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Writing about business

writing about
The New Columbia Knight-Bagehot Guide

to Economics & Business Journalism

e d i t e d by

terri thompson

Writing About Business

Writing About Business
The New Columbia Knight-Bagehot Guide
to Economics and Business Journalism

Edited by Terri Thompson

Columbia University Press
New York

Columbia University Press
Publishers Since 1893
New York Chichester, West Sussex
Copyright © 2000 Columbia University Press
The press gratefully acknowledges the support of Dow Jones &
Company in the publishing of this volume.
Library of Congress Cataloging-in-Publication Data
Writing about business : the new Columbia Knight-Bagehot guide to
economics and business journalism / edited by Terri Thompson.—
2nd, totally rev. ed.
p. cm.
Originally published: New York: Columbia University Press,
©1991; 43 sections have been written specifically for this book.
Includes index.
ISBN 0-231-11834-1 (cloth : alk. paper)
ISBN 0-231-11835-X (pbk : alk. paper)
1. Journalism, Commercial—Handbooks, manuals, etc.
I. Thompson, Terri.
PN4784.C7 W54 2000

Casebound editions of Columbia University Press books are printed
on permanent and durable acid-free paper.
Printed in the United States of America
c 10 9 8 7 6 5 4 3 2 1
p 10 9 8 7 6 5 4 3 2 1

Some images in the original version of this book are not
available for inclusion in the eBook.

Preface and Acknowledgments
The Guide


Terri Thompson, Director, Knight-Bagehot Fellowship
in Economics and Business Journalism

Writing About Business and the Economy


Chris Welles, fellowship director, 1977–1985




How Economic Systems Work


Barbara Presley Noble, ’96

The Political Economy of Government and Business


S. L. Bachman, ’98

Government Regulation and the Regulators


John J. Oslund, ’97

Economic Indicators


John C. Finotti, ’95

Demystifying the Federal Reserve


David M.Wessel, ’81



Economics of the Firm


Vincent Chikwendu Nwanma, ’99

Business Management: Organization of the Firm


Scott Aiken, ’76

Sales and Marketing


Charles Butler, ’99

Accounting Principles and Practices


Ovid S. Abrams, ’76



How to Read Financial Statements


Susan Scherreik, ’91

Covering Business in Your Town


Jacalyn DePasquale Carfagno, ’98



Where Wall Street Meets Main Street


Patrick McGeehan, ’94

The Stock Market


Sharon R. King, ’96

The Bond Market


John J. Doran, ’99

Derivatives and Other Exotic Securities


William Glasgall, ’78

Hedge Funds


Jaye Robinson Scholl, ’82



Trade and Global Economics


Stephen H. Dunphy, ’76

International Business


Dave Lindorff, ’79

Global Financial Markets


Andrew Leckey, ’79

Covering the World Bank


Paul Sweeney, ’86



How to Use Numbers and Statistics


Julia Angwin, ’99

What You Can Get from Public
and Private Companies


Leah Beth Ward, ’88

What the Government Has in Its Files
James V. Grimaldi, ’93, and Lawrence J.Tell, ’83




The Freedom of Information Act


Pamela G. Hollie

Internet Resources for Business Reporters


Robin D. Schatz, ’84

How to Use Electronic Data
to Generate Company Stories


Michael Molinski, ’98

Live Sources—How Do You Get Them to Talk?


Peter Alan Harper, ’95

Conducting Live Television Interviews


Jan Hopkins, ’83

Business Journalism on TV


Mark Piesanen, ’96

Online Journalism


Gerri Willis, ’92

Ethics in Business Journalism


Aly Colón, ’83

Part III.


