The Audit
Audit Notes: Zombie lies and regular old lies
How misinformation spreads
By Ryan Chittum Oct 25, 2013 at 06:50 AM
PolitiFact gives CNBC’s Maria Bartiromo a “false” rating for saying that Obamacare “is turning us into a part-time employment country.”
Now it’s hardy news that Bartiromo got something wrong, but it is interesting to learn how she got it wrong:
We contacted CNBC and they pointed us to a couple of articles on Bartiromo’s behalf. One from Red Alert Politics, a website affiliated with the Weekly Standard and Washington Examiner, gave examples of companies that have said they will shift or might shift to using more part-time help. They said they would do this to avoid the Obamacare rule that firms of 50 or more employees must offer health insurance to anyone working 30 hours or more. The list included White Castle, the hamburger chain, and Trig’s, a Wisconsin supermarket chain. (The rule, which was supposed to go into effect Jan. 1, 2014, has been delayed by one year.)
Another item was an opinion piece in the Wall Street Journal. The CEO of a company that owns several fast-food chains, among them Hardee’s, made the claim that the “numbers show” that Obamacare is affecting hiring. The proof? The job numbers that came right after the administration announced in early July a one-year delay of the requirement that all larger employers offer health insurance.
Relying on The Wall Street Journal edit page and Red Alert Politics for facts is a really bad idea. That’s how the zombie lies bounce around the right-wing echo chamber.
— Erik Wemple picks up on another fascinating scoop from David Folkenflik’s new book, “Murdoch’s World”: That Fox News ratfucked Crain’s reporter Matthew Flamm, who was working on a story about CNN beating Fox in a key demographic.
Fox—ostensibly a news organization—planted false information with the reporter, waited for him to run it, then used it to discredit him and his story. Folkenflik:
What the hell had happened? Flamm called the producer at Fox who had given him the errant tip. She was incredulous when he finally reached her. Who are you? she asked him coldly. I have no idea what you’re talking about. Panicked, the reporter sent an email to the Hotmail account from which he had received the original scoop. It bounced back. The account had been shut down. As Flamm and his editors conceded to associates, they should have treated the email as a tip rather than a confirmation. A former Fox News staffer knowledgeable about the incident confirmed to me they had been set up.
Wemple:
Voilà — what was once a story about CNN beating up on Fox News in ratings becomes a story about false information being spread about Fox News. Of the PR operation, Folkenflik tells the Erik Wemple Blog, “They are essentially a political unit appended to something that presents itself publicly as a cable news operation.”
It’s surely a coincidence that Roger Ailes was a Nixon man.
— Remember all the outrage and all the jokes about the lady who got scalded by hot coffee and sued McDonald’s, winning $2.9 million? Yeah, not funny.
Watch the NYT’s Retro Report on how poor reporting by the press was seized by pro-corporate advocates to create a zombie lie that smeared an old woman left with severe burns thanks to McDonald’s repeated, knowing negligence about how its product was unreasonably hot.
Victor Davis Hanson’s Silicon Valley caricatures
The National Review columnist’s fact-free screed
By Ryan Chittum Oct 24, 2013 at 11:00 AM
Victor Davis Hanson has an entertaining take-down in the National Review of the hypocrisy of Silicon Valley lefties—a sort of digital-age version of the limousine liberal.
If only it were true.
This is the kind of argument-by-assertion piece that falls apart upon even half-hearted inspection. It’s intellectually unserious (and i should note, this is hardly unusual for Hanson, a leading propagandist for the Iraq war). Hanson, a classicist who’s now at Stanford’s embarrassing Hoover Institution, gets facts wildly wrong, generalizes broadly, and offers no evidence to back up his stereotypes.
Let’s start from the top, where Hanson asserts that the 1 percent of Silicon Valley—households making between $300,000 and $700,000—are living lives of “quiet desperation” because of the high cost of living:
With new federal and California tax hikes, aggregate income-tax rates on dot.commers can easily exceed 50 percent of their gross income. And hip California 1 percenters do not enjoy superb roads and schools or a low-crime state in exchange for forking over half their income.
There’s no way any couple in Silicon Valley making between $300,000 and $700,000 a year is paying 50 percent aggregate income taxes. There isn’t anyone in all of California who pays more than 50 percent of their income in aggregate income taxes. You can toss in payroll taxes, too while you’re at it.
Let’s look at the high end household. A couple with no kids, no mortgage, no retirement savings, and no other deductions would pay about $220,000 of their $700,000 income to Uncle Sam and about $73,000 to California. That would be a 42 percent aggregate income-tax rate. That’s the most it is possible to pay in income taxes in that range of income. A similar $300,000 couple would pay about 31 percent.
Of course, these theoretical couples with zero tax deductions almost certainly don’t exist. Most rich people have lots of deductions and the average 700k couple’s combined federal and state income tax rate would be well under 35 percent. The average 300k couple would pay 25 percent or less.
Hanson’s tax error is hardly the only whopper here.
Take K-12 schools. Currently, there is a stampede to enroll students in upscale private academies — often at $30,000 a year. That seems strange, when local public high schools like Menlo-Atherton, Woodside, and Palo Alto were traditionally among the highest-ranked campuses in an otherwise dismal state public-school system.
But things have changed — or at least are perceived to have changed. About 25 percent of the Silicon Valley population is now Hispanic, representing a huge influx of service employees — to work in hotels and restaurants, as nannies and housecleaners, in landscaping and construction — and their presence has expanded beyond the old barrios of San Jose and Redwood City.
The result is that Silicon Valley liberals are apparently worried about the public schools, given that second-generation Hispanics are perceived to be disproportionately represented in statistics on gang activity, illegitimacy, and high-school dropout rates. In crude terms, would a Google executive really wish his child’s hard-driving college-prep curriculum or enlightened social calendar altered somewhat to accommodate second-language teenagers whose parents recently arrived illegally from Oaxaca?
It’s hardly a new phenomenon that rich parents—whether lefties or not—tend to send their kids to private schools. What’s Hanson’s evidence of this supposed “stampede”? He gives us none. So let’s look at the actual data in Mountain View, one of the towns Hanson name checks.
In the Mountain View-Los Altos school district—home of the Googleplex and LinkedIn—among many others, the student population is 51 percent white, 24 percent Hispanic. The city of Mountain View’s population is 22 percent Hispanic, up from 18 percent in 2000 and 16 percent in 1990—hardly explosive growth (the much smaller Los Altos’s tiny Hispanic population exploded from 3 percent in 2000 to 3.9 percent now).
Moreover, it sure seems like the schools are pretty good there. The district has a 96 percent graduation rate, with 70 percent going on to four-year college.
Mountain View is hardly all of Silicon Valley, of course, but the burden is on Hanson to back up his impressions with actual numbers. Until then, there’s no reason to believe him. “I said so” doesn’t cut it.
Finally, there’s this:
Yet there is no liberal movement for “affordable housing” for hundreds of thousands of Latino service workers who are often living in garages, sheds, and trailers from Redwood City to San Jose. There are no community leaders in Menlo Park or Atherton who lobby to build affordable condos along the foothill freeways, where water, power, and transportation are readily accessible, that might better serve the new Latino population.
Here, let me Google that for you. This is the City of Menlo Park’s Below Market Rate housing program. The community leaders at Facebook and its developer are subsidizing 53 affordable housing units as part of a 400-unit project—15 of them in the actual complex. And here’s Menlo Park community leaders lobbying to build affordable housing, including along a foothill freeway.
