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Podcast Summary: A Book with Legs - Chris Roush - The Future of Business Journalism
Overview In this episode of "A Book with Legs," hosted by Cole Smead, the discussion centers around business journalism with Chris Roush, author of the book "The Future of Business Journalism." The episode provides insights into the changes, challenges, and future directions of business journalism, particularly in light of technological disruptions and audience demands.
Key Themes and Discussions
Introduction of Guests and Context
- Cole Smead: CEO and Portfolio Manager at Smead Capital Management.
- Chris Roush: Journalist and author, with a history of contributions to various reputable publications. He authored a previous book on business journalism history titled "Profits and Losses."
Motivation Behind the Book
- Roush was inspired to write "The Future of Business Journalism" after recognizing significant developments and challenges in the field over the past 10-15 years, amplified by the COVID-19 pandemic.
Historical Context of Business Journalism
- Roush argues that business journalism has historically been vital, tracing its roots back to the Fugger family who provided crucial economic information in Europe.
- Early forms of business journalism included "price currents" in newspapers, which listed goods and prices, highlighting the long-standing relationship between news reporting and business developments.
Influential Figures in Business Journalism
- Ida Tarbell and Upton Sinclair: Pioneering muckrakers who examined corporate practices and influenced the field of business journalism.
- Roush emphasizes their critical role in shaping journalistic practices that remain relevant today.
Current Landscape and Challenges
- Corporate Resistance: Many businesses historically resist media coverage due to fear of negative exposure, despite research suggesting that media coverage—positive or negative—can ultimately benefit companies in the long run.
- Role of Journalism in Investigations: Roush notes that many significant corporate frauds (e.g., Enron) were uncovered by diligent business journalists acting as watchdogs.
The Changing Media Environment
- Many traditional newspapers are downsizing their business journalism departments, leading to a lack of comprehensive coverage of local economies.
- Roush highlights the dominance of public companies in media coverage, which overshadows the significance of private businesses that contribute much more to local economies.
The Divergence of Business and Consumer Journalism
- Roush argues that news organizations focus disproportionately on public companies, neglecting the private businesses that are crucial to local economies.
- There’s a gap between the needs of the average person and the business news being disseminated, as most Americans do not own stocks and are not concerned with daily market fluctuations.
Recommendations for Improvement
- Roush suggests collaboration between business schools and journalism programs to produce better-trained journalists capable of nuanced business reporting.
- He emphasizes the importance of adapting to audience needs and providing relevant business news to everyday consumers.
The Future of Business Journalism
- Roush calls for a renaissance in business journalism that not only informs but also engages the public in understanding the broader implications of business practices and market dynamics.
- He advocates for a shift towards more local and relevant content that resonates with the community.
Conclusion The episode concludes with a call to action for consumers and professionals alike to demand better journalism that serves their interests and needs. Roush's insights shed light on the vital role of business journalism in society and the urgency to adapt to the evolving media landscape.
Key Takeaways
- Business journalism has a rich history intertwined with the economic fabric of society.
- The shift in focus from local, private businesses to public companies in media coverage needs to be addressed.
- Improved training and collaboration in journalism education are essential for the future of business reporting.
- Consumers have a role in shaping the media landscape by demanding better and more relevant business news.
Additional Resources
- Chris Roush's website: [TalkingBizNews.com](http://talkingbiznews.com) - A platform for daily updates on business journalism and a newsletter subscription.
Listeners are encouraged to read Roush’s book, engage with the content, and think critically about the future of business journalism and its impact on society.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:02You're listening to A Book With Legs, a podcast presented by Smeed Capital Management. At Smead Capital Management, we advise investors who fear stock market failure. You can learn more at SmeadCap.com or by calling your financial advisor.
0:20Welcome to A Book With Legs podcast. I'm Cole Smead, CEO and Portfolio Manager here at Smead Capital Management. At our firm, we are readers and we believe in the power of books to help shape informed investors. In this podcast, we speak to great authors about their writing. the late, great Charlie Munger prescribed using multiple mental models and analysis. We analyze their work through the lens of business, markets, and people. Thank you for our listeners joining us for this episode of the podcast. We are going to look back on the history of an industry, and I would ultimately argue we are going to ask ourselves questions about the soul of commerce, the soul of the information in stock markets, and really the soul of America.
1:00Chris Rausch is joining us to talk about his recently released book, The Future of Business Journalism. Chris wrote for the Sarasota Herald Tribune, the Tampa Tribune, Businessweek Magazine, the Atlanta Journal-Constitution, Bloomberg News, and SNL Financial, where he was editor-in-chief and launched Insurance Investor Magazine. In 2010, he was named the Journalism Teacher of the Year by the Scripps Howard Foundation and the Association for Education in Journalism and Mass Communication. Chris, thank you for joining me. Thank you so much for having me. It's a pleasure to talk about this topic.
1:34So you've been a journalist, an academic, and an author. What inspired you to write this book? Well, I had written a book back in late 2007, 2008, that was basically a history of business journalism called Profits and Losses. And it basically looked at how business journalism had covered certain important business issues over the last 100, 150 years. And the book publisher, Georgetown University Press, the editor there, and I started talking, well, what's happened in the last 10 or 15 years? And I was like, well, there's a lot that's happened in the last 10 or 15 years. I think there are some issues in business journalism that I need to bring some attention to.
2:23So that was really the impetus. The fact that it was COVID helped a lot because I basically was running the School of Communications from Quinnipiac from my kitchen table and needed something to keep me from going crazy. So in your book, you touch on some, like I said, it's a great book, I think, especially for young people. And Chris, at the age of 40, I still consider myself a young person. So it's a great book to look back and ask questions of history. And I also, the other thing I love about your writing is you've mentioned a lot of books that we really like. And also I added books to your list.
2:57And since our podcast is all about books, I think our readers will really enjoy this. But as an example, you give a short history of Fugger and we read The Richest Man Who Ever Lived written by Greg Steinmex, which you also reference. You argue that news was really always about business from the beginning. Can you explain this to our audience? Yeah, I mean, to me, the Fugers are the original business journalists in civilization. I mean, they were writing letters and had their people all over Europe writing letters, providing really great information about what was happening in Paris and Rome and Antwerp and London that was influencing interest rates and who they lended money to.