Personal Finance


Pauline Tai, ’89

The Insurance Industry


Joseph B.Treaster, ’96

Health Care


Trudy Lieberman, ’77

Technology and Telecommunications


Craig Miller, ’86

Media and Entertainment


Michael Connor, ’81

Real Estate and Urban Development


John Gallagher, ’87

The Retail Industry
Mel Laytner, ’88




The Environment


John M. Holusha, ’76

Labor and Workplace Issues


Kim Norris, ’96

Consumer Reporting


Frances Cerra Whittelsey, ’85



Sandra Block, ’94

Not-for-Profit Institutions


Steve Askin, ’91

Founding the Fellowship


Stephen B. Shepard, editor-in-chief, Business Week

List of Contributors


Preface and Acknowledgments
From conception to completion, this guide is a true collaboration and includes a collection of essays written and edited by some of the best practitioners of business writing today. More than sixty individuals contributed to this work as writers, editors, and reviewers. The essays were written by alumni of the Knight-Bagehot Fellowship in
Economics and Business Journalism, a midcareer program at the Graduate School of
Journalism, Columbia University. This guide is their gift to the Fellowship on its
twenty-fifth anniversary.
This is a second, totally revised edition of the Knight-Bagehot Guide, which was
first published in 1991 and edited by Pamela Hollie Kluge. Though most of the material presented here is new, the mission of this guide is the same as that of the original—
to demystify business and economics and to help journalists do an important job well.
The idea to revise this guide grew out of discussions with members of the KnightBagehot Board of Advisors, including the Fellowship’s past directors. I wish to especially
thank Chris Welles, who directed the program from 1977 to 1985, for his guidance and
enthusiastic support of the Fellowship. His introductory essay puts business and economics journalism into an historical context.
The Fellowship owes a special thanks to Stephen Shepard, editor in chief of
BusinessWeek, who, with Soma Golden Behr, assistant managing editor of the New York
Times, developed the idea for the Fellowship in 1975. With the encouragement of several deans, including Elie Abel, Joan Konner, and, most recently, Tom Goldstein,
Columbia Graduate School of Journalism has provided a lively, innovative environment
for economics and business journalism education to flourish.
Several members of the Columbia University faculty, as well as many of the speakers and guests who take part in the nine-month Fellowship program, helped with the
guide. Among these, I would like to thank Peter Bakstansky, Jim Carey, Tim
Carrington, Evan Cornog, John Dinges, Franklin Edwards, Peter Garrity, Ray Horton,
Maile Hulihan, Steve Isaacs, Myron Kandel, Catherine Lacoursiere, Marshall Loeb, Ed
Martin, Joshua Mills, Floyd Norris, Jonathan Oatis, John Pavlik, Steve Ross, Rosalind
Seneca, and Matt Winkler. For his loyal assistance, I also thank Robert Petretti.
For guiding this book through the production process, I thank Ann Miller, executive editor at Columbia University Press, and the team at Impressions Book and Journal
The Fellowship is indebted to many corporations, foundations, and individuals for
their annual financial support. Because of the commitment of these supporters, the
Fellowship has been able to make a valuable contribution to journalism education, to


the profession, and to the public. The Fellowship is especially grateful to the John S. and
James L. Knight Foundation, which has contributed $5 million to the program’s endowment; I wish to thank in particular Del Brinkman, who directs Knight Foundation’s
journalism programs and has been a constant source of encouragement.
Finally, I wish to thank my family—my father, John Thompson, for sharing with
me his business acumen; my mother, Donna Thompson, for her spiritual guidance; and
my husband, Peter Rosenthal, and son, Daniel, for their loving patience.

