The Hopeless Future of Financial Media

A new year. Typically the time for a media technique as old as media: recapping last year or predicting this year. But instead of doing that today, below I’m re-posting The Day Journalism Died, a piece I wrote in 2006. It’s not about financial media, but it reminded me what consumer financial media is and can be.

Despite its sensational headline—another media technique as old as media—The Day Journalism Died is actually about the evolution of political media from pure reporting to either (a) unabashed partisan strategy or (b) humor. And despite today’s even more sensational headline, I’m not hopeless about the future of financial media. It’s just that when markets turned ugly in August 2007, a year after I wrote that post, I realized financial news had evolved almost the same way: from something resembling journalism to either (a) covert market strategy or (b) entertainment. Let’s look at these, then at the future of financial media.

Financial News As Market Strategy: This is when market participants use media to tout a strategy they’ve already set up. Traders, money managers and other market players have been doing this for years, and the most famous example is CNBC’s Jim Cramer. For decades before his daily media presence, he was a full-time money manager who would go on CNBC (and elsewhere) to discuss stocks he liked or disliked. The trick was that his funds were already long or short these holdings, and using CNBC, he’d make the trades go his way. He got busted for it, booted from the network, started disclosing his positions at the time of discussing them, and was eventually reinstated. These landmark events made disclosure commonplace in mainstream financial news, but they also reinforced subscribe-to-market-strategy media models.

Financial News As Entertainment: This is when financial news uses age-old media gimmicks or big personalities to make complex content more palatable to consumers. Gimmicks include impossibly hot female news anchors to lure a mostly male audience and, yes, sensational headlines. Big personalities fall into two categories: market observers and market participants. A good example of the latter is Paul Kedrosky: he’s credible because he’s an actual investor, and also entertaining…especially on Twitter. And my favorite example of a market observer is Larry Kudlow, a man who’s not actively participating in markets. He’s one of the best blowhards in the business, and if you doubt that, just look at the What Has You Outraged? banner on his website. He’ll always garner ratings, not because his hardline opinions have market clout but because they’re a form of entertainment.

The Future of Financial Media: A lot has changed since August 2007 but content will always be market opinions, and sources will always be market participants or observers. And here are three ways cheap technology and social networks will continue to change consumer financial media in 2011, and interestingly, they’re all driven by market participants rather than observers.

(1) Financial Blogging. Bigwigs in this area are money managers Barry Ritholtz and John Mauldin. Their blogs aren’t brochures for their investment businesses. They’re just good, entertaining market commentaries that keep their profiles high, which gets them regular mainstream media slots, which is the best and cheapest marketing for their businesses. Finance blogging like this is a boon to the few finance pros who do it right.

(2) Paid Subscriber Media. There’s nothing new about paying for a pro’s market strategies or opinions, but technology makes it cheaper. Which means that countless services do this including Cramer, of course. Problem is that consumers wouldn’t know which service to trust, and why can’t they get this from their own advisors? So the high-hope innovation is a market strategy and commentary service that a finance pro can subscribe to and present to clients as their own.

(3) Social Financial Media. Financial markets are based on bets, and financial media tries to corral the rationale for those bets. If there was one place that could possibly corral all that security-level rationale, social media technology could re-distribute it all as streams for users to follow. This is what StockTwits does. It’s like Twitter, but you follow ticker symbols so you can get realtime rationale for why investors are betting on those securities. Talk about the future of financial media.

The Day Journalism Died
Thursday, July 27, 2006 will forever be known as the day journalism died. It was presumed dead for years, but nobody really knew for sure. Not until Stephen Colbert gave journalism a proper burial on Tuesday night when he responded to attacks from NBC News and ABC News that he was playing politicians for fools on The Colbert Report.

Jake Tapper, a senior correspondent for ABC News, asked: “With the reputation damaging risk associated with an appearance on The Colbert Report, why do politicians keep going on the show?”

Colbert’s answer: “This show is the news. Not only is this show the news, evidently it is news. It’s gotta be news because you morning shows are the news and you’re doing reports on it. So I guess Congressmen come on my show in the hopes that you’ll use their appearance on my show on your show.”

Forbes, CNN, USA Today, and however many other media outlets joined ABC and NBC in reporting on Colbert’s recent interviews with Congressmen Robert Wexler (D-FL) and Lynn Westmoreland (R-GA). Interviews in which he gets them to say crazy things or reveal their lack of knowledge about their jobs. This means all of these so-called purveyors of journalism have absolutely no defense against Colbert’s claim. These journalists using a comedy show as a source also means that people should let go of any hope they have that objective reporting of facts is still alive.

Nobody knows precisely when journalism started dying, we just know that it happened while the internet and 24-hour cable news mushroomed. Maybe it was in October 1996 when Ronald Reagan’s and George Bush Sr’s closest media advisor Roger Ailes created and launched Fox News – an event which marked the official transformation of TV news from journalism into partisan political strategy.

Or maybe it was January 30, 1998 when Jake Tapper published a Washington City Paper cover story titled I Dated Monica Lewinsky; the piece that ran less than two weeks before the story of Lewinsky’s ‘relations’ with Bill Clinton broke, and marked the official transformation of political journalism into global entertainment.

Or it very well could have been in January 1999 when overgrown frat boy Craig Kilborn lost the Daily Show top job to the more politically-minded Jon Stewart. The strength of the Stewart/Colbert satire model has since grown so strong at uncovering and reporting facts, it’s sparked questions as to whether their shows should be considered a news source. But isn’t this debate relevant for all other news sources too?

If formats (satire, humor, entertainment, political strategy, etc) have killed journalism’s core tenets of objectivity and balance, now it’s just a matter of who presents the most credible information. In a reporting era dominated not by fact but by format, the real question is: who’s doing their research? Is it a guy like Colbert who knows more about all our country’s Congressman and districts than just about anyone? Or is it the ABC News correspondent who’s playing Texas Hold ‘Em with a chimp?

And so shouldn’t Colbert be praised, not attacked, for challenging Congressman Westmoreland on his lazy, lemming-like policies — regardless of the format in which he poses these challenges? Or should Jake Tapper just cut his Real Journalist losses and go back to the news-as-entertainment model he used to sneak his way into hard news?

Here’s the Colbert Report clip that sparked all of this. You decide.