In a city with 13,000 housing units, is that enough? Surely not. But it’s flat false to say there are no community leaders lobbying for affordable housing.
I’m all for skewering the hypocrisy of the Silicon Valley elite, but this is just lazy.
Murdoch corruption scandal back in the news
Trials to begin, WSJ interference confirmed, secret tape fallout serious
By Ryan Chittum Oct 23, 2013 at 11:00 AM
The Murdoch hacking scandal is back in the news after a bit of a respite.
Next week, Rebekah Brooks, Rupert Murdoch’s right-hand woman and a central figure in News Corp.’s hacking and bribing culture and in the ham-handed coverup, will go on trial for bribing public officials, phone hacking, and obstruction of justice. Alongside her will be former top Murdoch editor and David Cameron spokesman Andy Coulson, who epitomized the corrupt relationship between News Corp. and the British government, and Glenn Mulcaire, who hacked phones for the News of the World and whose silence was bought by the company when the hacking scandal began coming to light.
Brooks could presumably bring the House of Murdoch down if she felt it best served her own interests. It’s worth noting, though, that she too was paid off by Murdoch when defenestrated—with $18 million. But pass the popcorn.
In the meantime, NPR’s David Folkenflik is out with a well-timed book on Murdoch. I haven’t had time to read it yet, but it’s made news on a couple of fronts.
First, “Murdoch’s World” reports that Murdoch’s top men at The Wall Street Journal stymied the paper’s coverage of the unfolding hacking scandal story in the summer of 2011.
Folkenflik reports of “stories that were blocked, stripped of damning detail or context, or just held up in bureaucratic purgatory” and notes that the London bureau of the WSJ, still stocked with pre-Murdoch veterans waged a fierce battle against Managing Editor and Murdoch yacht buddy Robert Thomson, who was intent on squashing original reporting that could raise problems for News Corp.
That’s not a surprise if you were reading your Audit back in July and August of that year, much less in 2009. But it’s as close as we’ve gotten to concrete evidence that it was a conscious editorial decision.
The Journal’s coverage of the hacking story was embarrassingly stunted in the first several weeks of the world-shaking scandal. On the day after the Milly Dowler bombshell broke, the paper stuffed a wire brief on A11 with the headline “U.K. Tabloid Accused of Hacking Girl’s Phone.” It followed the next day with a workmanlike story on B1, but dropped it below the fold.
The WSJ’s first major contribution to the hacking story was a piece a month later—that fingered, based on flimsy evidence and without talking to the alleged briber, News UK rival the Sunday Mirror for a minor instance of alleged police bribery more than a decade. I hit my old paper at the time and got perhaps the most livid complaint call I’ve ever gotten, from a WSJer whom it was clear was under tremendous pressure at the time. Now we know the backstory.
Folkenflik also reports that Murdoch’s flacks at Fox News descended into industrial-scale sockpuppetry in comment sections of posts critical of Fox:
Fox PR staffers were expected to counter not just negative and even neutral blog postings but the anti-Fox comments beneath them. One former staffer recalled using twenty different aliases to post pro-Fox rants. Another had one hundred. Several employees had to acquire a cell phone thumb drive to provide a wireless broadband connection that could not be traced back to a Fox News or News Corp. account… “Even blogs with minor followings were reviewed to ensure no claim went unchecked.”
Another long-held suspicion confirmed.
Now, British investigative site ExaroNews, has more bad news for News. This summer, Exaro got hold of a tape of Murdoch’s meeting with beleaguered Sun journalists last year that showed him admitting he had known about his papers’ bribes culture for decades. The tapes showed the old man has learned almost nothing from the last two years of scandal. In addition to his “everybody knew it” admission, he trashed Scotland Yard, and promised jailed Sun journalists “support.”
“I’m not allowed to promise you - I will promise you continued health support - but your jobs. I’ve got to be careful what comes out - but frankly, I won’t say it, but just trust me.”
Exaro now reports that News Corp. executives were in an uproar over Murdoch’s statements leaking out and that they “fear disaster from secret recording.” The tapes make a Foreign Corrupt Practices Act prosecution of News Corp. more likely and Exaro says some think Murdoch may have to step down as an executive at 21st Century Fox to contain the damage.
Perhaps Mr. Murdoch can just pay a Jamie Dimon-style visit to Eric Holder (and his British counterpart), wave a few billion dollars in their faces, and put this whole pesky mess to bed. Such is the life of a plutocrat.
Making sense of the JP Morgan settlement
Praise for Peter Eavis amidst much misinformation
By Felix Salmon Oct 23, 2013 at 06:50 AM
Are you worried that JP Morgan is being robbed of $13 billion that rightfully belongs to shareholders? Richard Parsons (not the former Citigroup chairman, but rather the former Bank of America executive vice president) is shocked by the size of the JP Morgan settlement, trotting out a line of criticism which is pretty standard in Wall Street circles:
If it is true that J.P. Morgan Chase must pay penalties for mistakes made by Bear Stearns—a firm that Washington encouraged them to take over—then it is likely federal policy makers have actually increased systemic risk to the financial system. In a country that has seen 3,000 banks fail over the past 30 years and more than 12,000 over the past century, it is not difficult to imagine future bank failures…
Little thought seems to have been given to the pursuit of J.P. Morgan Chase over Bear Stearns. Once the government proves itself to be an unreliable “partner” in resolving failed institutions, it will find fewer banks willing to step in next time there is systemic risk to the banking system.
This is doubly false, and no one has done a better job of demonstrating its falseness than Peter Eavis. Back in September, Eavis explained, patiently, that JP Morgan bought Bear Stearns and Washington Mutual with its eyes open. (This isn’t hard to show, when Jamie Dimon was saying, at the time, things like “There are always uncertainties in deals; our eyes are not closed on this one.”) Besides, JP Morgan has made billions of dollars in profit on these deals, even after paying this settlement.
If you have any doubt about this, just look at the accounting. WaMu had shareholders’ equity of some $40 billion, before it was bought, which JP Morgan paid $1.9 billion for. JPM valued that equity at $3.9 billion, so it booked a $2 billion gain the minute that the acquisition closed; it then said that WaMu would contribute about $2.5 billion per year in extra profits going forwards.
The point here is that JPM fully expected that legacy WaMu assets would generate some $36.1 billion in losses. Now that those losses are starting to appear, all that we’re seeing is the arrival of something which was expected and priced in all along.
In reality, Washington Mutual did better than JPM expected: the bank is going to take a $750 million gain this quarter to reflect the outperformance of WaMu mortgages. (I’ll tender a guess, here: underwater mortgages are impossible to refinance, and as a result a huge proportion of JP Morgan’s underwater borrowers are paying well above-market interest rates.)
As a result, there’s no reason whatsoever for JPM to regret playing nice with the government in 2008 by buying Bear Stearns and WaMu. As the WSJ unambiguously reports (emphasis mine):
J.P. Morgan Chase & Co. is willing to pay a steep price to settle with the Justice Department over soured mortgage securities, but it is getting one thing it wanted: It won’t have to pay heavy penalties for the sins of two companies it bought during the financial crisis.Under the terms of a tentative $13 billion deal that could be finalized in a matter of days, J.P. Morgan will pay roughly $2 billion in penalties that apply to its own conduct during the years before the financial crisis, and not any for problems it inherited from Bear Stearns Cos. or Washington Mutual Inc.