The Guide
Terri Thompson

Much has changed in the decade since the guide was first published. In many ways, the
world has gotten smaller as developments in technology and the growth of the Internet
have brought us closer together. But one thing has not changed. Business and economics are complicated, and writing about them is risky. Every day holds a chance for mistakes, misunderstandings, and misrepresentations.
This guide should help journalists, as well as students of business and public relations, reduce the risks and feel more confident in their writing. The essays assume the
reader has little or no experience with economics or business terms and concepts, so the
guide will be useful even to those who dodged college courses in economics, accounting,
marketing, or finance. Some of the information may be familiar; some may seem technical and obscure. But all the topics covered are important to an understanding of the
scope and demands of economics and business writing.
There’s no such thing as a single business “beat.” Business reporting involves many
beats, and journalists who cover business tend to be specialists. Those who cover the
markets, for instance, are known as financial writers, whereas those who report on monetary or fiscal policy from Washington may call themselves economics correspondents.
These essays were written by dozens of journalists in the belief that no single journalist
could have written it all because no one has ever done it all or, at least, done it all well.
Each of these essayists has in common a desire to learn and to improve business
journalism. They all share a commitment to fairness and accuracy in their reporting. As
Knight-Bagehot Fellows, they took time out of their careers to rigorously study business
and finance. In this guide, they bring together hundreds of years of experience, and in
their individual essays, they generously pass on their expertise and knowledge. As editor
of the guide, I’ve tried to preserve the voice and opinions of each author. Any errors are
undoubtedly the result of careless editing on my part and the authors should, of course,
be absolved.
The guide is divided into three parts. The first provides background and basic concepts of economics and business, including how economies are managed, how companies operate, how capital markets work, and how the rest of the world fits in. The second part gives practical reporting and writing tips, such as where to find the best
resources and how to conduct interviews. Part III tells journalists how to tackle everyday



stories and describes investigative techniques and strategies for covering specific beats.
Finally, the glossary at the end of the guide should prove a handy reference for anyone
who writes about business and economics.
To get the most from this guide, readers and teachers who use it as an aid to teaching may want to skip around and mix and match essays from the various sections. For
example, you can put to practical use the essay from part II on what you can get from
public and private companies by reading it concurrently with the essay from part I on
how to read financial statements. Similarly, the essay on personal finance from part III
should be read together with all of the essays from part I that deal with capital markets,
particularly those on stocks and bonds.

Part I: Basic Concepts
The economy may be journalism’s most intimidating subject. Economic stories never
seem to be as clear or as meaningful as journalists would like. One reason for this is that
economists, the economic translators, are seldom certain about what’s going on. And
the federal government, despite its tinkering with interest rates or budgets, doesn’t really
“manage” the economy. To put this into perspective, the guide begins with a section on
Macroeconomics is the study of whole economic systems, that is, it looks at the whole
economic picture and takes into account general levels of income and output and how
they relate to various sectors of the economy. Within this section, you will find essays on
how economic systems work; how politics affect economic policy; and how government
intervenes through regulation and, in the United States, through the Federal Reserve.
Microeconomics, which is the study of individual areas of activity as opposed to the
whole, is addressed in the next section. The text includes essays on the economics of the
firm, business management, sales and marketing, and principles of accounting. Though
each of these essays is useful to a reader who is learning how businesses are organized
and run, the essays on how to read financial statements and how to cover business in
your town are especially helpful to business reporters.
Finance is a lucrative business for investment bankers, and Wall Street deal makers
and their deals are often the focus of business coverage. But most newspaper business
sections were created to inform shareholders—the owners of public corporations—of financial developments. A section on capital markets, banking, and finance begins with
an essay on where Wall Street meets Main Street and includes essays on the stock and
bond markets, derivatives and other exotic securities, and hedge funds.
As world financial markets become increasingly linked as countries with centrally
planned economic systems shift to market economies and trade expands, looking beyond our borders becomes increasingly important. This final section in part I of the



guide discusses world economics, international business, global financial markets, and
the World Bank.

Part II: Practical Reporting and Writing Tips
Part II of this guide is designed to provide practical information, such as how to find
and develop sources. Since many of us who studied journalism or selected it as a profession did so to avoid mathematics, a “math phobia” permeates the field. Overcoming this
fear may be a serious challenge for business specialists, because nothing is worse than
confusing readers with misused or inaccurate numbers. For this reason, this section begins with an essay on how to use numbers and statistics properly when writing about
Other useful essays discuss what you can get from public and private companies,
what the government has in its files, where to find Web resources, how to use electronic
data to generate company stories, how to get sources to talk, and how to conduct live interviews on TV. Two of our contributors have weighed in with critiques of television
business journalism and the growing field of online journalism. Finally, we discuss
ethics, a subject that should be important to all journalists but especially business journalists, who almost daily confront potential conflicts of interest. This essay suggests conduct guidelines for business reporters to ensure the highest level of integrity and credibility.

