Business Noose

The next obit many legacy media companies may be writing is on the death of business sections.  When times get tough, second-tier publications often relegate business sections to the back of the sports or metro pages, and then, without nary a whimper, the business section is kaput, KO’d, a grizzled piece of charred meat that you were thinking about eating because you were still hungry but couldn’t stomach the idea of putting in your mouth.
 
So where do you go to satisfy your hankering for business news?  Fox Business?  CNBC?  The Wall Street Journal?  Maybe you lost your appetite or never had one for business news.  Maybe the financial collapse is inducing your gag reflex and business news is on par with your fondness for acid reflux.  Reflex, reflux, whatever it is about business news, it is time for some reinvention.  It is time for a new way to portray business news that engages, debunks, and denudes the financial mavericks that got us into this mess in the first place.
 
Below is a brief list of media outlets that offer a fresh take on business news. Some will entice. Some will repel. But at least they are attempting to resuscitate an important subject that is too critical to lose to gimpy newsprint.
 
Footnoted.org – Each day, Footnoted looks under the hood of companies’ SEC filings and tries to make sense of what they are saying.
 
Planet Money – NPR’s take on the global economy.
 
SEC Data Guy – Stats and analysis of EDGAR and IDEA data.
 
10Q Detective – Former analyst waxes on quarterly results, SEC filings and the like.
 
Market Folly – A blog primarily focused on hedge fund portfolio tracking.

 

Evan Pondel, epondel@pondel.com
 
 

Death of a Business Section

There has been much speculation on whether the L.A. Times will continue to publish a business section, and as a former business reporter, that makes me downright sad.
 
Traditionally, business sections have always been treated like chopped liver. Editors and reporters alike perceive the business section as a luxury and not a necessity, and therein lies the rub. Does it occur to any publishing company that we are in the midst of one of the worst economic downturns since the Great Depression, and business news should be coveted, not discarded like a leftover spicy tuna hand roll from two nights ago?
 
OK, I get it that newspapers are ailing and newsprint is going out of style faster than a fanny pack on Richard Simons, but cutting the entire business section is absolutely absurd when you consider it is one of the only sections in a newspaper that can help us make sense of the mess we are in.

 

Evan Pondel, epondel@pondel.com
 
 

Etymologists, This One’s for You

With so much going on these days, who has time to read magazines?  I certainly don’t, and I assume you don’t, either.  But one magazine I scan religiously each week is the New Yorker, whose writers I have quoted several times in this blog.
 
Lately, I have been spotting many words in New Yorker articles that I never heard of before.  So I started keeping a log—I found more than 30 in the last three issues alone.  I looked up their meanings and am happy to share 10 with fellow PW Insight readers.
 
You’ll not likely ever see these words in PondelWilkinson-written press releases or in other documents that we draft for our clients, but maybe we’ll all find some use for them somewhere.
 
Let’s have some fun, and if you have a moment after reading this, shoot me a quick email to let me know how many of these words you have heard of.  Hint: they all came from the same general kind of article.  Let me know if you figure that one out, too.  Now cover the answers below, and test yourself:
 

  1. lumpen
  2. purdah
  3. adumbrated
  4. merde-head
  5. epizootic
  6. gamine
  7. sententious
  8. emunctory
  9. insouciance
  10. louche

 
The answers:
 

  1. mentally sluggish
  2. curtain to separate women from men
  3. partially concealed
  4. shit-head
  5. containing fossil remains
  6. diminutive female who is part imprudent and playfully mischievous
  7. given to excessive and pompous moralizing
  8. body organ that functions in carrying off waste products
  9. lack of concern or indifference
  10. shady and disreputable

 
Give yourself one point for every answer you got right, even if you’re close.  Give yourself 10 bonus points if you figured out that each of these words came from articles that had to do with the upcoming presidential election.  Really.  Don’t forget to let me know how you did.

 

Roger Pondel, Chief Etymologist, rpondel@pondel.com
 
 

Media Dividends, How about Dividon’ts

The pain being suffered this year by the U.S. banking system is all too familiar for another American institution – the media.  So, speaking on behalf of the Fourth Estate, welcome to the misery, guys.
 
It’s not really news that the American media, especially its print arm, has been in crisis mode for some time.  When it comes to billion-dollar bailouts, I’m certain there are more than a few newspaper publishers who would like a piece of that pie.  Newspapers have been slashing and burning staff for the past three years, as advertising has dried up and circulation has dropped faster than Lehman Brothers’ stock price.
 
But don’t shed too many tears yet for the media giants and their financial misfortunes.  Some of the major media companies – Gannett, Media General, The New York Times Company, McClatchy – had terrible second quarters, but still remain profitable and are still throwing around big-time dividends, according to a recent article in the Columbia Journalism Review.  Gannet, in fact, lost a tenth of its revenue from a year ago in Q2, but still posted a profit margin of 13.5 percent, which must leave other companies asking, ‘What are they whining about?’
 
In the financial clean-up package, Gannett, and others, should start by taking a look at their dividend yields.  Gannett’s dividend yield is 9.3 percent, Media General has a 7.4 percent rate and the NYT Co. is at 6.9 percent.  McClatchy’s was a whopping 14.7 percent, but executives wised up last week and announced they are cutting their quarterly dividend in half.
 
The question is, if newspapers are gasping for air, why are they returning all this cash to shareholders?  Well, the families that control the voting shares need a steady stream of income to afford another ivory back scratcher, so they are essentially bleeding their companies dry.  Maybe a more practical idea would be to eliminate these dividend payouts all together and use these hundreds of millions of dollars as the media’s version of a government bailout.

 

Ron Neal, Senior Associate, rneal@pondel.com
 
 

Paper or Plastic?