As Eavis explains today, the settlement breaks down into three parts. $6 billion goes to compensate investors for losses on mortgage securities; $4 billion is relief for homeowners; and the remaining $3 billion in fines is specifically targeted only at actions which took place directly under Dimon’s watch.
Despite the concerns that JPMorgan was being unfairly taken to task for the practices of Bear Stearns and Washington Mutual, investigations into the two firms are not expected to lead to any fines. Justice Department lawyers, one person said, decided against allocating fines to those firms because doing so might appear punitive. The government encouraged and helped arrange the two takeovers.
In other words, Parsons’ premise is exactly wrong: JPM is not paying penalties for mistakes made by Bear Stearns. All that it’s doing is making good on obligations of WaMu and Bear related to securities they sold. And it’s inherent in buying a bank that you become responsible for its liabilities as well as its assets.
There is one unexpected wrinkle to this settlement, however. As Matthew Klein point out, some $4 billion of JP Morgan’s non-fine money will go to the taxpayer all the same, in the form of the FHFA, thanks in large part to the dogged efforts of FHFA director Ed DeMarco. DeMarco has been micromanaging Fannie Mae and Freddie Mac for the past four years, which means that he — rather than Fannie and Freddie themselves — has taken the lead in terms of chasing down money the two agencies are owed by the banks from whom they bought mortgage securities.
DeMarco sits in a kind of weird regulatory limbo: technically he only regulates Fannie and Freddie, but because he’s a fully-empowered government regulator, that gives his lawsuits especial force. And so when he sues JP Morgan (and Citi, and Wells Fargo, and other mortgage-bond merchants), the suits fall somewhere in the middle between aggressive regulatory action and a simple civil claim brought by formerly private companies which suffered losses due to miss-sold securities. Most importantly, because DeMarco is a regulator, other regulators, including most importantly the Justice Department, can join in — and, ultimately, settle the whole deal for a huge headline sum.
The best way of looking at this JPM settlement, then, is not as a massive $13 billion fine for wrongdoing. Rather, you should think of it as an upsized out-of-court settlement between JP Morgan and the various private companies which bought mortgage bonds from JPM, WaMu, and Bear. Those companies were mostly Fannie and Freddie, which means that they’re now owned by the government, and so of course lots of other government baggage is being brought in at the same time. But what we’re not seeing is overreach by the SEC, by the Justice Department, by Treasury, or by any other government agency. And we’re certainly not seeing JPM being punished for takeovers which the government asked it to do. We’re just seeing two enormous and bureaucratic systems — the federal government, and JP Morgan Chase — doing their best to disentangle the various obligations that the latter has to the former. It’s opaque, and not particularly edifying. But it’s probably good, on net, for both parties.
Audit Notes: Fast Food welfare, finance in the doctor’s office, sharing economy
Taxpayers subsidize McDonald’s & Co. with $7 billion a year
By Ryan Chittum Oct 18, 2013 at 07:12 AM
Researchers from Berkeley and the University of Illinois have found that most fast-food industry workers are paid so poorly that they receive public assistance, something that costs the federal government $7 billion a year.
Contrary to industry propaganda, your typical fast-food worker isn’t some teenager needing gas money: The median age is 28. Reuters:
Data from the U.S. Census Bureau and public benefit programs show 52 percent of fast-food cooks, cashiers and other “front-line” staff had relied on at least one form of public assistance, such as Medicaid, food stamps and the Earned Income Tax Credit program, between 2007 and 2011, researchers at the University of California-Berkeley and the University of Illinois said…
Twice as many fast-food workers enroll in public aid programs than the overall workforce because of the low wages, limited work hours, and skimpy benefits their jobs afford them, according to the Berkeley study.
But even those who work full-time are struggling. More than half of these families are enrolled in public assistance programs, the researchers said. This costs taxpayers nearly $7 billion per year, more than half of which is in health insurance costs.
— Jessica Silver-Greenberg has a good watchdog report in the Times on how dentists and doctors are teaming up with the finance industry to offer credit to patients in their offices.
In dentists’ and doctors’ offices, hearing aid centers and pain clinics, American health care is forging a lucrative alliance with American finance. A growing number of health care professionals are urging patients to pay for treatment not covered by their insurance plans with credit cards and lines of credit that can be arranged quickly in the provider’s office…
The American Medical Association and the American Dental Association have no formal policy on the cards, but some practitioners refuse to use them, saying they threaten to exploit the traditional relationship between provider and patient. Doctors, dentists and others have a financial incentive to recommend the financing because it encourages patients to opt for procedures and products that they might otherwise forgo because they are not covered by insurance. It also ensures that providers are paid upfront — a fact that financial services companies promote in marketing material to providers…
While medical credit cards resemble other credit cards, there is a critical difference: they are usually marketed by caregivers to patients, often at vulnerable times, such as when those patients are in pain or when their providers have recommended care they cannot readily afford. In addition to G.E., large banks like Wells Fargo and Citibank, as well as several specialized financial services companies, offer credit through practitioners’ offices.
— Tom Slee shreds Peers, a new astroturf group for the “sharing economy,” which is appropriating the language of progressive politics to con people into protecting its corporate interests: fighting regulations that they don’t like.
Andrew Leonard from Salon has been following the story, and tells us that funding comes from “mission-aligned independent donors”. So that’s wealthy backers with a financial interest in the sharing economy. This is not grassroots, it’s astroturf…
The sharing economy is not an alternative to capitalism, it’s the ultimate end point of capitalism in which we are all reduced to temporary labourers and expected to smile about it because we are interested in the experience not the money. Jobs become “extra money” just like women’s jobs used to be “extra money”, and like those jobs they don’t come with things like insurance protection, job security, benefits - none of that old economy stuff. But hey, you’re not an employee, you’re a micro-entrepreneur. And you’re not doing it for the money, you’re doing it for the experience. We just assume you’re making a living some other way…
The sharing economy is the centralization of global casual labour. Investors invest because individual sharing economy companies have the potential for global reach, collecting a little from each of millions of transactions around the world, and funnelling it to California.
As Slee says, “If there is one thing that makes me angry, it is people appropriating the language of collective and progressive politics for financial gain.”
The extraordinary promise of the new Greenwald-Omidyar venture (UPDATED)
Adversarial muckrakers + civic-minded billionaire = a whole new world
By Ryan Chittum Oct 17, 2013 at 06:50 AM
Make no mistake, news that Glenn Greenwald is leaving The Guardian to start a new publication funded by eBay billionaire Pierre Omidyar is giant news—a bigger deal, in my book, than Jeff Bezos buying the Washington Post.
(UPDATE: I should disclose that the Omidyar Network helps fund CJR, something I didn’t know until shortly after I published this post.)
This isn’t just another startup.
What makes this extraordinary is the combination of muckraking—and, dare I say, dissident—journalists Glenn Greenwald, Laura Poitras, and Jeremy Scahill with the gargantuan fortune of one of the first internet billionaires.
The problem with the Billionaire Savior phase of the newspaper collapse has always been that billionaires don’t tend to like the kind of authority-questioning journalism that upsets the status quo. Billionaires tend to have a finger in every pie: powerful friends they don’t want annoyed and business interests they don’t want looked at. The Way Things Are may not work for most of us, but it ain’t bad if you’re an American billionaire.