Part III: Getting the Story—Investigative Techniques
and Strategies for Covering Specific Beats
In part III, writers provide advice on several important beats, such as personal finance,
insurance, taxes, health care, real estate, retailing, the environment, and workplace issues. These essays will help journalists learn how to cover specific industries, such as
technology and telecommunications or media and entertainment, and how to keep the
reader in mind when doing so.
The guide does not attempt to answer every question about every type of business,
but most of the important beats are covered here. And while many journalists will not
need all the information in this guide, most business editors will. Sooner or later, all
journalists confront stories they never foresaw, issues they never considered, information
that baffles them. For those times in particular, we hope that you will keep the guide
around as a handy reference.

Writing About Business and the Economy
Chris Welles

For years, business, economics, and finance journalism was a bleak wasteland—“the
most disgracefully neglected sector of American journalism,” according to former NBCTV correspondent and former dean of the Columbia Graduate School of Journalism
School Elie Abel. If you did a lousy job covering city hall, couldn’t hack it writing obits,
weren’t too swift taking classified ads over the telephone, then they sent you to the business section. Maybe they even made you business editor.
That was the way it went at countless newspapers. And it wasn’t much better at
most business magazines. Business writing was tedious and boring, little more than
jargon-ridden rewrites of corporate press releases about earnings results and executive
promotions. And because business writing was tedious and boring, smart journalists
considering specializing in the field tended to conclude that business itself was tedious
and boring. They regarded the business desk as a dead end. Writer Dom Donafede once
described business reporters as “city staff castoffs and journalistic drifters, bit players in
a raw profession, fulfilling a melancholy task requiring little talent and less imagination
in a cramped corner of a newsroom.”1
Today, everything is changing. Business journalism isn’t just flourishing; it’s exploding. CNNfn, the financial network division of the cable news giant, employs more than
200 business journalists. Bloomberg L. P., which rapidly built a news and information
empire, employs more than 800. According to one survey, more than 5,000 journalists
have joined business news establishments in the past decade. Publications featuring
business, finance, and economics news are proliferating. Business is now considered a
glamour beat, almost as prestigious as the White House or the Paris bureaus. The ranks
of business journalists now include some of the best-known and most talented editors
and writers in the country.
Readers of this book who may be attracted by the aura of glamour or the abundant
job opportunities need to understand that the field of business is quite different from
other journalistic specialties. Business writing requires special skills and presents often
formidable demands and frustrations. Some of the difficulties stem from the complexity
of the subject matter, such as the arcane intricacies of corporate financial statements.
1 Dom

Bonafede, “The Bull Market in Business/Economics Reporting,” Washington Journalism Review, July/
August 1980, 23.