3:43And that's kind of evolved over the last five, six hundred years into what business journalism is today. I mean, business journalism is all about news and information that should be important and should be valuable, not just to business owners, but to consumers on how they should spend their money, how they should save their money, how they should invest their money. That makes sense. Now, let's step forward from Fugger just as an example. As we pivot to, say, like the 18th century or maybe the early 19th century, what kind of news would people be getting from publications at that time? And what were examples of publications that were out there?
4:24So in the United States in the early 19th century, the big newspapers were things called price currents. price currents on their front page would list the current prices of 70, 80 different goods that business people and other people could go and purchase from ships that had come into port or from traders who operated in the city. And so if you look back at kind of the history of newspapers in this country, business journalism or business news and information kind of goes hand in hand with the development of newspapers and the media in this country. How important was Upton Sinclair and Ida Tarbill to business journalism?
5:11And I say that because, you know, again, to highlight to our listeners, you know, we did Breaking Rockefeller as one of the books we discussed, and she's an important figure in really, you know, causing the awareness of what Standard Oil was doing, and really appealing to a wider society and a wider mass. And I only point that out because in that context, I mean, if I had to go out and say, who would be kind of a rock star business journalist like that? Well, I think of like Andrew Ross Sorkin as an example to that. So how important do you think the figures like that are in terms of looking back to the history of business journalism, creating figures like that in our society?
5:48vitally important in fact I just wrote a chapter in a book that's a business journalism anthology and the chapter of the the title of the the chapter is how the muckrakers spurred on business journalism and in that chapter I argued that it was Ida Tarbell and Upton Sinclair and Lincoln Steffens and a lot of other journalists in the late 19th century and early 20th century that were really the first journalists in this country that started looking critically at business, at the markets, and really kind of pioneered some reporting tactics that are now widespread today. I mean, Ida Tarbell's use of documents, such as lawsuits and corporate records, when her reporting about the Standard Oil Company is kind of standard practice today.
6:46You know, Lincoln Steffens looked at financial relationships between, you know, government officials and companies, which is kind of a kind of a basic business reporting story these days as well. Sure. So let's kind of pivot. Let's talk about the relation between business and journalists that cover them. What do you mean when you say that the business community has historically played a negative role in business news? Can you explain this? Sure. I mean, historically, and that's a broad generalization, there are some exceptions, but historically, corporate America and businesses don't want coverage from journalists and from media organizations because they are afraid that the coverage is going to be negative and that that's going to hurt the reputation of their company or the reputation of their executives.
7:41And what I showed in the future of business journalism is that there's a lot of research out there that actually shows that's not the case. And in fact, any coverage of a company, even if it's negative, is actually pretty positive for a company or for an industry in the long run. But that's something that really has never gotten through to a lot of corporate executives and to a lot of companies. So explain journalism's role in fraud cases. I think you do a good job explaining the vital role of journalism in investigation of these type of issues. Can you teach us what would that look like in the past versus what does that look like today with where journalism is now?
8:27Sure. I mean, some of the biggest business fraud cases in corporate American history have been first uncovered by business journalists. I mean, Enron, you know, the first reporting about Enron and Enron's, you know, kind of shady financials was in Fortune magazine and then in the Wall Street Journal. You know, there's a business school professor, Greg Miller, who actually did a study about 20 years ago where he showed that about a third of all of the SEC enforcements against companies for doing illegal things were actually first reported by business journalists. And so without that kind of watchdog in society, the conclusion is we'd have a lot more companies that are screwing customers, screwing investors, and doing illegal things.
9:27Sure. This is a question I think we'll come back to, but I want to ask it just to kind of set the stage for you during our discussion. Why should business journalism not be providing opinion, and how does that hurt journalism? Boy, that's a great question. You know, to me, business journalism is all about presenting the facts and presenting the information to whoever the audience is, whether it's consumers, whether it's investors, whether it's, you know, people who are looking for a job and let that person make their own decision. I've never been a big fan of opinion in journalism. Now, there are columnists out there who do a really good job of writing about business and economics issues and are very persuasive in what they do.
10:18But that's not what I did as a business journalist. And it's frankly not what I like to read when I want to get my business journalism Jones on. Sure. And I think there's a big difference between and I'll use an example. Let's say we take like a John authors formerly of the FT now writing for Bloomberg, where he's writing things as a columnist to say, I find these interesting, and providing a lot of information to your point, versus and I won't name any names. But let's just say you turn on a TV network where there's like a stock market information on that TV network. And there's an employee of the network who's telling you their opinion.
10:56and it's not a third party giving their opinion, is that really journalism or is that crossing the line? It's not really journalism. And oftentimes it's people who have a vested interest in the stocks or in what they're talking about because they're money managers or investors themselves. Just as an aside, John Authors, a great journalist. I actually hired his wife, a former Financial Times and Wall Street Journal reporter to teach business journalism at Quinnipiac. Yeah, and he's wonderful. I visited with him years ago now when he was still at the FT before coming across the pond. So let's use, I know you're a writer there, but let's use the story that you tell of the Atlanta Journal-Constitution.
11:41Can you kind of walk our listeners through the evolution of that newspaper to help them understand how we got to today? Sure. And the story of the Atlanta Constitution is really just illustrative of what has happened in virtually every major metropolitan newspaper around this country. I started at the Atlanta Journal-Constitution in 1994 on the business news desk. And I was there for about three years before I went to Bloomberg News. And my beat for most of the time I was there was Coca-Cola and Home Depot was my beat. Okay. And the business news desk of the Atlanta Journal-Constitution at the time had a staff of about 45 reporters and editors.
12:27And so that meant that we could really dig in to companies like Coca-Cola, like Home Depot, like UPS, like Delta Airlines that were based in Atlanta. The last 25 years, that business news desk has gotten smaller and smaller, and the newspaper has gotten smaller and smaller as things have changed. and the newspaper industry. And the business news desk at the Atlanta Journal-Constitution today, as we talk, is a staff of four. And they can't possibly cover all of the important business news stories that are happening in the Atlanta market. There's just no way that the Atlanta paper anymore, to me, would be a go-to business source if I'm an executive or if I'm a consumer in Atlanta.
