The failings of the financial press

Joel Dreyfuss, a former tech writer for Fortune magazine who relaunched Red Herring magazine in 2004, writes about the failings of the business media in the wake of the recent criticism of CNBC.

Dreyfuss writes, “Whenever we get to the woe, as we do now, it is usually after the fact. As a Wall Street market timer once told me in an interview, ‘Journalism is a trailing indicator.’ By the time the financial media get to a tough story, the barn door has long been open — or the barn has burned down completely. This failure of vision happened before during the dot-com bubble when companies with no revenue and no possibility of making a profit soared in value to rival real companies like IBM, GE and General Foods. It also happened with Enron, HealthSouth and a bunch of other scandals.

“I was at Fortune when we created the cult of the CEO. The universe revolved around the dashing chief executive, who was invariably handsome, square-jawed and some kind of genius. We were told that we could never write that ‘companies’ did something; any action by a company was an act of the CEO. So Steve Jobs did this or Jack Welsh did that, but never Apple did this or GE did that. We invented the CEO as some sort of super being, completely in control of every facet of his company and completely ethical.

“The fact is that even in covering public companies, journalists don’t get a lot of information; quarterly reports mostly tell you what companies want you to know. Carol Loomis made a career of reading the footnotes in annual reports and taking companies to task for financial manipulation. But she was the exception. Financial journalism doesn’t have much of a tradition of muckraking and investigative reporting. It has mostly been about identifying the ‘heroes’ and building stories around them. In other words, like much of journalism, it is one step up from stenography. Look at it this way, the financial press has been no more enlightening about the Ponzi schemes of the last five years than the political press was about the lead-up to the Iraq war.”

Read more here.