By hiring Greenwald & Co., Omidyar is making a clear statement that he’s the billionaire exception. A little more than a year ago, Greenwald was writing for Salon.com, which (somehow) has a market cap of $3.5 million. Six years ago he was still typing away on his own blog. It’s like Izzy Stone running into a civic-minded plastics billionaire determined to take I.F. Stone’s Weekly large back in the day.
NYU’s Jay Rosen interviewed Omidyar and breaks the news that he was one of the few people approached about purchasing the Washington Post. That process led Omidyar to “ask himself what could be done with the same investment if you decided to build something from the ground up,” Rosen writes.
Wait… did he say “same investment”? As in $250 million-ish? Yes he did:
I asked how large a commitment he was prepared to make in dollars. For starters: the $250 million it would have taken to buy the Washington Post.
That is an astonishing amount of money. Think about how much incredible journalism the nonprofit ProPublica has put out in the last five-plus years. It has spent just $43 million in that time to do so—total. Virtually all of that has been funded by foundation grants and reader contributions.
It will be fascinating to see how Omidyar and Greenwald set up the business model for their new venture, being truly unencumbered by legacy constraints. Omidyar tells Rosen that the site will be a company rather than a nonprofit, but that “all proceeds… will be reinvested in the journalism.” If that’s the case, it will be a sort of quasi-nonprofit: able to sell ads and otherwise act like a publishing company but paying little to no taxes.
If it takes ads. Omidyar already has a track record of supporting journalism startups, launching the well-regarded Honolulu Civil Beat in 2010. That site had a $20 a month hard paywall that has now morphed into a metered paywall that charges $10 a month. The Civil Beat calls itself “subscriber-supported journalism” and doesn’t take advertising.
The new company will surely have a different, more ambitious model. Rosen:
Omidyar believes that if independent, ferocious, investigative journalism isn’t brought to the attention of general audiences it can never have the effect that actually creates a check on power. Therefore the new entity — they have a name but they’re not releasing it, so I will just call it NewCo — will have to serve the interest of all kinds of news consumers. It cannot be a niche product. It will have to cover sports, business, entertainment, technology: everything that users demand.
At the core of Newco will be a different plan for how to build a large news organization. It resembles what I called in an earlier post “the personal franchise model” in news. You start with individual journalists who have their own reputations, deep subject matter expertise, clear points of view, an independent and outsider spirit, a dedicated online following, and their own way of working. The idea is to attract these people to NewCo, or find young journalists capable of working in this way, and then support them well.
This is the best news journalism has seen in a long, long time. Here’s hoping this remarkable pairing realizes its full potential.
Further reading:
Guardian bombshells in an escalating battle against journalism. Greenwald partner’s detention, prior-restraint threats, and smashed hard drives.
Britain’s spooks don’t get the 4th estate. Oliver Robbins on the detention of David Miranda and the seizure of press communications.
The HBGary Federal Scandal. Many questions need answering as hackers shine a light on the private-security underworld
A piracy defense walks the plank at the Post (UPDATED)
A blogger gets schooled by the meanies of Big Copyright
By Ryan Chittum Oct 16, 2013 at 07:09 AM
There are many problems with Timothy B. Lee’s Washington Post blog post on Hollywood’s supposed culpability for the theft of its own movies, beginning with the morally unserious jujitsu deployed in arguing that Hollywood is culpable for the theft of its own movies.
The Mercatus- and Cato-connected editor of the Washington Post tech blog that aims “to be indispensable to telecom lobbyists and IT professionals alike, while also being compelling and provocative to the average iPhone-toting commuter” also had a major correction that undermines the entire premise of the piece and reveals its one-sided reporting.
(UPDATE: Speaking of conflicts… CJR has recently gotten funding from the Motion Picture Association of America to cover intellectual-property issues. MPAA has no influence over the Cloud Control feature’s content and doesn’t fund The Audit).
The post initially was published with the Reddit-bait headline “Here’s why Hollywood should blame itself for its piracy problems,” still appears on Wonkblog’s most-popular list as “People pirate movies they can’t get legally,” and now is reduced to “Many of the most-pirated movies aren’t available for legitimate online purchase.”
Lee based his argument on bad data from PiracyData.org, which was co-founded by a couple of researchers at the Koch-funded anti-government think tank the Mercatus Center to document whether “people turn to piracy when the movies they want to watch are not available legally.”
Left unmentioned: That Lee himself contributed a chapter to a Mercatus book with the researchers (at least one of whom is his friend) called “Copyright Unbalanced: From Incentive to Excess.” That would have been worth disclosing in the post. Readers would have had more reason to be skeptical.
Here’s the correction, which is stuffed at the bottom of the piece rather than flagged up high like it should have been:
The original data supplied to us by PiracyData.org was inaccurate. It showed 1 movie available for rental and 4 available for purchase. In fact, at least 3 were available for rental and 6 were available for purchase. “Pacific Rim” is also now available for digital rental, though it’s not clear if that was true on Monday. We regret the errors. We also added some additional comments from the MPAA’s Kate Bedingfield to the end of the article.
And that’s how you go from “Here’s why Hollywood should blame itself for its piracy problems” to “Many of the most-pirated movies aren’t available for legitimate online purchase” a few hours later.
Here’s the thing: If you make a movie, you should be able to sell it however you see fit, not however free-Internet types see fit. Perhaps how you decide to sell it will not be the best way you could sell it. That doesn’t in any way excuse tech companies from aiding theft via piracy, much less the people doing the actual pirating. And yes, anti-copyright people, pirating a copyrighted work is theft.
People steal pirated movies largely because they’d rather not pay for something they don’t have to pay for, and because the consequences of breaking the law are almost nonexistent. It’s not very complicated.
And there’s a correlation/causation problem here too. While it’s certainly true that some unknown percentage of the piracy here is due to limited availability, it’s also clear that the movies in the top-10 most-pirated list are relatively recent releases. And relatively recent releases are in higher demand—including from thieves—than back-catalog films.
So what about those additional comments from the MPAA Lee refers to in his correction? This is how his rewritten post now ends (emphasis mine):
But Bedingfield counters that films get heavily pirated even when they’re made available in online formats. “The Walking Dead was pirated 500,000 times within 16 hours despite the fact that it is available to stream for free for the next 27 days on AMC’s website and distributed in 125 countries around the world the day after it aired,” she says. “Our industry is working hard to bring content to audiences when they want it, where they want it, but content theft is a complex problem that requires comprehensive, voluntary solutions from all stakeholders involved.”
Finally, Bedingfield points out that the Mercatus Center counts Google among its funders.
Boom.
Score one for the big, bad MPAA.
Audit Notes: Shutdown/debt ceiling edition
The consequences have already begun
By Ryan Chittum Oct 15, 2013 at 03:00 PM
Audit pal Felix Salmon has an important piece on the Republicans’ debt-ceiling insanity, writing that “the default has already begun”—as has the irreparable damage:
The harm done to the global financial system by a Treasury debt default would not be caused by cash losses to bond investors. If you needed that interest payment, you could always just sell your Treasury bill instead, for an amount extremely close to the total principal and interest due. Rather, the harm done would be a function of the way in which the Treasury market is the risk-free vaseline which greases the entire financial system. If Treasury payments can’t be trusted entirely, then not only do all risk instruments need to be repriced, but so does the most basic counterparty risk of all. The US government, in one form or another, is a counterparty to every single financial player in the world. Its payments have to be certain, or else the whole house of cards risks collapsing — starting with the multi-trillion-dollar interest-rate derivatives market, and moving rapidly from there.