13:17Sure. Well, let's use Atlanta as a picture because to your point, 30 years ago, Bloomberg did not have a bureau in Atlanta. Now they do today. In fact, I did a TV spot. I remember talking to one of the journalists that covered the malls, for example, and we own malls. So can you teach, you know, as the community newspapers is what I'll call them, like the local, you know, Metro Daily newspapers have declined. Is that in effect who has picked up the slack? But obviously, as we know, that's a different audience. I mean, Bloomberg has picked up some of the slack, but really the organization that has picked up most of the slack when it comes to business news have been the weekly business journal newspapers.
13:58Most of them are owned by a company in Charlotte called American City Business Journals. They own about 45 cranes out of Detroit, owns the ones in New York, Detroit, Chicago, and Cleveland. There are some independents elsewhere. I think those weekly business newspapers have done a pretty good job of picking up the slack. But again, those news organizations are really focused on a couple of specific topics, commercial real estate being a primary topic for the American City Business Journal's publications. And that's not what a lot of business news readers want or need. Sure. I get that because, so for example, one of their publications is the Puget Sound Business Journal, which I know a couple Wall Street Journal writers who have gone off to, you know, awesome careers post working there.
14:49And, you know, for someone like us that, you know, as an investor, there was a certain amount of that news that just wasn't applicable. It wasn't teaching us anything, to your point. And so I totally understand that. Let's talk about the big newspaper companies. In full disclosure to you, Chris, we used to own Gannett, particularly back when they owned their TV stations as well, which is where more of the value of the businesses we can see today was. Can you kind of teach our listeners what that's gone to? The other thing that I think of a lot when I think about this discussion is Warren Buffett in the 2012 Berkshire meeting, it was announced that he had bought the Omaha World Herald.
15:26And he has since sold that to Lee Enterprises. All of his newspaper publications went to Lee. And at that time, he said, you know, community news is so important to America. and here we sit now we're not even Buffett owns those newspapers so what's going to happen to even those large newspaper players because if we're not getting great content will they be around yeah so the the big issue for for daily newspapers and not just the big metropolitan papers but every daily newspaper in this country is that they they cut the uh the printed stock prices uh the stock charts that they used to publish every day Monday through or Tuesday through Saturday in their business section.
16:11And when they cut those and basically told their subscribers, you can get those stock prices on the internet. Well, people stopped subscribing and people stopped reading the business sections. That was just a huge mistake that most newspapers and newspaper companies made. The other big mistake that they made is that they were giving away their content for free on the internet. Yeah, I agree. And so if I don't have to subscribe to the Atlantic Constitution to read what's happening at Coker Home Depot, if I can get it on the internet, why should I subscribe? I mean, a lot of them have come around on this in the last eight to 10 years and are now charging.
16:54But what they did was that they let consumers get used to the fact that this content was free and that they could get that content for free. So this is going to take me to where I was a younger man in this business, but this is probably a decade ago, maybe 12 years ago now. So I was sitting with a colleague. We were in the office, and he used to work at a local trust bank. And he was telling me that at one point, the local newspapers and the local TV stations took in data that they produced from this local trust bank, and it was like a Northwest or Seattle area stock market index represented by the local companies.
17:30and it was kind of just a gauge of what was going on among local stocks. And as I was reading your book, I thought a lot about that because if I went out and said, great, I want to look at the local Phoenix market and ask myself what publicly traded stocks in Phoenix have been doing lately, I would have to individually go out and look at every single stock if I can find them all versus if they publish that once every week or day or whatever that is, I would know where to go for it And I would know who the constituents are in that. Is that the kind of unique content that's missing today? Definitely.
18:07I'm in North Carolina. If I want to find out what's happening with a big North Carolina company stock like Martin Marietta Materials or Albumar or Bank of America or Truist, I'm not going to the Charlotte Observer anymore or the Triangle Business Journal or the Raleigh News. an observer, I'm going to Yahoo Finance because I can put in a ticker in Yahoo Finance and get not just the current stock price, but what it's done for the last six months. I can get analyst expectations. I can even get some news from there. So to me, it's a missed opportunity for a lot of business news organizations that they're not really providing that content anymore when there's a definite need.
18:58Sure. That makes sense. So let's kind of go one step further on this idea of public markets. And you come back to this repeatedly in the book, and I think this is very important. Explain the divide between the private businesses that employ America and the publicly traded stocks that entertain America is what I'll say. How does the media focus on the wrong businesses? Yeah. So there's about 15 ,000 publicly traded companies in this country, and they're traded on the New York Stock Exchange, the NASDAQ, or the American Stock Exchange. But that's like less than 1 % of all of the businesses that are in this country.
19:37There's 23 million businesses in the United States. And the business news organizations and the mainstream news organizations have inordinately decided to focus their coverage on the public companies. when, yes, it is, they do employ, the last number I saw was about 48 % of all the people who are working in the United States, but they're getting about 80 % to 90 % of the coverage. And that's just not indicative or not illustrative of what local economies are. Local economies are primarily private businesses where you can't buy their stock that are often much smaller, but probably more important to a local economy than some of these publicly traded companies.
20:23This show is brought to you by Smead Capital Management. We hope you're enjoying the podcast. You know, we work hard putting together this show, but we work even harder for our investors at Smead Capital Management. At Smead, we believe in disciplined investing, which is why the Smead funds have a proven track record of long-term outperformance. If you're an investor who fears stock market failure and want to invest in wonderful companies to build wealth, we invite you to visit smeadcap.com. Past performance is not indicative of future results. Investing involves risk, including loss of principle.
20:52Please refer to the prospectus for important information about the investment company, including objectives, risks, charges, and expenses. Read and consider it carefully before investing. Smead funds distributed by UMB Distribution Services, LLC, not affiliated. If we think about someone IPO-ing, that's a transaction on the balance sheet of the business. And if a local company like us, let's say we were building widgets and we looked and said, you know, we have to do some internal transactions to buy out our founder and we go out and find a bank who will do private stock lending. Well, that's a story because there might be other businesses looking for private stock lending.
21:27So I was thinking about all the types of stories that are of interest to the readers that will never see the light of day because it's a private transaction. And that's the kind of stuff that because we can't see it, we treat it like it's not there, but it's fundamentally important to how we drive the economy. So would you say that this, I'll call this chasm of coverage, is it just because the fact that in the case of the public stocks, they're so readily available, they're so widely accessed on the internet, and therefore why would you care about another business? But I think the real question is, wouldn't some of the information that the paper could provide you about what goes on in private markets be more valuable to most of the businesses.
