Talking Biz News

Information about business
journalism from the
Carolina Business News Initiative.

A California court has ruled that Apple must pay $700,000 in legal fees of bloggers that wrote about the company that it had tried to subpoena to determine its sources, according to this story.

The story stated, “Apple Inc., had issued subpoenas to online tech journalists, including the publisher of AppleInsider.com and PowerPage.org, over reports the company claimed ‘violated California state trade secret law’ which divulged so-called confidential information about not-yet released Apple products. Apple claimed the journalists were not entitled to First Amendment protections similar to those afforded to their print counterparts.

“However, a California court disagreed, ruling against Apple and in favor of the defendants, who were represented by legal counsel from The Electronic Frontier Foundation (EFF). Apple was ordered to pay all legal costs associated with the defense, including a 2.2 times multiplier of the actual fees, bringing the total to about $700,000.

“The ruling was hailed by web journalists and EFF staff members as a legal victory in the battle to defend and protect the rights of online journalists.

“Kasper Jade, publisher of AppleInsider.com, one of the defendants in the case, said, ‘The court’s ruling is a victory for journalists of all mediums and a tremendous blow to those firms that believe their stature affords them the right to silence the media. Hopefully, Apple will think twice the next time it considers a campaign to bully the little guy into submission.’”

The Grumpy Editor blog wants to know why publications, particularly BusinessWeek, have decided that they don’t need to publish captions below their photos to help readers understand what’s been shown.

Grumpy Editor wrote, “But BusinessWeek, in its Feb. 5 issue, sports a number of images without appropriate information, sort of like Aunt Abby’s thick picture album sans dates and identification.

“The BW issue contains at least 19 illustrations that lack captions. Make it 21 if one counts three-quarter-page art of a man in a business suit riding an oil barrel bronco style, and a strange full-page drawing of an in-flight purple-winged woman, dressed in a gray suit and wearing high heels, encountering turbulence that scatters feathers and contents of her large pill box, all against a yellow and orange background.

“Contrary to traditional procedure, 15 color photos in an eight-page ‘Special Report’ cover story on McDonald’s all are minus ID. These include close-ups of old and young customers, usual and new food offerings and preparation, plus shots inside and outside a fast-food eatery, presumed to be in Garner, N.C., highlighted in the text.”

Read more here.

A WSJ.com cameraman visited Tuesday’s meeting of The Wall Street Journal’s editorial board. To view video of the board discussing the battle of Najaf, click here.

Next, I imagine newsrooms will be videotaping their reporters interviewing executives on the phone and typing notes on their computers so that readers can see what didn’t make it into a story.

The public relations disaster for CNBC that has resulted from the disclosure that anchor Maria Bartiromo took a trip on the Citigroup jet that led to the ouster of one of its executives is the network’s fault, writes Marketwatch media columnist Jon Friedman.

Friedman wrote, “Bartiromo’s image as a hard-working, responsible journalist was shattered. And CNBC’s self-styled reputation as ‘the worldwide leader in business news’ took a Lusitania-like hit.

“CNBC hoped that the story would gradually fade away, but as USA Today’s Web site pointed out Tuesday: ‘The Maria Bartiromo story shows no signs of dying, and it may instead be spinning into that rare business-page yarn worthy of the watercooler.’

“Note the language. USA Today called it ‘The Maria Bartiromo story,’ not the Todd Thomson (who?) story.

“Uh-oh.

“Over the past week, the Wall Street Journal, the New York Times, the Washington Post, Newsweek, the Financial Times and Reuters were among the news outlets that weighed in with various angles. (I reckon that we can practically count the days till smart-alecky New York magazine flashes a “Mariagate” headline across its cover.)

Charles Payne, the CEO of Wall Street Strategies, an independent stock research firm, spoke Monday night on Fox’s “The O’Reilly Factor” about the recent scandal involving CNBC anchor Maria Bartiromo taking a trip on a Citigroup jet, which led to the firing of a bank executive.

Payne points out that few people on Wall Street want to criticize CNBC and Bartiromo because they want the business cable network to cover their deals, such as IPOs, in the future.

