Reforming the Media: Influences & Suggestions

Media Corporations are getting bigger and bulkier than before, as they try to capture market share of multiple platforms of radio, print, television, movies and internet. The competition is high, margins are small and their business cycles are dynamic. There is so much stress and competition that today news reporting can be easily influenced in cash or kind. Let us see the various mechanisms of influence

1. Direct ownership: In many of today’s media corporations number of companies or interest groups have stakes in ownership and management. Shifting their focus to shareholders satisfaction and biased news coverage at times.
2. Influence of Advertising companies as clients: To keep their shows and prints running, media companies need advertisements. Thus media companies have to service their relationship with clients and that does imply a favour here and there.
3. Knowledge & data processes: You may have seen on business channels on tv, smartly dressed people with big company banners sharing their thoughts on the markets, which are as volatile as the market itself. Media needs these industry thinkers to lend credibility to their shows, but then it makes the audience credulous to their views.
4. Pre-existing political influence: Media thrives on the news makers and politics is very much intertwined with media coverage. Barack Obama showed us the power of social media in the US Presidential elections last year and I feel all of our Indian politicians are no less then drama queens. It is very well prevalent observation that India’s biggest print newspapers are lenient towards different ideological political parties.

Moreover, large advertisers can influence even competing media outlets by threatening to withdraw their advertising; numerous small advertisers can exert influence if they share a common interest and can coordinate (e.g., when represented by an advertising agency). As a result, media competition alone is not always sufficient to prevent commercial media bias.

The Possible Solutions

There maybe many more ways of influence, present but what is more important is to see what all can be done to improve news reporting, specifically financial journalism. I have certain measures in mind, radical they may seem but radical change is the need of the hour.

Firstly, removing advertising from public TV stations as imminent in France and Spain. This reduces commercial bias of their content and pressures their competitors to reduce bias; it also shifts ad revenues to private media, complementing plans to subsidise media consumption and media entry.

Secondly, making the consumer or viewer or reader more aware that certain views and opinions of this show or column maybe biased. This can be done by running a disclaimer before or during the programme, reminding viewers that it is just an opinion, not advice.

Thirdly, moral suasion is what is most required and most practical. Readers should advocate more investigative journalism, especially in business and finance. This should prevent scams like Enron or Satyam to ever happen again. Most importantly nip improbable frauds and thefts in the bud, and prevent full blow ups in the future.

Another important step would be to remove views or suggestions from the main report and keep them collected on a few pages or a different show. An easy example is the ‘Times View’ section in India’s leading English daily, which comes along with the news event; at times even on the front pages. This is bad journalism, as it induces the reader to opinion of the newspaper, rather than give him time to formulate his own. Opinion sections like these should be put in separate pages of the editorial.

Has Financial Journalism Lost Its Teeth??

John Friedman of MarketWatch was at the press conference announcing the Bank of America's acquisition of Merrill Lynch and wrote,

"the media were so polite and deferential to the two CEOs; they behaved as if the press conference were a victory lap for the financial services industry."

The above comment just so simply describes the present appalling state of financial journalism. It is true as I pointed out earlier and how easy it is for the media to be susceptible to external influences and how financial dailies and shows can influence the markets themselves.

Too much respect for seniors
One of the main problems affecting financial journalism today is the that business reporter are too close to the Wall Street that they forget the Main Street, and have too much respect for the institutions they are covering. If you have pre-bias towards the organization your covering, then most certainly you would end up asking sugar coated questions.

Also the innate behaviour to idiolise famous public figures like Warren Buffet, Richard Branson or George Soros is very damaging to prejudice free reporting. Every word that comes out of their mouth is said to be the view of the market or industry. It is shown as an implied piece of advice. Rather the journalists should be reviewing their decisions and investments.

Losing reality
Besides the above pre conceived impressions that have set in, many angry bloggers point out gradually financial journalists become part of niche circles in the industry and lose touch with the base and the common people they are writing for. They become very influenced by the views of the circle and many a times their daily columns show their responses to each-others opinions.

A major part of the flaw lies in the fast paced media culture, where ‘journalists are like fireman, going from one fire to another, dousing flames and moving on’. So they publish what is seen and avoid going to the heart of the story and dig out the facts. This surely leads to ‘the death’ of investigative reporting.

Listen then seek to be understood
During an interview recently on the Editors Weblog, the Financial Times's Managing Editor Daniel Bogler said, "It's unfortunate that the financial literacy and understanding of how things work in the City and of basic accounting and so on, is actually very thin in financial journalism." Thus this amplifies the need to have more knowledgeable people covering events which they fully understand and thus are more effectively communicate with their readers or viewers.

Looking back over the rapid collapse of the world's financial markets, and the uncertainty ahead, I very confidently say it is, a financial system failure, a regulatory failure and a media failure.

Everyone is willing to talk about the first two, but they are not willing to discuss the last one. We are all in this. It's a media failure of omission and commission.

Reforming The Reporter

The reform season is in the air and reason is clear, as people look for loopholes to cover and introspect the mistakes of the past to shield the future against a possible re-run of the crisis. Leading the charge and clarion of change is the media. But the media itself has blood on its hands. For long it has been shifting the blame on to the financial system but it has overlooked it own role in the crisis.

I am of the firm belief that it is the bias, profit making and gutless news reporting of today’s media firms is responsible for the various cycles of boom and depression we see in the economy. Like a columnist in the Financial Times put it in his blog, 

“If the banks make the soap water, the media blows the air into the bubble.”

The media and the industry share a symbiotic relationship, with both feeding of each others produce. What is startling is how the average investor watching TV is kept out of this relationship. This shows how the model is fundamentally skewed and biased. For the products and brand image, companies use the media. On the same hand, for bulking up their shows and references, sneaks, previews and hot news the media uses the companies.

Playing with emotions

Financial historians have often claimed human behaviour to be exemplified in the history of finance and more visibly on financial markets. Growing volumes of research in the field of behavioral finance show how investors and markets are being driven more by instincts and emotions, and less by calculative investing techniques. Booms and busts are products, at roots, of our emotional volatility

And the perfect medium to play with the markets via which to play with emotions and judgments of investors is the medium itself.

Let me give an example, say the DOW fell 300 pts in one day. One way to report; “The DOW has fallen 300 pts…these were the companies…these were the figures…blah blah”. And the other way of reporting is; “BLACK FRIDAY has just come...the DOW is very low…show stories of people losing lifetime savings…and ten honchos with big company name banners behind them, talking about their own evaluations and opinions of the gloomy day” (what irritates me is that those 10 honchos would have still earned money and would prospect to earn more after influencing the audience and in a way the market as well.)

It is important to keep in mind that large chunk of investors are not professionals or portfolio managers. So they have a huge dependence on the media for advice and suggestion, but like they say little knowledge is dangerous; so is the case with financial advisory. What the average Joe does not understand is that recommendations on investments are subject to personal circumstances and cannot be taken or applied on just watching a half an hour programme on TV.

Hiding it under the rug

Although my argument of reforming the reporter comes at a time when columnists and editorials are critically reviewing each and every jigsaw to this puzzle, but are shy to see their own mistakes. There very few writers who saw this coming in one form or the other, but were discouraged and disdained by peers.

Even today very few articles can be found in the newspapers and internet on how media has played its part. Thus I have tried to identify the issues and flawed processes and if there is any solution possible.

Stay tuned in for more on this…