22:09I would agree with you. What I also think has happened is that we've kind of had this divide in business journalism where if I'm an investor or if I'm a CEO of a big company, I can subscribe to a Bloomberg terminal or I can subscribe to Dow Jones News Service or a dozen other services and I can get the news and information that I want for my business and to make important decisions. But if I'm just an average business person or a consumer, I'm no longer getting that business news and information that I want. And one of the reasons why I'm not getting it is that the newspapers and other publications have looked at the success of the Wall Street Journal and Bloomberg and Reuters and say, we should be copying them and we should be providing the same content that these guys are covering because they've been so successful in doing it and they're making a lot of money.
23:07But they're not because the daily newspapers and other publications have a totally different audience that don't want that kind of information. Sure. Well, yeah, because I mean, in the case of Bloomberg, the lowest margin thing they do is news. The terminal is the highest margin thing they do. It's a subscription service that's much more expensive. And to your point, the worst thing you can do in marketing is to not differentiate yourself. And that's what they've allowed themselves to do. So let's go one step further on this. So how do you look at the shrinking number of public stocks? Because that's been a dialogue that's been going on for a while.
23:40And, you know, maybe we could talk about Reg FD or Reg Fair Disclosure, as would be known, or talk about Sarbanes-Oxley. But I just pointed out because the pool of stocks are shrinking. I mean, as an example, our company at our revenues and profits today normally would have been public in the past. Okay. But we wouldn't because there's no point to that today. So how do you look at this shrinking pool of public stocks and ultimately the concentration of public common stock ownership via big companies? You know, what's really happened is that the companies have just gotten bigger and bigger and bigger and bigger.
24:16And so the fact that we have fewer publicly traded companies is to me a byproduct of the fact that we've got bigger conglomerates that are operating in a number of different industries. It doesn't mean that they're getting less coverage, though. What it means is that just there's more things to cover about that company, which is fine for a Bloomberg or Wall Street Journal or the New York Times Business Desk. But for the Atlanta Journal-Constitution, that's not how it works. Sure, sure. That makes sense. So let's pivot again. We talked about the weeklies. What makes the American City Business Journal's model so different?
24:58I mean, it's obviously weekly. We talked about a little bit of the content. It's also, that's owned by the Newhouse family, who obviously is a large shareholder of Warner Brothers Discovery, one of the largest media companies in the world. So can you teach us, you know, why was that model created in effect to compete against the dailies? Yeah. So American City Business Journals, you know, was actually run for the longest time by the former president of Dow Jones, the parent of the Wall Street Journal. And he basically retired from the Wall Street Journal and moved down to Charlotte and started buying up these papers.
25:33And the model was, we're going to provide business news to people who are hardcore business news owners, but who may not be CEOs of Fortune 500 companies. They may be the president or CEO or executive vice president of a company that maybe has 200 million in sales and 1 ,000 employees, that there's this niche in business news that's not being addressed and that these people need that business news about what's going on in their industries and what's going on with their competitors and things like that. And frankly, they're wildly successful. I give them kudos for their business model. but more than 50 % of the revenue coming from American city business journals papers is actually not from news anymore.
26:28It's from the events that they have in their specific markets. Sure. You know, like the best companies to work for or, you know, the top 50 companies, things like that. That's where they're generating a lot of their revenue. Now the revenue is not coming from, from journalism. Yeah. Yeah, because I think one of the other things that they've published historically, which is interesting, is, so for example, like I haven't, I'm not a subscriber to the Phoenix Business Journal, but I have been in the publication. And I think, I don't know whether they consider it, but like we're the largest investment advisor in the state of Arizona.
27:02And so it'd be kind of fun to see your business in there. It'd be kind of a scoreboard, in effect. And I understand from a local business perspective, to your point, why that's unique. Can we talk about, and I think we touched on this, but I want to hit it, I want to hit the nail on the head. talk about the segmentation, right? In other words, as we're taking news, we're segmenting it out. And can you explain what percentage of Americans actually own common stocks to ask the question, is the segmentation really valuable for most people? That's a great question because most US residents now, majority of US residents are not invested in the stock market.
27:39And if they are invested in the stock market, it may be through a 401k, or a retirement plan at their company where they're not actually actively trading in the market on a daily basis. So they're really not paying a whole lot of attention to what's going on in the market. So it bugs me to no end that you'll have a paper like the Arizona Republic in Phoenix that will publish a daily stock market story, probably from the Associated Press or from Bloomberg or from Dow Jones Newswires when it's a documented fact that a majority of the readers don't really care. That 90 % of the stock in the United States is owned by 10%.
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28:25Sure. And by the way, take it one step further. So again, so this is, I want to say a couple years ago. So we went to the Arizona Republic. So we host what we call the Smeet Investor Oasis on the Monday of the week of the Phoenix Open, which is the largest golf tournament in the world. So we're not very smart people, but we get that people like coming in town that day, right? So we host our investor event on that Monday. And we have executives coming in from companies we own. And we're drawing this. And so we're creating something unique among our investors. And so we looked and said, you know what?
28:56Let's call up local publications. So a couple of radio stations, local publications. And it was like a who cares? I'm thinking to myself, we're the largest investment advisor in the state. there's some really interesting people coming into town and it was a who cares conversation interestingly this year the group that is going to be doing this is CNBC so we couldn't get a local publication to cover the event and we can get a national publication and I think when I was reading your book it shows you how weird the segmentation is right now yeah and in fact what I see happening in business journalism too is that let's say if I want to get news about the auto industry.
29:37I'm not going to read the Detroit News or the Detroit Free Press anymore, even though they have auto reporters. I'm going to go to automotive news or a specialty publication that really digs into that industry. And this is, again, another mistake that daily newspapers have made is that they've kind of punted the coverage on important industries in their cities to the niche publications. Sure. So let me let me go one step further on this, because I love I love your absolute pithiness at times about what goes on with the stock market day to day. And I totally agree with it. It was so good. So like if you're a listener, you know what I'm getting as Chris will make fun of it down to say what we get in stock market news is pretty much good for a day trader.
30:24And that's it. No one else. And I agree with that. But let's take this again a step further. So I'm going to theorize that stock market news in general, on TV particularly, is nothing more than entertainment for wealthy people is what I'll call it. It's entertainment for wealthy people. So let me ask you the question for the other 90 % of America. Was the newspaper really at one point a great form of entertainment for the rest of America? and by social media and TV growing and all these other forms of communication growing, is that what really crowded out the entertainment factor that the newspaper used to bring?
