The Poor State of Business Journalism (From a Strategy Perspective)

As a consultant, marketer, and now business owner, I’ve always relied on the business press for much of my information on markets, trends, and competitors.  I’ve never been fully satisfied with the results, but after putting some more thought into it, I’ve decided that business journalism is in many ways a very poor source of information for business analysts.  A lot of journalistic conventions are counterproductive for real business analysis.  Considering that the entire field of news and journalism is changing radically these days, I wonder if it’s also time for a clean break and a rethinking of business journalism.

So what’s my beef with business news?  In a nutshell, most articles focus on short-term stock movements, earnings per share, quarterly numbers, and a variety of other data points that are essentially meaningless from a business analysis perspective.  Even more in-depth pieces tend to lack context and often dwell on controversy or slavish praise rather than the most salient points of business strategy.

Let’s take earnings per share (EPS) as a particular example.  I consider these numbers pretty much useless for my purposes, for a few reasons.  Earnings, or net income, do not necessarily indicate how well the company is operating.  Those numbers incorporate taxes, interest, and various accounting treatments that can obscure the true economic performance of a company.  Dividing earnings by the number of shares is even worse.  I’m left with a number that is completely arbitrary based on the number of shares outstanding, and it’s often very difficult to compare across quarters because share numbers change.  The company may have issued more shares, it may have done a stock split, or it could be buying back shares.  In an ideal world, I would like to know the free cash flow of the company, but in practice I typically look at operating income (i.e., before taxes, interest, and special items).  That gives me a much better idea of how the company is performing as a business, not considering how much they managed to write off in taxes or other arbitrary items.  M&A people often focus on EBITDA (a mouthful: earnings before interest, taxes, depreciation, and amortization), which somewhat more closely mirrors free cash flow, but I’m usually too lazy to back out the D and A.

The same is true of stock prices, which seem to make up the other half of the typical business section.  In the short term, stock price movements reveal nothing about a company’s health, but the business press devotes reams of writing to them.  Finance sites have a similar problem, with their focus on stock charts.  Why can’t I have a market capitalization chart instead of a stock price chart?  Even better, how about an enterprise value chart, including debt as well as equity?  If I really want to start dreaming, how about a chart where I can download a spreadsheet of the data if I want to?  Whatever analysis business journalists actually do, which sometimes doesn’t seem like much, is locked on their computers, and all I have to show for it is an article.  Give me the numbers.

The writing itself is problematic because of the constant search for a good headline or hook to grab readers.  I recently read an article claiming that Cisco was going to start competing with Google Apps.  Despite Cisco’s overwhelming focus on networking infrastructure, the article went through various contortions to highlight potential competition in SaaS applications some time down the road.  This is a market which currently makes up 0% of Cisco’s business and a tiny fraction of Google’s and is nothing but a distraction from a true understanding of Cisco’s current business and future plans.  It was painful to read.  In the end, many stories either devolve into manufactured controversy like this or into a puff piece on a company being covered.

More generally, nothing gets put in context.  Few articles appear to have the space (and few writers the time and energy) to contextualize the latest company announcement in the industry, discuss how it might play out in terms of company strengths and weaknesses, and come to a truly novel conclusion.  Also, to go back to grinding my earnings axe, the fact that earnings are up 50% this quarter means nothing unless we know how the year-ago quarter looked compared to the long-term trend.

Business magazines and especially trade publications do a better job, of course.  Trade publications in particular provide more in-depth analyses of their industries and specific companies.  Unfortunately, I’m pretty much a generalist, so I can’t necessarily spend the time to keep track of these resources.  I also tend to avoid subscribing to specific sources unless I need them for a current client project.

In the end, we get the information, like the government, that we deserve.  There’s simply no mass market for better business information, so in a way I can’t really hold the business press responsible for a certain striving for the lowest common denominator.  Consider the fact that the Wall Street Journal, since being purchased by News Corp and slowly evolving towards a business tabloid, is perhaps the only major US newspaper with increasing circulation.  In a way, this is a “it’s not you, it’s me” type of problem.  I’m simply out of synch with the type of content and writing that drives mass media markets, such as they are.  Depth and utility don’t sell (much).

However, the issue I find truly frustrating is the puzzling lack of blogs in this space.  Blogs by definition can go after more esoteric topics and niche audiences.  Financial markets, mergers & acquisitions, technology, public policy, and entrepreneurship all attract incisive blog writing that manages to combine thoughtful analysis with a good dose of wit and style.  Perhaps I’m missing something, but I see a huge gap in coverage of business strategy and analysis that some enterprising blogger should be filling.

I hope to see a business journalism upstart along the lines of Politico reinvent the genre.  In the meantime, if any editors or writers are reading this, please spare me another update on quarterly earnings.  Oh, and could a few of you writing brilliant disquisitions on the Greek debt crisis or the failure to effectively regulate Wall Street show some love for plain old microeconomic strategy?


  • How’s this for fair?  I’ve also written a bit more on my issues with business blogging.

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  • eekim

    Great piece, Greg! I think your point about business journalism actually applies to all forms of journalism. It reminded me very much of Matt Thompson's piece on Wikipedia and the future of journalism:

  • Greg4

    I like Thompson's piece, especially the point in the article and comments about how news organizations are sitting on a great deal of valuable information, but they can't make use of it effectively with just an archives section or the inclusion of a nutshell paragraph in an otherwise flat story. There needs to be some kind of reformulation to make deeper concepts accessible to people, and Wikipedia is one of the best examples of how attractive that can be. Thanks for the comment.

  • marlenekennedy

    If you hear of anyone doing a Politico for business journalism, please let me know. I'm a laid-off longtime business editor (daily and weekly biz journal) who would *love* to get in on that action. I'll bet there are others like me similarly inclined. We're dying to get back in the game.

  • Greg4

    I don't have the inside line on anything, but do I think some kind ofdifferent business model is inevitable. There's a ton of value in businessjournalism that isn't being unlocked with the way things are done now.

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