He said, “They’re the 500-pound gorilla. Nobody on Wall Street wants to take them on, because they’re the only game in town right at this moment….But whenever you have a new product, IPO or whatever, you send people there to appear on the channel — it’s still a prestigious thing on Wall Street to appear on CNBC…… even though the audience has dwindled. Nobody wants to mess that up right now.”

Later, he added, “If Maria Bartiromo could interview Maria Bartiromo, she would nail her on this thing. Imagine if an analyst had gone on a flight with a company that he or she covered. CNBC would nail that person to the wall. Particularly after everyone lost their money [in the stock market bubble] and they sort of changed the tone.

“Because you know, pre-market crash they were really rah-rah about the market. But after that, a lot of people felt, you know, ‘I lost money watching CNBC.’ They really turned a corner and they became really tough. Tough interviews.”

Read the transcript of the segment here.

Dow Jones CEO Richard Zannino, speaking at the Software & Information Industry Association conference, said Tuesday he expects the company’s print operations to account for less than 60 percent of total revenue this year, and that the publisher of The Wall Street Journal and Barron’s will eventually derive less than half its revenue from print.

Louis Hau of Forbes wrote, “Some of Dow Jones’ free sites, such as the WSJ.com-linked CareerJournal.com, RealEstateJournal.com and OpinionJournal.com, ‘are not as large as we’d like them to be,’ Zannino said. In particular, the company sees ‘a big opportunity’ to build more traffic and ad inventory at CareerJournal.com, he said.

“WSJ.com has about 800,000 subscribers who play $99 a year for access to the site; after factoring in discounts, they generate about $50 million a year, Zannino said. The site, along with its related free sites, generates ‘another $50 million or so’ in advertising revenue, he said.

“‘We don’t think we’d do more revenue if we abandoned the paid model,’ Zannino said, noting that while such a move would generate more page views and advertising inventory, ‘we don’t think we could monetize that inventory today.’

“Dow Jones is also pursuing more novel ways of generating revenue, such as through its partnership with Office Media Network of Chicago, which displays news reports from the Journal on flat-panel video screens in high-traffic office buildings.

“And in what he described as ‘an interesting twist on how to do a license deal,’ Zannino said Dow Jones has a pact with ‘one of the major cellphone companies’–surely he meant a wireless carrier–under which the company has committed to purchasing advertising in the print edition of the Journal in exchange for an exclusive licensing deal under which its customers can receive Dow Jones news alerts on their cellphones.”

Read more here.

Dow Jones management, which is currently negotiating with the union that represents business journalists at its Wall Street Journal, Barron’s and MarketWatch publications, nudged a bit on Tuesday in terms of what it offered for future salary increases.

According to an update on the union’s web site, “We are seeing some additional signs of movement by the company’s negotiators, which is good. But they still are far from agreeing to the kind of contract we need.

“The company’s team made new proposals on wages, for example. Their original proposal was 2% a year. Their new proposal? Still 2% for the first year and the third year. But now they are prepared to go to 2.5% in the middle year of a three-year deal.

“On health premiums, the movement is similar. They have finally provided us with a schedule of the actual premiums they want to make you pay. They are no longer talking about a four-fold increase in our premiums in 2008. Now they want to triple them, or in some cases more than double them—depending on how much you make and what plan you use.

“On outsourcing, a subject they formerly wouldn’t discuss, they are offering to consult with the union before laying people off, and to give outsourced employees improved severance packages. But they refuse to put any restrictions on their ability to outsource at will.”

Read more here.

Former tech stocks analyst Henry Blodget, writing on Slate, takes aim at Jim Cramer and his CNBC show “Mad Money” for dispensing bad investment advice.

Blodget wrote, “The more I thought about Cramer, the more I realized that pointing out that he gives terrible investment advice would be like pointing out that the sun rises. Worse, I would be dismissed as a wet blanket who didn’t get that the point of Mad Money was just to have a bit of ironic fun. I mean, of course Jim Cramer gives terrible investment advice—we all know that, right?—and we only watch the show because, well, because he does possess a certain bizarre type of market and entertainment genius—if there’s a pundit out there with more opinions about more stocks, I’ve never seen him—and he’s irreverent, madcap, and, yes, even brilliant, in an idiot-savant, freak-show sort of way. (Moreover, Cramer is mesmerizing reality TV. Admit it: You watch because you wonder if this is the night he finally has a heart attack, kills someone, or explodes in a tirade of expletive-laced slander.)