31:01I think social media has had an impact. I think the internet has had an impact as well. You know, when I think about the daily newspaper when I was growing up in the late 70s and early 80s. I mean, the daily newspaper was like one-stop shopping. I could get box scores, and I could check my favorite teams, but I could also get the comics, but I could also get the weather. I could also get imported news about what's happening in my community. That's not a daily newspaper anymore. Daily newspapers, unfortunately, are filled with a lot of national and international coverage that they're just pulling off the wires that really has no relevance to that community that they're supposed to be serving.
31:50Sure. Well, and there's more competition for that content. So as you said, we've kind of hollowed out business journalism in the dailies. Would if I said to someone, listen, the daily should cut everything but local politics and sports, would that be a fair assessment? That would be a fair assessment, except they would put 50 % of that news hole on sports and maybe 40 % on politics and government and maybe 10 % on business. And I would argue that's a huge mistake. the people who run newspapers today have not understood or come to the realization that business and the economy are much more important news topics to society than sports and and hey i'm the biggest sports guy there is okay i'm going to be watching my alma mater tonight on espn uh because they're ranked in the top 10 and i want to see them kick their rivals But it's not what society needs.
32:52Sure. Well, and I don't disagree with you. I mean, I was just at the national championship to watch the Washington Huskies lose to Michigan. And the best place to get reporting was through the Seattle Times. It's one of the few reasons I go to the Seattle Times to this day. And yet, at the same time, I wouldn't go to a daily like that for almost, almost anything else outside of maybe like a capital gains issue that's been coming up in Washington that I tease my friends about who live there. You mentioned some stats on the Financial Times that I want to mention to our listeners. This is back when they were sold to the Nikkei.
33:25You pointed out that they made$37.3 million in profits on$519 million in revenue. What is that about? A 7.5%, 8 % profit margin? I think just offhand, I think it's 6%. So there's 6 % to 7%. Yeah. So here's my question. In a 6 % to 7 % profit margin, I would ask you, is one of the issues that that's a pretty low margin business in most communities and businesses, is that not enough to sustain through regular business cycles? That was the other way. I kind of analyzed that and said, if I was an owner or buyer of the company, would I want to sit through recessions and expansions with that low margin of a company?
34:03And I would argue to you that that should be enough of a profit margin. Okay. Okay. But, you know, historically, newspapers in this country have produced profit margins in the 20 to 30 % range back in the heydays in the 80s and 90s. Yeah. When they had more exclusive content then too. Let's go to like a bright spot in media. And I'll say bright spot with maybe like covering my head and praying to God while I say that. But can you teach our listeners about Business Insight or just kind of a picture as a place where journalism's thrived? It's become a unique content area. I think it has kind of a demographic to it.
34:42It's got a geography to it. But can you teach our listeners about Business Insider, what that is, what you think their role in their audiences? Sure. So Business Insider was started by actually a former Wall Street analyst, Henry Blodgett, in the first decade of the 21st century. It was basically business news written for a younger audience and an audience that maybe is not on Wall Street and is not interested in investing. And Henry was wildly successful. He really tapped into what Gen X and Gen Z was looking for in terms of business news. Kind of a smarmy attitude at times, but also kind of an irreverent attitude as well.
35:32I mean, I have a former student who works there who decided one week he was going to eat a Warren Buffett diet. And what that meant was drinking a lot of Diet Coke and eating a lot of McDonald's and Dairy Queen. Sure. And he wrote about this. And it got like 10 million hits. Yeah, it's crazy. But he wrote about it in a way that explained to people why Warren Buffett was investing in these companies and buying these companies. Sure. You know, that's not the type of an angle that the Wall Street Journal or Bloomberg is going to take on that story. Well, correct. And what they're getting at, though, too, is, I mean, I've grown up in light of Warren Buffett versus if you're a baby boomer, you grew up and later in life learned who Warren Buffett was.
36:17He's all, in some respects, I've known, you know, about him since I was a child. And so once you know someone that from beginning, you're going to think about their life vastly different than learning about them at 50. And I think it kind of typifies that idea of what if I had to play Buffett, you know, because I know him so well. Let's talk about public relation firms. You mentioned, and this is crazy to me, and since we, I think I mentioned to you before, that we hire a public relations firm. Since they're really good to us, I'll mention them. They're called Lycius Group, started by a former colleague of ours, Tucker Slosberg.
36:51Can you explain the ratio of public relations staff to journalists in America? Yeah, the ratio is about six and a half to one, and it's widening. And so if you are a business journalist or even just a journalist, you're pretty much outnumbered when it comes to trying to cover a company or trying to cover a topic. You're often inundated by the number of PR pitches that you get. And it used to not be that way. The ratio used to be almost one to one. I can remember when I was in business journalism the first time back in the 90s, I felt like it was more of an even relationship. But what that, I think, has also resulted in is because companies have more PR people on staff or they're using PR agencies to do their work more and more often is that it's really resulted in a lack of communication between the business journalists and between the executives as to what's really happening in a business.
37:59because there's now that PR filter that is really prevalent between the two sides. So on the PR side, you mentioned that what you'll see among PR firms is their ability to lie or obfuscate. Can you explain what you mean by that? Yeah, I mean, there's been research that shows that PR people admit to lying or not really telling the truth or the full story about 15 to 20 % of the time. And to me, that's a bothersome, you know, because I feel like as a society, we really should be focused on the truth and what's really happening. And so if a company and a company's PR people are really trying to not present an accurate story, that can mislead investors, that can mislead people who are looking maybe to take a job at that company.
38:59And that just really troubles me. Now, having said that, I know a lot of PR people who are very ethical and would never do that. But the fact that there is research out there where they're admitting to doing it, that troubles me. I want to give a big shout out to everyone who's listening to this show. You know, we recently hit the top 10 in investing podcasts on Apple Podcasts, and even number one in the business category in several countries. As you may know, this show is brought to you by Smead Capital Management. Smead understands how frustrating and illogical the stock market can be. If you're searching for funds with a proven track record, give the Smead funds a look.