You have carefully selected and planned the contents of your media kit, but when asked paper or plastic…which should you choose?
 
In today’s technologically advanced world, should we still use the traditional paper approach and stuff kits with an array of collateral materials? Or should we combine everything into electronic files and offer them as downloads and take-away CDs?
 
On one hand, electronic press kits save printing and paper costs, as well as offer companies more freedom to digitally enhance their presentations with animation, sounds, and other sensory stimulations that plain paper is lacking.  Furthermore, CDs and downloadable links are relatively easy to distribute.
 
However, what if someone wants to compare a fact sheet with the company’s management biographies side-by-side?  Or perhaps an executive has limited access to the Internet or a computer but needs to immediately peruse the kit.  The fact that paper kits are free from the virtual handcuffs of a hard drive makes paper a much easier and more reliable source for those who need to quickly access a kit.
 
So what should we do?  Double bag it.  Use paper first and use plastic to enhance and provide the main source of support.
 
While each style has its unique advantages and disadvantages and plenty of overlap, perhaps it’s better to combine the best of both worlds and just let the overlaps…well, overlap.
 
Keep a smaller supply of traditional paper kits handy to cut down printing, paper and shipping costs.  Have them ready to mail out, ready to update and replace outdated materials while maintaining the main electronic version with digital enhancements online or in CD format for daily users.

 

PondelWilkinson, investor@pondel.com
 
 

Are Web Sites a Suitable Disclosure Outlet?

According to the Securities and Exchange Commission, the answer is…maybe.  The SEC’s new interpretive guidance states that posting material information on a corporate Web site may satisfy Regulation FD, but that the facts and circumstances of each case must be weighed first.
 
According to law firm, Cravath, Swaine & Moore LLP, several factors must be determined before a Web site can be used as the sole means of disseminating material information.  These include:
 

  • whether the Web site is a recognized channel of information distribution;
  • how, where and when the information is posted and becomes broadly accessible to the public; and
  • the Web site’s capability to meet the “simultaneous or prompt” timing requirements of Regulation FD’s Rule 100 as well as the Web site’s capability to meet reasonable usage demands.

 
At this point, it’s probably a safer more shareholder friendly bet to continue utilizing the wire services to disclose important information.

 

Laurie Berman, Senior Vice President, lberman@pondel.com
 
 

M&A Advice You Rarely Read About

The New Yorker—my all-time favorite magazine and the one I read to steal myself away from business news—had an insightful piece about mergers and acquisitions.
 
Tucked inside the Financial Page column (June 9 & 16, 2008 issue), which focused on CBS’s recently announced acquisition of CNET Networks, were some hidden gems of advice for acquirers of companies:
 

  • It is not necessary “to own a company to make money from its properties. Much of what mergers are supposed to accomplish can be achieved through partnerships and alliances.”
  • Mergers “that rely more on cost cutting from such actions as combining back-office operations and eliminating redundancies than on promises of vast growth are more likely to be successful.”
  • “Acquisitions of smaller, younger private companies are usually wiser than acquisitions of publicly traded firms,” where the acquirer must typically pay a steep premium to an already known public valuation.
  • While acquisitions may “boost a company’s growth rate, they too often make it bigger without making it better.”

 
The article’s author, James Surowiecki, aptly quoted Warren Buffett: “Executives see the companies they acquire as handsome princes imprisoned in toads’ bodies, awaiting only the ‘managerial kiss’ to set them free. Unfortunately, most toads turn out to be as warty as they look, and magic kisses are harder to bestow than executives think.”
 
Surowiecki has written a well-received book, The Wisdom of Crowds—Why The Many Are Smarter Than The Few And How Collective Wisdom Shapes Business, Economies, Societies And Nations, which describes systematic ways to organize and aggregate the intelligence available in organizations in order to arrive at superior decisions—often better than those that individuals would make, even if they are ‘experts.’

 

Roger Pondel, President, rpondel@pondel.com
 
 

Tacos and Beer

I don’t drink that much beer, but I do enjoy an occasional light brew when tacos are present. It’s a very nice complement, kind of like mondel bread and coffee.
 
The media is shedding light on a different kind of complement these days. I am referring to blogs and PR. The Wall Street Journal recently devoted more than 20 inches of copy to a beer blog that Miller Brewing Co. recently launched.
 
The blog is written by a former Advertising Age staffer who channels his sudsy muse into an analysis of the beer industry. Of course, I suspect the blog doesn’t break news about the very brewer that pays for its existence. But to Miller’s credit, the company is completely transparent about its relationship with the blog.
 
As more companies attempt to ride the wave of blah-blah-blogging (ours included), I find Miller’s approach refreshing and full bodied. They are taking the foam out of foam. They are tapping the proverbial keg and making themselves look smart, as opposed to drunk and stupid.
 
So, here’s to Miller Brewing Co. for drumming up a savvy PR program. The question is whether a similar program could be applied to a publicly-traded company.
 
My advice is to proceed with caution. Don’t get me wrong, I think blogs can be valuable for public companies. However, public companies must not forget that they are blogging on behalf of shareholders, too.

 

Evan Pondel, Senior Associate, epondel@pondel.com
 
 

It’s a Go for Murdoch

It’s official.  Shareholders of Dow Jones & Co. approved the sale of the publishing company to News Corp., a deal that was bemoaned by media but lauded by shareholders. The question is whether News Corp. is able to run the Journal without compromising the quality of its content.  Of course, News Corp. Chairman and CEO Rupert Murdoch has pledged to keep the Journal’s reputation fully intact as a go-to source for business news.  But how could he say otherwise?  Only time will tell whether another monolith of a media conglomerate will force the ink to fade and yellow.

 

Evan Pondel, Senior Associate, epondel@pondel.com