And here’s the problem: we’re already well past the point at which that certainty has been called into question. Fidelity, for instance, has no US debt coming due in October or early November, and neither does Reich & Tang:
And Citigroup and State Street are telling clients they don’t want T-bonds maturing in mid-to-late October as collateral, as the Journal reports.
Felix:
While debt default is undoubtedly the worst of all possible worlds, then, the bonkers level of Washington dysfunction on display right now is nearly as bad. Every day that goes past is a day where trust and faith in the US government is evaporating — and once it has evaporated, it will never return. The Republicans in the House have already managed to inflict significant, lasting damage to the US and the global economy — even if they were to pass a completely clean bill tomorrow morning, which they won’t. The default has already started, and is already causing real harm. The only question is how much worse it’s going to get.
— The New Republic’s Noreen Malone marvels at the sheer nerve of Republican Senator Ted Cruz, who’s as responsible as anyone for the government shutdown, taking to the National Mall with fellow demagogue Sarah Palin to rail against the government shutdown. Cruz had the nerve to ask, “Why is the federal government spending money to erect barricades to keep veterans out of this memorial?”
Malone:
2) The memorial is closed because the government is shut down. That’s why veterans — and everyone — can’t get it.
3) Barricades don’t really cost money to erect in this day and age. The Park Police, particularly in D.C., probably have lots of those laying around and stuck them up before the shutdown began, kind of like a “gone fishing” sign for the collapse of democratic process. It’s not as if they welded them by hand with the molten tears of people forced to sign up for Obamacare. If the government did “spend money” on them, it’s in the past tense. It’s not an ongoing activity. Also, it probably cost like … maybe a hundred bucks, total?
4) The Park Police are, in fact, monitoring the memorial, but it’s mostly to keep the protesters (protesting its closure) under control. The Park Police are not being paid for this (even though protesters chanted “You work for us”), because they’ve been furloughed. Thanks largely to the intractable Ted Cruz.
— The economist Justin Wolfers points to the Gallup poll of consumer confidence, which shows it collapsing as the shutdown/debt ceiling fiasco drags on:
Thanks, Republican Party.
I’m really surprised that the markets haven’t freaked out yet, even though consumers have been for weeks.
A Fed whistleblower on Goldman’s conflicts²
ProPublica excels while the NYT’s DealBook slips
By Ryan Chittum Oct 15, 2013 at 07:07 AM
ProPublica’s Jake Bernstein reports on the intriguing tale of Carmen Segarra, a former Goldman Sachs bank examiner at the New York Federal Reserve who was fired for determining—and then insisting, after being told from superiors to say otherwise—that the bank’s conflict-of-interest policies were sorely lacking.
Finding conflicts of interest at Goldman Sachs, of course, is like finding gambling in the casino. Conflicts are part of its raison d’être. As Bernstein points out, the old joke on Wall Street is that the firm’s motto is “If you have a conflict, we have an interest.”
But Segarra’s was a very specific bureacratic mandate: Find out whether Goldman’s conflicts policies conformed with Fed rules issued amidst the financial crisis. They did not, according to her account.
Segarra’s notes of an initial meeting read like farce: Goldman said it didn’t have a company-wide conflicts policy. Its conflicts oversight group didn’t consider that task a “legal and compliance function.” And the group was called the Business Selection and Conflicts Resolution Group:
“Our eyes were open like saucers,” she said. “Business selection is about how you get the deal done. Conflicts of interest acknowledge that there are deals you cannot do.”
In other words, even Goldman’s conflicts-of-interest oversight had conflicts baked in! That’s a whole new dimension of conflictedness, brought to you by Goldman Sachs: conflicts squared.
Segarra says the lack of a central conflicts policy left a patchwork of rules across the bank. The private-banking group actually had a written policy of not talking about conflicts of interest in writing:
However, e-mails or other written communication should not be used for vetting conflicts because it is unrealistic to expect that all relevant information will be properly captured in written communications, particularly e-mail, and they may create a misleading record of our thought processes and deliberations.
But, ProPublica reports, the Fed pushback against Segarra began, according to her account: A Fed official working on Goldman asked to doctor her minutes of a crucial meeting. Her boss advised her it would be better to be more “quiet.” Her boss told her not to ask questions about Goldman’s conflicted-to-the-core El Paso Energy/Kinder Morgan deal. A supervisor told her to keep quiet about evidence Goldman had lied about Fed approval of a transaction with Santander “for your protection.” Her bosses told her to say that Goldman’s conflict-of-interest policy was in compliance when she insisted it was not.
Then they fired her.
On the same day ProPublica’s investigation came out, The New York Times’s DealBook ran a story that basically just rehashes Segarra’s lawsuit filings. But it also includes this sideswipe:
Within the Fed, some people who worked with Ms. Segarra echoed those concerns, according to people with knowledge of her time at the agency. Ms. Segarra, these people said, sometimes developed “conspiracy theories.”
This is really beneath the Times (and reminiscent of a 2010 stinker from DealBook boss Andrew Ross Sorkin on a Lehman whistleblower). You simply can’t give a whistleblower’s bosses or colleagues (or whoever these anonymice might be) cover to hide behind their personal criticisms of them.
If it’s worth saying, it’s worth attaching their names to. “She’s crazy, sources say,” is chickenshit.
Audit Notes: Ginger Baker, $15 minimum wage, fisking Niall
The Cream legend just can’t stomach insipid questions from the press
By Ryan Chittum Oct 14, 2013 at 07:30 AM
Ginger Baker, the former Cream drummer, gives the interview of the month to Rolling Stone. Baker is simply not having any of it:
Why is Alec your favorite bass player?
Because of the way he plays!…
Are you living in England now? Yes. That’s where I am right now. You just phoned me so you know that this is an English phone number.
I know, I just wanted to ask. Well why ask me questions if you know the answer?…
What was the last record that excited you? God knows. I don’t know. I don’t listen to music.
Why? Because I don’t!
It’s what you do, though. Yeah. So when you’re talking about a bus driver, his holiday is driving?…
But it was only six shows. You wouldn’t want to do anymore? Well, it was actually seven shows, but never mind. You guys always get everything wrong. This sort of rubbish that people publish about news is quite extraordinary.
It’s always worth remembering what it’s like to be on the other side of the notebook. Read the whole thing.
Also on that note, recall this montage Nirvana put together for its “Live! Tonight! Sold Out!” documentary that captures how surreal, ridiculous, and insidious the media circus can be:
— The New York Times has a good report from SeaTac, the small Seattle suburb that houses Sea-Tac airport, and which is preparing to vote on a measure that would raise the minimum wage to $15 an hour.
Opponents assert that if higher wages drive up prices for airport food, people will vote with their feet.
“If you’re going to have a 30 percent increase in food prices, it will mean a lot of people will eat outside the airport,” said Bob Donegan, the president of Ivar’s, a seafood company based in Seattle with a restaurant at the airport. “That’s not a good thing for the airport or its workers.”