39:35Or better yet, reach out at SmeadCap.com. And don't forget to mention you're a fan of the podcast. Past performance is not indicative of future results. Investing involves risk, including loss of principle. Please refer to the prospectus for important information about the investment company, including objectives, risks, charges, and expenses. Read and consider it carefully before investing. Smead funds distributed by UMB Distribution Services, LLC, not affiliated. I was thinking about this, every part about this book, and I think your book's really good for business owners because also you can ask a lot of strategy questions in your own business, which I think your book highlights that.
40:11But so I'll give you an example. We picked up a PGA player on the front of their hat this year. Awesome guy named Chan Kim. He's a first year to her cardholder. And I asked myself the question as I was reading your book, would local journalists even vaguely care that we hired on the front of hat, a PGA player who's from Arizona, went to Arizona State, he lives here. So local, local, local, local. And the question is, would anybody care? And the problem with that is, isn't that the kind of content that's missing? I would say in the 1990s when I was covering Coke. And if Coke had done that, I'd have been all over that story.
40:50Sure. Like, how did they meet him? Where did they find him from? What was the relationship? Those kind of questions. And what's Coke's strategy of putting their logo on that golfer's hat? What are they going to get in return for that? Sure. You know, that's what readers want to know. if I'm an investor in Coke stock or if I'm an employee of Coke stock, I want to know how is this going to boost sales or how is this going to boost the stock price? And now the only way you're going to get that story or the only place you're going to see that story is going to be, again, an initial publication like Sportico or the Sports Business Journal.
41:26Sure. That makes sense. Because I think the one thing that you miss in those when you go direct on social media is the wonderful, and by the way, I think of great media organizations are your partners, right? They are your partners in my mind, because they can help you grow your business or not. And so third party validation is the best kind. It's like the word of mouth that is always the best marketing. And I think the danger in people doing too much on social media is what are you going to leave for your partners to tell about your story, which you need them? Is that the other way of looking at the danger in going direct?
41:58It is. And the other thing that you're missing, if like a CEO, let's just take Elon Musk as an example, who is on Twitter every day, what you're missing is the filter. because there's no business journalist out there who can analyze and say, okay, what the CEO is saying is true, but you need to think about this or what this company is saying may not be true and here's why. So when you have companies and executives using social media to, I guess, bypass the middleman, the business journalist and go directly to consumers, what is missing in society is that business journalist who's been trained to analyze and to look at company statements and company's financials and actually present a more balanced communication.
42:57Sure. Let's talk about Amazon's no comment policy. I found it interesting that you put this in there. And by the way, I think about this a lot because I want you to know, you can ask them questions as a journalist and you'll hear this. You can ask them as an investor and you'll hear that. I think my question is how often has that been repeatedly done over many decades for large companies and been able to hold the line on a policy like that? I was trying to think of examples of it and it's not like you can find much writing on this, but like, let me give an example. If I asked Amazon, hey, in your web services business, I would like to know what portion of your profits is from hosting the porn business.
43:38They would say no comment. Now, here's the thing. It's the most profitable thing they do in the web services business. So as an example, like you won't get a comment. There's a lot of things they wouldn't comment on. I'm using that as kind of extreme. But I just say it because is that the kind of thing that businesses can do when they're high on the hog, to use the old phrase? And when they're having trouble and they want to make sure people really know their business, they get down on their knees and they're very kind and humble to journalists? It's happening. And it's happening more and more often.
44:06But I get back to what the research shows. And this research is coming from business school professors, that the fact that companies don't talk to the media is hurting them more than it's helping them. And until we can get that through to the Amazons and the other big companies in the world who are just not going to reply or just going to say no comment to the business journalists. We're not going to be improving society. Sure. And that makes sense. You mentioned a little bit of the Theranos saga with John Carrier's reporting and is ultimately writing about that. Is the perfect goal today? Because I think about incentive structures.
44:48What is the incentive structure for an outstanding business journalist in American society, whether it be for a daily, for a major news organization like a Bloomberg or Reuters, et cetera. Isn't the incentive structure that we've set up in journalism where if you're good at what you do, you're a good investigative reporter, you end up learning so much about a company or a situation, and then you go write a book to go on the New York Times bestseller. Isn't that kind of an ideal structure today? I mean, maybe an ideal structure for the upper echelon, for the John Kerry rules of the world. And John, by the way, is now at the New York Times.
45:24But for 95 to 98 % of the business journalists out there, they're not going to make enough money to be able to do that by coming across a Theranos. Sure. But what about even out to where, let's say it's not a Theranos, let's just say it's a company where they can tell the history. Like, for example, we did a podcast with Karen Southwick, who's no longer alive. she has a book out there called high noon and it's the story of sun microsystems which is that you know for for someone like my age to go back and learn the history of sun back into the early 1980s it's just a wonderful piece of writing in my opinion and so you know she's no longer alive so we did the podcast with scott mcneely the former ceo of sun microsystems but as i look out into the book world there's not a lot of business histories written nowadays it's very very few to teach you how a company got to where it was.
46:20And I totally agree with you. And because I've written five books about companies and their histories, what I would tell you is there's not a lot of money in that because those books, unless it's about a blockbuster company like Apple or Amazon, not going to sell. I wrote a book about Home Depot and I think it sold maybe 15, 20 ,000 copies. Gotcha. And my royalties were, you know, good enough to maybe help pay for my first year of my oldest son's college tuition, but that was about it. Okay. So let me ask you another question off that because I think there's another thing. So as you were talking about the education of journalists, you were discussing about, and I will come to this in a second, but about the classes that you'd recommend.
47:10But beyond the classes, the other thing I want to ask you about is, is it really that feasible for a journalist to go out and get an MBA after getting their undergraduate degree? Because to your point just a second ago, when would the payoff for that MBA get to the point where it makes sense? And if most people aren't going to be the rock star journalists, let's just call it, does that make any sense? Or are there more practical ways to go at that idea of marrying business with journalism to get superior journalists across society? As you mentioned, I devoted a whole chapter to this issue of business journalism and business journalism training.
47:46And my issue is that most universities that have journalism schools do a really bad job of training future business journalists. They do a good job of training government reporters and cop reporters and sports reporters, but most of them ignore business journalism. And that's a problem, and that's one of the issues in business journalism is that most people who get into business journalism have never taken a business journalism class or an accounting class or even an economics class. And so what I was proposing in the book in this chapter is that there needed to be more collaboration in higher ed between business schools and between journalism and communication schools in terms of sharing the curriculum for these types of students.