“Reviewing the list of common Mad Money show segments (Stump the Cramer, Am I Nuts?, Pimpin’ All Over the World) and sound effects (squealing pigs, a wrecking train, a toilet flushing, a screaming man falling out a window and then crashing on the ground), I realized that, yes, I was taking Jim Cramer waaaaaay too seriously, that his nonstop comedy routine about being a brilliant and respected investor and making everyone rich is just shtick, and that there couldn’t possibly be a Mad Money viewer who actually believes that he provides intelligent advice.”

Read more here. The Dealbook blog on the New York Times website notes that Blodget critiquing Cramer has plenty of irony.

Dealbook stated, “Mr. Blodget, who recently published ‘The Wall Street Self-Defense Manual: A Consumer’s Guide to Intelligent Investing’, has been the subject of some bitter opinion pieces. A few weeks ago, MarketWatch’s Wall Street columnist, David Weidner, expressed ire over Mr. Blodget’s recent punditry. Mr. Weidner said that it was a ’sign of the apocalypse’ that Mr. Blodget is allowed to comment on bad stock-pickers, adding that ‘Blodget himself lost a bundle in tech stocks.’”

Gregory Miller, a professor of accounting and management at the Harvard Business School, has a recent research article where he argues that the business press is diligent in exposing corporate misdeeds.

“The press is important in uncovering these things, they uncover a third of them in advance, and they even create the original information in a large percentage of the situations. Often, the press is way out there before the SEC,” explains Miller.

His wide-ranging survey of press outlets found no evidence to support the common criticism that coverage of errant firms is influenced by advertising revenue. On the other hand, he detected clear bias in the types of companies that the press targets for special scrutiny.

For this reason, business people are wise not to underestimate the ability of the press—particularly the specialized business press and trade publications, he says. “The press provides new and original information. A lot of people didn’t expect that. People in the press did. But most other people really are surprised to see that because they think of the press as repeaters and not as creators.” His paper, “The Press as a Watchdog for Accounting Fraud,” is published in the December 2006 Journal of Accounting Research.

Miller, whose favorite non-academic business reading includes the Wall Street Journal, the Financial Times, and the investor relations magazine IR, recently talked with HBS Working Knowledge about the implications of his work.

Read Miller’s Q&A with Martha Lagace here.

Slate media columnist Jack Shafer writes about the recent coverage of the Maria Bartiromo/Citigroup controversy and notes that the word usage and language in many of the stories implies something that the reporters can’t prove.

Shafer wrote, “Delineating a friendship that includes a trans-Pacific flight alone in a corporate jet, an apparently significant sighting in an expensive restaurant, and a dressing down in which a corporate executive is told to reduce his contact with his friend of the opposite sex, all but draws the doughnut and tosses the hot dog through it. On Jan. 26, the Journal rehashes some of the Thomson-Bartiromo story, referring to their jet trip home from Asia, their ‘friendship,’ and their ‘relationship’ (twice). The story breaks new ground in reporting that Thomson tried and failed to get Bartiromo on his jet more than a year ago, while entertaining clients in Montana.

“You can almost hear the Journal reporters snicker when they write that CNBC insisted that any jet trips taken by Bartiromo ‘fell under the ’source development’ section of its code of ethics.’ Wink, wink, nudge, nudge, say no more!

“Having dumped the compost, planted the seed, and fertilized and watered the earth, the Journal leaves it to nobody’s imagination what species the flowering Thomson-Bartiromo friendship, relationship, and contact is without actually coming out and writing anything that 1) they can’t prove and 2) invites a libel suit. This is the sort of copy a clever lawyer directs reporters to write when they “know” something but can’t prove it. Leave it to the reader to assemble the meaning of the facts in their minds, the wise libel attorney tells his clients.”

Read more here.