Supporters, citing a report by the liberal research group Puget Sound Sage, said that travelers accounted for more than two-thirds of airport commerce, and that increasing pay to $15 an hour would inject $54 million into the local economy.
Of all the places to try the immediate jump to $15 an hour, an airport is it. Contrary to Donegan’s claim, airports have a captive audience, most of whom can’t really eat outside the airport. This is going to be a fascinating case study of the minimum-wage economy if SeaTacians vote “yes.”
— Matthew O’Brien of The Atlantic fisks the almost always wrong Harvard historian Niall Ferguson, who’s been in a public spat with the almost always right (at least in the last five years) Paul Krugman lately.
Here are three facts about how the 10-year budget outlook has changed in the past year: 1) the fiscal cliff deal raised $600 billion in new revenue; 2) the sequester, if left in place, cut spending by $1.2 trillion; 3) the CBO revised its projection for federal healthcare spending down by $600 billion.Harvard historian Niall Ferguson has a counterfactual take. Here’s how he described how our debt trajectory changed the past year:
A very striking feature of the latest CBO report is how much worse it is than last year’s. A year ago, the CBO’s extended baseline series for the federal debt in public hands projected a figure of 52% of GDP by 2038. That figure has very nearly doubled to 100%. A year ago the debt was supposed to glide down to zero by the 2070s. This year’s long-run projection for 2076 is above 200%. In this devastating reassessment, a crucial role is played here by the more realistic growth assumptions used this year.
This isn’t a difference of opinion. It’s incorrect. But it’s incorrect for reasons that will escape casual readers.
T-Mobile shows upside of M&A; skepticism
After AT&T;’s disastrous attempted acquisition, T-Mobile upends convention
By Ryan Chittum Oct 11, 2013 at 06:55 AM
Two years ago, AT&T; announced it had agreed to acquire T-Mobile USA from Deutsche Telekom for $39 billion.
The deal would have effectively made the US a two-carrier country, with AT&T; and Verizon controlling 73 percent of the wireless industry, with third-place Sprint at 16 percent, but losing billions of dollars a year.
So confident was AT&T; in the decades-long gutting of antitrust enforcement that it agreed to pay Deutsche Telekom $3 billion in cash and extremely valuable spectrum licenses if it failed to complete the deal.
For the typically rah-rah M&A; press and, more important, for antitrust officials, the purchase proved to be a deal too far, and AT&T; was forced to abandon its bid nine months later.
The company had to fork over $7 billion in cash and spectrum rights to Deutsche Telekom.
For making one of the costliest and dumbest moves in the annals of industry, AT&T; CEO Randall Stephenson took a $2 million pay cut—to $22 million that year. Other people’s money, and whatnot.
Fortunately, for Americans with cellphones, the government stepped in to prevent an already consolidated industry from calcifying further.
Now, they’re reaping the benefits.
T-Mobile has taken to marketing itself as the “Uncarrier” and has indeed made some major moves that distance itself from the American wireless industry’s cartel-like behavior with actual, you know, competition.
This spring, it ended what the NYT’s David Pogue has aptly called the Great Cellphone Subsidy Con, where the carriers subsidize the price of your iPhone in exchange for a two-year contract, which doesn’t decrease in price when your phone is paid off. T-Mobile allows you to pay full freight for a phone upfront or pay off the actual cost in installments on your bill. It also did away with contracts completely—a major step.
On Wednesday, T-Mobile announced that its users will no longer have to pay roaming charges when they’re overseas. Say what?
T-Mobile customers will be automatically enrolled in the free-roaming agreement on Oct. 31. Those who subscribe to the company’s plan, called Simple Choice, can take their smartphone to a foreign country and pay 20 cents a minute for voice calls. Text messages and data will be unlimited.
The free roaming benefit will apply to about 100 countries, including France, Spain, China, Japan and Russia.
I just moved to Denmark a few weeks ago and I was super-paranoid about racking up one of those $200,000 mobile bills. AT&T; charges $19.50 per megabite of data when you’re roaming overseas without an international plan. It charges $120 a month for a plan with 800 MB of data, which is less than half what I had in the States.
I always thought these exorbitant charges were due to high market rents charged by other carriers. I should have known better. T-Mobile’s leather-jacketed CEO exposes that as untrue:
Pogue:
“The big carriers have created a perception that it costs this much. But it really doesn’t,” Mike Sievert, T-Mobile’s chief marketing officer, told me. “It’s just that they’ve gotten away with charging us these bloated 90 percent profit margins.”
Here we have an extremely valuable lesson in why we need antitrust enforcement. Had AT&T; absorbed T-Mobile two years ago, there’s zero chance any of these big changes would have been made.
In the meantime, T-Mobile is already putting heat on the would-be duopolists at AT&T; and Verizon. It’s gaining market share, reversing what had been a downtrend and further gains will put pressure on competitors to adopt its customer-friendly practices. T-Mobile also acquired the small carrier Metro PCS—a “good” instance of M&A; because the deal enables the two to better compete with the big boys.
The US cellphone market clearly needs more of this kind of competition. Here in Denmark, the mobile market is highly competitive despite TDC having a 42 percent market share—bigger than AT&T; or Verizon has in the US. There are four major carriers and a lot of prepaid providers that are given access to the big companies’ networks. That in a country of 5.5 million people.
I just signed up for Danish mobile service that includes two 4G lines that each get eight hours of talk, 2GB of data, unlimited texts, family talk/text, unlimited music, data sharing, and hotspots for 300 kroner a month. That’s $54, including taxes.
My AT&T; bill back in the States for lesser service? $165 a month. Take out the iPhone subsidy and it was still $145 a month or so.
Here’s hoping T-Mobile shakes things up some more in the States.
Too Big to Fail banks still extend, pretend
American Banker reports the big four are sitting on tens of billions of dollars of losses
By Ryan Chittum Oct 10, 2013 at 03:00 PM
American Banker’s Kate Berry has a very interesting piece on the pile of bad mortgages the big banks still have on their books—ones that they’re almost certainly not accounting for correctly.
The Banker reports that the biggest four banks—Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo—alone have $57 billion in “seriously delinquent” FHA mortgages that they’re not writing down:
The banks… have assured investors in the footnotes of quarterly filings that the loans are government-insured and therefore pose no threat to their bottom lines, even if they end up in foreclosure. What’s more, the banks have used these supposedly iron-clad government guarantees as a pretext for continuing to classify the loans as performing and for holding no reserves against them.
Why aren’t the Big Four aren’t taking the losses? For one, because of the threat that the FHA will slap them with huge fines for violating the False Claims Act if the mortgages were fraudulently put together, which a big chunk of them surely were. For another, they may not be able to find the documents because of years of robosigning.
And this is particularly interesting:
Some observers suggest that the loans could sit on the four banks’ balance sheets until they settle existing disputes with the FHA over their underwriting. B of A and Citibank have already negotiated settlements over False Claims Act violations with the FHA or are in the midst of doing so.
The settlements are to resolve claims involving an unknown amount of previously filed FHA claims that could date back a decade or more. After the legal claims involving these mortgages are cleared up, the banks will be able to file new claims for loans still on their balance sheets.
So extend and pretend, tie up all their liability with a settlement, and then get much of it back via the FHA, anyway. That sounds about right.
This is hardly the only questionable accounting banks have used during the crisis. The OCC said last month that banks “may be fudging their numbers,” in Jon Weil’s words, by aggressively releasing loss reserves to pad their profits.