48:35It's what I did when I started the business journalism program at UNC. And when I was the dean at Quinnipiac, it was something that I was pushing there as well. Because I think that is one of the solutions. If we have better trained business journalists, they're going to be able to write more nuanced, more analytical stories. They're going to be more helpful to consumers. Sure. So we talked about how the stock market has affected journalism and the readers and where the media has ultimately kind of moved to. They've gone to the higher margin part of the market. But let's just talk about some societal changes.
49:09And you had some data in here that I want to discuss. So, you know, less Americans own stock than back in 07. You point that out, and that's true. You point out that fewer Americans own homes today than in 07. But I went back and looked at the data on the Federal Reserve side. It's 66, and I think when you wrote the book, it was 67 % was the most recently reported data. It's one of the highest homeownerships we've had. It's not as high as, say, 05, which I think we would all agree. There were certain people that had houses back then that we shouldn't have sold houses to and shouldn't provide mortgages to.
49:39But I only point it out because I actually look at housing vastly different where I would make the bet that strong housing ownership in America is really good for community news because I think it spurs certain businesses locally that aren't national in nature. But that's a very different, as you pointed out earlier, interest locally than the stock market. So I guess my question to you is, if we have good housing markets, isn't that great for the local business news and maybe not good for the stock market? I would argue that it is good news. And I would argue to you that maybe newspapers should be paying more attention to that housing data and maybe trying to market themselves better to people who are buying new houses.
50:27Well, Craig, I mean, they look at the data, Redfin. I mean, for example, I think Redfin had some data out last week where they talked about Gen Z. So the group after millennials have higher homeownership rates at the age they're at than millennials did. No one has said that. I didn't read any other writing off that. And I thought, wow, what a great follow up story. Have you got that data as a reporter? I'd go out into my neck of the woods and ask, can I ascertain the data locally and ask that question and ask the why? Why is that going on? And you won't find any writing on that at all. No, you won't.
51:01You won't. And frankly, you know, one of the other issues to me, and I'm coming this obviously from a journalism and communications academic background, is that there's not a lot of research from a communications or journalism academic standpoint on business journalism. Most of the research is being done by business school professors. Sure. And that's a totally different audience for that research. Well, yeah, because I think the housing makes me think it's directly tied to jobs because you have to have a job to have a house. So that's why I think it's a very intriguing business case. Housing, jobs, they go hand in hand.
51:38But then I also thought about babies. For example, with the decline of papers, you can also see the decline of childbirthing among U.S. households. And so I asked myself, maybe government policy of pushing people to have more children would naturally cause you to be more interested in things locally because it also causes you to need a house. In other words, they're all tied together. And yet I've never heard someone say, I've done the research and babies and newspapers are the same business ultimately. And I would die to see that because I think they're integrally tied. But again, I think it's what factors have caused the stock market to do well.
52:15And I think you do a good job of this in your book. they're not the factors that cause news, business news and the economy to do well. Is that fair? I think that's fair. The stock market is not the economy. And a lot of people think the stock market going up means that the economy is doing well. But the data does not support that. The other facet we talked about briefly, but I want to hit on, I mentioned Andrew Ross-Sorkin. You quoted him in your book. He said, business has become politics and politics is business. Explain this to our listeners, and how does it feed into your large company problem that you point out in stock market news?
52:52You know, the issue is that a lot of people are focused on just what is happening in the stock market, whether it's going up or down. And that's just such a minor, or I guess not important, when we think about the macro world and the macro economy as a whole. So like if I'm thinking about the Atlanta economy, what's happening with a dozen stocks that are of companies based in Atlanta doesn't really have a whole lot to do with what's happening in the Atlanta economy. Sure, sure, sure. Yeah, I mean, if you're a local financial advisor, you might say, well, here's my 10 places I'm going to spend a lot of time looking for customers because I know that they own publicly traded assets already.
53:39but that's again a very niche business inside the Atlanta economy and might only sit in the bucket area for example and so if you're not in the bucket area there's no news that you can take in what so let me ask you this question then what as you look out among the the publications out there you know we talked about business insider earlier being kind of like the super niche audience and by the way what you did mention but I will say is Henry Blodgett was a crook a bad person totally unethical i wasn't going to say that okay i will because it's true and he sold the publication so business insider should not take any offense to that but he's a bad he's a bad dude is how i'll put it and not not someone i would ever want to have my money with but i just say that because using a niche like that there are niches that can be found as you look at the the landscape what are have you had any of these like aha moments i had i found a little publication niche.
54:35And I was thinking about this, like in our industry, there used to be publications like, and I think they're still out there technically, but Outstanding Investor Digest was a super niche-y publication that followed interesting money managers and stock pickers. Or Value Investor Insight is still out there, I believe. Those are very niche-y. They have their audience. The readers are the people that get interviewed, and the people that get interviewed are the readers. They are kind of reflexively true in that way. Are there publications out there that you look and say, gosh, they do such a good job, or I think I found something tangential to something that's going on out there that would be interesting publication for a select group of readers.
55:13Yeah. I mean, there, to me, there's a lot of them. And when it gets back to my, my, uh, idea that, you know, the more niche publication, uh, probably the better you are. I mean, like there's a website out there called Jaloptic that I love for auto industry coverage. Okay. Okay. That's all it does. There's a business journalist in Charlotte who used to work at the Charlotte Observer who started a daily business newsletter in Charlotte. I mentioned this in the book called the Charlotte Ledger. And to me, his newsletter is doing a better job in covering Charlotte Business News than the Charlotte Observer and the Charlotte Business Journal.
55:54So what I would suggest is you've got to figure out, OK, what is the business news I want or the business news I need? And then who's covering that? Because there probably is somebody covering it. Sure. What I also thought about, I mean, historically speaking, it wasn't outlandish. I mean, Jeff Bezos buying the Washington Post. If I was really wealthy, why wouldn't you want to control a certain amount of local news? I mean, that just makes sense to me. And I was thinking to myself, gosh, you know, maybe I need to buy the Arizona Republic. I'm not saying I have the money for that, but that would be a fun way to kind of say, hey, here's how I want to run this.
56:26Let's experiment because that wouldn't be where I get my source of wealth from, obviously. And made me really kind of think about, you know, who would go test the realms of what's possible and allow it enough time to have success versus try it for 12 months and give up. Because I mean, to your point, if you look at the market cap of Lee Enterprises and Gannett, I mean, they're smaller than our business practically is if we were going to go out and sell ourselves to investors. And I think it shows you that the end game of what the news businesses tried to go to, it's just spells failure left and right.
