's preliminary report on the May 6 flash crash, released on Friday, offered few assurances that anybody knows exactly what happened.

According to the SEC, the whole thing may have been caused by a single trade. Apparently, a single trader, reportedly from Waddell & Reed Financial ( WDR), entered orders only to sell e-mini S&P 500 futures. The trader had a short futures position that represented on average 9% of the volume traded during that period. The trader sold on the way down and continued to do so even as the price level recovered. Still, that's only being cited as a possible cause.

It's not too much of a stretch to make this analogy: many people are afraid to fly, but few are afraid to fly because they doubt the control mechanisms of the air traffic control system. Many investors have their doubts about the latest biotech stock, but few are afraid to invest as a rule because they don't trust the markets to function effectively. Well, that's not the case anymore with the latest flash crash in shares of Progress Energy.

"I think it has reached the point where the public is so fed up that something has to be done," said Eric Hunsader of market research firm Nanex, who has become a go-to guru in the science of detecting suspicious trading patterns in the era of high frequency trading. "There's no doubt that manipulation is going on to an extent far greater than I've expected, and the exchanges need to dismiss it outright because any exchange that puts out enforcement loses that business to other exchanges," Hunsader said.

Of course, the talking points from the markets about high frequency trading is that it's made for a more efficient market -- except, of course, when the flash crashes are cratering shares, and exchanges like Nasdaq are having to decide on arbitrary trade-cancel policies. In the case of Progress Energy, it was any trade 15% below the National Best Bid and Offer (NBBO). Why 15%? Because Nasdaq decided on 15%. There is no formal exchange policy on what to do when trades need to be canceled because of a flash crash, and that's just one minor frustrating wrinkle in the growing market dysfunction.

For better or worse, the markets are electronic. Machine has conquered man, the battle's over, end of story. But that's not the issue. The average investor has already been forced to wave the white flag when it comes to a man on the trading floor versus an unthinking machine running algos. The problem is some investors are getting ready to wave the white flag about investing in general.

If Joe The Investor could just get a decent quote, the whole man versus machine thing wouldn't be a problem.

TheStreet Says: If you're an investor, get ready to use your fat middle finger when the stock drops from $100 to $1 in a millisecond, while the regulators and exchanges twiddle their thumbs.

1. Apple Gets All Touchy About Its Precious Little iPad

Apple ( AAPL) doesn't seem to have a sense of humor when it comes to the destruction of iPads. Or at least it doesn't when Cablevision's ( CVC) Newsday does it to promote its iPad app. But when the New Yorker does the same, well heck, that's just funny.

Last week, Newsday launched a highly entertaining and humorous ad touting its iPad app see below . In it, a father sits at the breakfast table and -- forgetting that his iPad is not, in fact, a newspaper -- swats a fly with his iPad, shattering the device. Not only is the ad a compliment to the usability of iPad, it's also freakin' hilarious.

Regardless, according to, Apple apparently took exception to seeing the iPad screen broken into pieces. An unverified Newsday insider said Apple sent Newsday and cease and desist letter. Newsday took the video down in short order.

Then, this week, the New Yorker unveiled its own iPad app ad, this one featuring actor Jason Schwartzman and shot by Roman Coppola. In it, Schwartzman is seen using his iPad in the shower and even taking it for a dip in the pool -- which, and we're just guessing here, probably ain't so great for the touch screen.

But did Apple have any problem with the New Yorker's style of iPad destruction? According to a spokesperson for the magazine, there hasn't been a peep from Apple. So what, exactly is the issue here? Production values? Star power? Perhaps a certain class distinction between readers of Long Island's Newsday and the New Yorker?

We're unlikely to know Apple's reasoning for such a ridiculous double-standard, but businesses eager to develop and market their own iPad apps should take note: if you're going to abuse the The World's Most Important and Precious Product, you'd better make sure you're doing it in a sophisticated, high-minded, indie-darling sort of way.

TheStreet Says: Is there an app for identifying elitist double standards?

In light of all this dumbness, we now ask you: Which is this week's dumbest of the dumb stories? Take the poll below to see what TheStreet has to say.

Which is this week's dumbest of the dumb stories?

BP CEO and Safety?: It's Déjà vu all Over Again
Discovery Gets Crabby
NFL to Fans: "Drop Dead"
Investors Still in the Dark on Flash Crashes
Apple Gets All Touchy About Its Precious Little iPad
This article was written by a staff member of TheStreet.

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