Nice watchdog work by the Banker here.
No paywalls, please: we’re the Guardian
Everyone’s favorite newspaper is on a risky financial course
By Dean Starkman Oct 10, 2013 at 11:00 AM
Everyone loves the Guardian—well, everyone except Rupert Murdoch, the British intelligence apparatus, the American intelligence apparatus, and bullies, sneaks, and abusers of authority everywhere.
But everyone else surely does, and no one more than us here at The Audit, where we judge Alan Rusbridger the premiere editor of his generation.
Exactly how much everybody loves the Guardian is going to be tested in the next few years, because the newspaper’s finances are not—repeat, not —good. It is on an ominous track and pursuing a strategy that is high-minded but also high-risk.
Alarmist? Let’s take a look.
The Guardian, by way of background, has a peculiar pedigree and is governed by unusual structure. Founded by a Manchester cotton trader in the early 19th century, it was bought by a longtime editor, C.P. Scott, who whose son in 1936 left it in a trust, the Scott Trust, run by his descendants [ADDING: for more, see Don Montague’s comment below]. The trust was converted to a “limited company” in 2008, but it basically serves the same function: “to sustain journalism that is free from commercial or political interference,” according to Guardian literature. The trust is the sole owner of a corporation named the Guardian Media Group (GMG), which in turn owns several units, including, famously, Guardian News Media (GNM), which is the “newspaper” in both its digital and print forms, along with an online dating service, and other small businesses.
The important point here is that unlike The New York Times and The Washington Post, the Guardian is not ultimately part of a commercial enterprise. It doesn’t need to grow financially. It just needs to not lose too much.
Trouble is, GNM, the news organization, is losing too much. Indeed, as many people know, it is a huge money loser.
How huge? Put it this way: The group doesn’t even talk about profits for GNM, only getting losses to “sustainable levels.” Right now, they are not. Here’s what they look like for the past five years (the figures are in millions GBP).
Fortunately for the Guardian, and the free world, the Trust owns other businesses that are part of the larger Group. The two main things are a big stake in Trader Media Group, which owns Auto Trader, a nicely profitable auto classified ad operation, and Top Right Group, which does event planning and the like.
In 2013, for instance, the two trade operations earned enough to push the whole group into a profit.
But, that has decidedly not always been the case. As we can see here, the entire Group—never mind the GNM—has posted losses in three of the past five years (the figures exclude the results from former businesses. If they had been included, the 2012 loss would have been much higher).
The Guardian’s ace-in-the-hole is the Trust and its investment fund, which exists to subsidize the paper and which, after taking some hits in the financial crisis, has stabilized. The important number is the blue line, the cash and investment fund:
Still, this is not a bottomless cookie jar.
As Ken Auletta noted in his recent takeout on the paper (with my emphasis):
Still, the Guardian lost more money this past year than it did in fiscal 2007-08. To run its print and online operations, the Guardian employs sixteen hundred people worldwide, including five hundred and eighty-three journalists and a hundred and fifty digital developers, designers, and engineers. “The toughest critique of Alan is that he has not faced up to the Guardian’s costs,” a longtime executive at the paper said. The newsroom “is too big for a digital newspaper.”
And:
[GMG CEO] Andrew Miller admits that he does not foresee the newspaper earning a profit anytime soon. Rusbridger said, “The aim is to have sustainable losses.” Miller defines that as getting “our losses down to the low teens in three to five years.” But at some point, if the Guardian does not begin to make money, the trust’s liquid assets, currently two hundred and fifty-four million pounds, would be depleted.
Correct.
Now, we’re big advocates of paywalls around here, in general, for legacy news organizations, especially when nothing else is working. The paywall debate has been cast in quasi-religious terms, and Ryan Chittum and I are supposed to be paywall haredi or something, but as we’ve said like a million times, they’re a tool that can, if used correctly, add an income stream to news organizations while costing next to nothing in traffic, digital ads, and reader engagement. The breakthrough, the innovation—to steal back a phrase favored by free-content proponents—was the NYT’s metered model introduced in 2011 and copied around the world.
A paywall, done right, can be seen as essentially free money. You set the meter high enough to not impact your pageviews and uniques and get whatever you can from your core readers.
The Guardian’s Katharine Viner the other day eloquently made the case for the transformative power of open journalism and against paywalls. The philosophical discussion is one for another day, but I’d only say here that the question is not nearly as binary as many seem to believe.
One reason we’re inclined to like metered subscription models—all else being equal—is that they debunk the annoying and now disproved idea that journalism has no value in the marketplace. And they provide incentives for quality that click-chasing models, those based on sheer volume of posts and traffic, do not.
We were adamant, for instance, that The Washington Post needed one because its digital revenue had been flatlining for years at relatively low levels. With digital ad rates continuing to decline, asking online readers to contribute was an obvious move, especially since experience has shown the loss of traffic and digital ad revenue is not really material.
The Guardian has its own reason for eschewing paywalls. One is practical: the BBC employs thousands of journalists and is free. Why, then, would people pay for the Guardian? Another is ideological, and not in a pejorative sense. “Open journalism” is just part of the Guardian’s, and the Trust’s, ethos, part of their identity. It’s hard not to respect that.
A third reason is that, unlike at other places, digital revenue is actually growing and growing at a respectable pace—from £37.4 million in fiscal 2011 to £55 million in 2013, a rise of nearly 50 percent in two years, accelerating to 28 percent in the last year alone, eclipsing the decline in print revenue.
The Trust’s executives are pleased with the direction of the company, and this is understandable. This dame here, Dame Amelia Fawcett DBE, chair of the GMG, says:
At Group level, we were pleased to convert last year’s loss into a profit before tax, while EBITA also improved. This is due in no small part to the success of our transformation plan, as we continue to map our way towards the digital future.
And this, uh, gent, Miller says:
The financial impact of our digital-first strategy, launched two years ago, is clearly demonstrated in our performance in 2012/13. A sharp increase in the contribution of our digital operations to revenue was a striking feature, enabling a modest increase in overall Group revenues. Having committed to digital earlier than our peers, we are now reaping the benefits.
Digital revenue, importantly, includes some subscription income via apps for phones and tablets.
Hey, if you assume similar growth for the next few years, you are looking, dames and knights, at a fairy tale ending—total revenue actually rising:
All we can do is root for that kind of growth to continue but, also, to recognize it’s very, very unlikely. For one thing, it’s just harder to achieve that kind of growth off of a larger base. Even the Times’s vaunted digital subscription growth eventually fell to earth and stabilized. Betting the Guardian on growth continuing at that rate is folly.
The stakes are quite large. The Guardian is formidable today precisely because of those 583 journalists and 150 digital developers. There is no free online-only news organization anything close to that size. The Group is already taking £25 million out of the organization in cost savings, and that’s fine. But obviously cutting alone is not the answer.
So, no paywall? Sure. Let it ride, for now.
But realistically, chances are that within the next few years, digital growth will level off while the print side continues its steady decline. Not that I want this. Just that that’s what’s likely to happen.
At that point, if the goal is still to get the losses into the low-teens, it will be time to turn to readers for help, as they already are on tablets and phones.
As the Lord Protector might say, trust in open journalism, but keep your powder dry.