57:00And, and you've hit on a bigger issue that I've been thinking about recently, and that is there are all these nonprofits out there that are quote unquote trying to save journalism. And what they're doing is funding a lot of new startups in communities where there are news deserts. And that's all well and good. But the bigger impact they could have had over the last 15 years is maybe buying bigger newspapers and buying them away from the hedge funds and the private equity people who have been buying up newspapers in the past 10 to 15 years and then just bleeding them dry. To me, that's the bigger issue here.
57:49We lost 115 journalists at the Los Angeles Times yesterday because it was bought by a businessman in LA whose only real concern is making money. But if the Knight Foundation or the McCormick Foundation or the Ford Foundation or one of these other foundations that have been putting hundreds of million dollars into journalism had actually bought the Times, that would have never happened. Sure. When I thought about this too. So in the cable business in America, our framework is we have regulated monopolies. Okay. So we have Cox Communications is the regulated monopoly here in the Phoenix market. So the other idea I had out of reading your book, I thought, you know what?
58:32We know how good news, local news is for a society, civically, politically, all those things. So should our framework be that the federal government dictates local monopolies on local news to the papers, but regulates the profitability like we do with the cable companies? Because in that way, someone will want to be there to provide that margin that they get to collect. At the same time, you can't have too much competition and you can't have too much profits because again, it fulfills the role and the need in the community. Was my sudden like, aha. Now, I mean, obviously I'm not going to get the federal government to do that anytime, But we have other ways of distributing information like that where we have allowed those powers to be.
59:16And at one point, the papers did, in effect, have a monopoly in those local areas, too. I think it's a great idea. You would get pushback from a lot of hardcore journalists that regulating newspapers and regulating media like that violates the First Amendment, though. Well, no, I say when I say regulating their rates or the profitability they can run. So, for example, like in a utility, you have to provide your electricity to everyone, right, that you can't object. And because you can't object, you are only allowed to charge a certain amount. So I look at it as like to your point, they wouldn't regulate the speech.
59:50It would just be regulated purely on how much money they could make based on, say, their subscribership numbers, right? But that way you have someone willing to collect that margin and you have someone there in the community versus what we're creating is deserts. Unless you're like me and you sit on a Bloomberg terminal, I could be in any desert in the world and still get my news. But if you're my next door neighbor who has a good job paying about$85 ,000 to$90 ,000 a year, you might be not ever reading news. One other way I thought about this too is, again, because you also talk, and this will be the last thing I touch on, but you talked about the interaction of labor and also how we over-dedicate ourselves to the stock market.
1:00:29So here was my other question. You know, thinking about, let's just say we go back 50 years ago, I'm sitting here in Arizona, GE has its non-labor union workers here building what was then computers. It would have been very interesting to interview the person running the pension for GE in, say, 1973, okay? versus that's a person that's not present because GE has a 401k therefore doesn't have a pension like it did in the past wouldn't wouldn't that be the kind of content that matched like this idea of what's important to you as a person working there what do you want to know because it does directly affect you that today we can't report on because you choose your own 401k and no one's going to be like, hey, what did Bob do in his 401k today?
1:01:23You know, and I got to believe that maybe if I'm a GE employee, I'd want to know where that guy is putting my retirement money. What is he investing in or what is, how well or how poorly is he doing? Correct. And what's his view of the world today and where do they think there's opportunity? That's your story. I'm sure, by the way, in a big enough employer like that, I'm sure there could be someone doing a GE retirement newsletter, right? And having a nice little business because there's enough people. but again enough people would have to care about what goes on in their 401k for it to matter which is a weird way to think i don't even saw this but ibm is going back to a pension because it's going to save them money so i thought well i mean there could be more to talk about even in a niche pension world if you're say institutional investor in the world we're going to rather than the world we just came out of so obviously i loved your book chris i ate up a ton of it.
1:02:17And there's a bunch of stuff I'm looking here in my notes that I didn't touch at. I was going to ask you about like Warren Buffett. What do you think about his media strategy over time as a business executive? But I'd love to just throw it to you and ask, you know, is there anything that we haven't touched on your book that you think is very important for thinking about this problem? And I do think it's a problem of business journalism in America today. You know, just the fact that I think that until consumers and by consumers, I mean, both average everyday people as well as executives start demanding better and more nuanced and more analytical business news, we're not going to get it.
1:02:58Because the media companies, the big conglomerates have shown that they have no understanding of what their audiences really need. And I think it's really going to take a concerted effort by people outside the media world to start demanding what they really want from the media for things to change. And as I told you before we started, I wrote this book with the target audience of being the business community and the investment community, because they're the ones who can affect change. Agreed. Where can our listeners follow you going forward, Chris? So I have a website called TalkingBizNews.com where I blog daily about the world of business journalism, put about a dozen things a day on TalkingBizNews.com.
1:03:50So I have a daily newsletter that comes out from Talking Biz News at noon every day. You can subscribe to me there as well. Awesome. Chris, thank you for your time. For our listeners, I believe Chris's book, The Future of Business Journalism, asks what has transpired to bring us to today. It then asks the question of who we want to be as a country, and I would ultimately argue as a culture. It asks questions also of the logos and the soul of America. I think everyone should go buy a copy today. If you enjoyed this podcast, go to Apple, Spotify, YouTube, or wherever you listen to A Book with Legs.
1:04:24Give us a review. Tell others about the books and great authors like Chris Rausch that we have the opportunity to understand and study the world with and through. For our tribe, If you have a great book you'd like to recommend, email podcast at smeedcap.com. That's podcast at smeedcap.com. You can also send your suggestions to us on X. Our handle is at smeedcap. Thank you for joining us for A Book With Legs podcast. We look forward to the next episode. Thank you for listening to A Book With Legs, a podcast brought to you by Smeed Capital Management. The material provided in this podcast is for informational use only and should not be construed as investment advice.
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From the publisher
In this episode, author Chris Roush joins Cole Smead to discuss his book, "The Future of Business Journalism," which explores the evolving media landscape and its impact on business reporting. Roush navigates the challenges and opportunities facing business journalists in an era of technological disruption and shifting audience demands.