The Celebrity Journal
Stars are turning up in the once-august paper for little or no reason
By Ryan Chittum Oct 10, 2013 at 06:50 AM
I noticed The Wall Street Journal’s “The Experts” back in March when the advertiser-friendly special section ran a story on personal-finance advice from noted gurus Pat Sajak and Morgan Fairchild.
But I’ve noticed that the once-and-still-somewhat-august Journal has become an awfully celebrity-friendly place lately. For a few days recently, WSJ.com plugged the “WSJ Startup of the Year” quasi-reality show with a video that featured Will.i.am, the annoyingly named leader of the awful pop group Black Eyed Peas, “mentoring” some startup founder who has an augmented-reality app and thinks “the language of the future is a visually-based language—universal, democratic… everyone can rally around something. And so we’re doing a lot in the entertainment space.”
A few weeks earlier, the Journal had a startup called ‘ZinePak mentored by MC Hammer, “pop rap pioneer” and notorious bankrupt. ‘ZinePak is “trying to bring innovation and revolution to the recorded entertainment industry” by making tickets into souvenirs, but the Hammerman had zero advice or mentoring to offer.
And Morgan Fairchild and Pat Sajak are still hanging around the WSJ Experts lounge, offering advice on questions like “What would your ideal retirement party playlist be?” Suzanne Somers also got that one.
The WSJ asked Fairchild on another occasion, “What will surprise people the most when they retire?” She replies, “Since I’m not retired yet, my view of what the biggest surprise will be may be a bit skewed. However, many folks seem to find time on their hands is not all it’s cracked up to be. They get bored!! To that end, learn things and/or volunteer!” Experts, indeed.
The Experts even asks Robert Plant about what “top two global risks that you think companies should be prepared for?” Err, wait. That’s Robert Plant of the University of Miami, not the Robert Plant:
But I look forward to the WSJ interviewing the real Robert Plant on how to rock—even if it’s how to rock in your retirement.
Rupert Murdoch has clearly been big on celebrity coverage across his empire, the moneymaking parts of which are interdependent on the publicity machine of the press. An extremely unscientific survey of WSJ clips in Factiva (I searched for “celebrity” or “celebrities”) seems to show that these stories have increased significantly under Murdoch (after actually declining slightly his first two years), perhaps as part of his initiative to morph the Journal from a smart business-focused newspaper into a not-as-smart general-news paper:
Those are hits in the newspaper. Not included in that count are the blog posts proliferating on WSJ.com.
For instance, WSJ’s Speakeasy, which gives us such gems as the Emmys liveblog: “if Kerry Washington and ‘Scandal’ don’t come away with some hardware, will it be a true scandal?” One commenter responded, “Old man Murdochs tabloid credentials are really spilling into the WSJ. This is now a Republican version of the national Enquirer.”
Then there are the TV recaps like this one of “Nashville” Season 2, episode 2. If you don’t know what TV recaps are (or at least WSJ-style ones), think 8th grade book reports, but about episodes of TV shows:
Rayna isn’t sure she’ll be able to talk to Deacon again. She says she’s just done but we’ve heard that before.
Scarlett is chatting with Gunnar about nothing. Gunnar wants to know if she wants to get together. She says not so much. Also, she wants to know where her couch is (whoops!)
Journalism!
I didn’t have the heart to read “‘Project Runway’ Recap: Season 12, Episode 6, Elementary,” but be my guest.
Here’s a post called “Miley Cyrus Sings ‘We Can’t Stop’ with Jimmy Fallon and the Roots,” which got a single comment:
Why is this on the site? This is not what i come to WSJ for, in any form or fashion.
Good question, “razorbacks.”
There’s nothing wrong with covering pop culture, of course, but too much of this stuff is just not very smart:
Frontline’s landmark ‘League of Denial’
A gripping story of decades of NFL coverup and the deadly consequences
By Ryan Chittum Oct 9, 2013 at 07:13 AM
We already know most of the information Frontline presents in its gripping “League of Denial” documentary on the NFL and concussions.
Or let me be more precise: Those of us who have followed this story have heard most of it. Most people haven’t followed it closely, and even those who have likely don’t know the details of just how this story unfolded. As news appears in dribs and drabs over years or decades, it’s usually impossible for readers or viewers to keep track of the narrative arc. When did I first hear about this story? What did the principals say about it back then? How has it developed over the years?
The value of this documentary is not in the news, but in the storytelling: the expert synthesis of decades of information, the drama of the narrative, combined with the power of the visual medium. The story is the thing, as the pioneering investigative publisher Sam McClure said, and as Audit Chief Muckraker Dean Starkman has reminded us.
This story involves billions of dollars, fanatical loyalties, denial, and life and death, and—let’s be frank: good and evil—and Frontline has told it about as well as it can be told. It’s one of the most remarkable pieces of journalism I’ve seen in a long time—a highly disturbing look at a corporate coverup and its direct human cost.
If that lead-in somehow doesn’t make the point: Stop what you’re doing and spend two hours to watch it:
There are a number of good guys and gals in this story, including the journalists who helped uncover it. But the doctors/scientists Bennet Omalu and Ann McKee are true heroes.
While it’s obvious that a film like this would get much of its power from simply telling the stories of the players whose lives were devastated by chronic traumatic encephalopathy, Omalu’s and McKee’s stories push this into greatness.
Omalu’s story is particularly stirring. Nigerian born and trained, Omalu was the first to discover that a football player had CTE after being presented the body of former Pittsburgh Steeler legend Mike Webster. The NFL would go on to threaten and ostracize him for years, to the point where he said he wished he’d never heard of Webster: “You can’t go against the NFL. They’ll squash you. I really, sincerely wished it didn’t cross my path of life, seriously,” he told Frontline. It’s appalling how he was treated.
And then there’s the NFL, which Frontline conclusively shows covered up the crisis for years. It hired an unqualified, NFL-loyal doctor to head up its committee and pooh-pooh the evidence for more than a decade. It attacked and belittled scientists like Omalu and McKee. Its commissioner, Roger Goodell, won’t admit that playing football is linked to brain damage, despite the fact that forty-five of the 46 brains of dead football players that have been studied have had CTE.
Goodell is shown to be particularly awful: a real villain, along with his hand-picked doctor Ira Casson. It will be a shame if Goodell survives long in his job after Frontline’s film. I’d like to know where the Department of Justice is on this scandal.
And then there are the corporate quislings at ESPN, whom Frontline doesn’t mention, but whom I will. “League of Denial” was an ESPN/Frontline partnership until five weeks ago when ESPN pulled out. The New York Times reported in the days after that disgrace that the NFL had pressured ESPN to back out of the partnership, quoting one investigative reporter there as saying “Disney folks got involved and shut us down.”
This is not to criticize ESPN’s journalists. Steve Fainaru, Mark Fainaru-Wada and Peter Keating have all done critically important work on this story and they are fantastic in Frontline’s film. It’s a crying shame that ESPN’s goons nixed its corporate participation, but at least they didn’t nix the film.
This shows very clearly why it’s so essential that we have nonprofit, public media like Frontline, PBS, and WGBH that don’t have billions of dollars riding on what they’re reporting on.
For now, share this with every football fan you know. Especially share it with every parent with a kid playing football. Ask yourself: Can you watch the game? Can you let your kid play it?
I’ve always been a huge Oklahoma football fan, but I’m not so sure my answer is still “yes.” Not until some major changes are made.