The Internet can be very helpful, but ferreting out information requires special talents.
Even more challenging is so-called “computer-assisted reporting,” for example, using
computers and databases to establish discrimination in housing policies or determine a
company’s workplace safety record. Other challenges are more subtle, such as the reluctance of many business executives and other story subjects to cooperate with reporters
and the economic pressures that business interests can exert on the media. But having
worked as a business journalist for 37 years, I can attest that the satisfactions much outweigh the frustrations.
Some basic questions: Why has business journalism emerged from obscurity to
prominence? Why has the field become so essential to readers and viewers? Why does it
present journalists such unusual rewards and challenges? One big reason is that news
about business, economics, and finance is going through one of the most dynamic, momentous, and exciting periods in its history. That means grist for endless stories. These
are some of the major trends:
The Internet. It is not exaggeration to say that the Internet will transform life as we
know it. It is fundamentally changing the way we live, talk, work, play, shop, communicate, and much more. The impact of the Net on business will be especially dramatic.
The first phase was the explosion of information availability. The second was so-called
consumer “e-commerce,” such as buying books through Amazon.com. The third has
been called e-process. Though less visible, it may be the most dramatic development of
all. E-process changes business systems, generates new revenue sources, creates new
competitive advantages, and increases new operating efficiencies. In their book
Unleashing the Killer App: Digital Strategies for Market Dominance (Harvard Business
School Press, 1998), Larry Downes, a consultant and speaker on the impact of emerging
technologies on business strategies, and Chunka Mui, an expert on the potential of the
digital future, said, “The Internet is remaking every company in every industry in the
world—faster than anyone is willing to predict.” They add that the Net “is already moving from a source of business change to one of social and personal transformation.”
The new economy. In the first edition of this guide, analysts bemoaned “stagflation,”
a condition that was dragging down the economy. What a difference a decade makes. By
2000, the economy had been in a protracted expansion for almost a decade. Not only
was it booming, it was also radically overturning long-held conventional economic wisdom. The economy was growing at a rapid rate, around 4 percent, while unemployment
and inflation held steady at relatively low levels. Why? Believers pointed to a surge of
productivity, the result of innovations in computing and telecommunications. Skeptics
argued these conditions were one-time flukes—that inflation would flare up or the
economy would slump. In short: more fodder for economics reporters.



Global capitalism. Not long ago, most markets were under the control of individual
governments. Now we have moved toward a global system that nobody controls. The
emergence of unfettered capitalism and worldwide markets has radically altered the flow
of goods, services, and money, promoting trade, innovation, and growth. But uncontrolled markets have a downside: greater volatility and vulnerability to debilitating instability.
Digital convergence. Telecommunications, television, and computers once operated
in discreet realms. Now they are fusing into a single digitized system of electronic communications that allows images, text, sound, and video to be manipulated and transmitted. The possibilities are astronomical. Telecommunications is undergoing its own upheaval. The global telephone monopoly is collapsing. Most communications may be
wireless and migrate to the Web.
Biotech. Dolly, the cloned sheep, made a big splash in 1997. But Dolly was only a
sideshow compared to the surge of innovations in genetics and biology that are revolutionizing medicine, agriculture, and industry. Scientists are already beyond understanding life; now they’re manipulating it. And as we learn how to play God, the toughest issues we confront may be ethical ones.
Trading markets. Dealings in stocks, bonds, and commodities have changed very little over the past 200 years. Now, the new wave of electronic technologies is fundamentally remaking the New York Stock Exchange and other traditional exchanges. Much, if
not all, of the action will soon be electronic. Physical trading floors will be only a memory. The winner at the end of the day? The investor.
These complex trends about business, economics, and finance are as important as
politics or international affairs. Most editors and reporters have come to appreciate the
profound impact that business and economics have on our lives. Economics may seem
arcane and abstract. Yet such indicators as interest rates, employment, installment
credit, the consumer price index, housing starts, and consumer confidence data directly
affect our jobs, our salaries, the taxes we pay, the interest on our mortgages, the return
we get on our investments. Large corporations may seem remote and somewhat mysterious. But the decisions they make about where to build plants, the technologies they
use, the kinds of goods and services they produce, and how they market and distribute
their products play a huge role in the choices we have and the prices we have to pay for
the things we buy.
Finance, especially, can be very difficult to comprehend. Take derivatives and securitization deals. Many trillions of dollars’ worth of these instruments course through the
financial markets every year, but only a tiny portion of the population has ever heard
about them. Even fewer can explain them. Most consumers are familiar with such insti-



tutions as banks, savings and loans, insurance companies, credit unions, mutual funds,
and real estate investment trusts. Still, few people really understand how those institutions behave—and misbehave. They can have a powerful impact on your wallet. As
Woodward and Bernstein learned: “Follow the money.”
Readers and viewers now depend on business and economics journalists to explain
how business works and provide advice about a wide range of topics. Indeed, perhaps no
other journalistic specialty provides consumers with information that is as essential to
their daily lives. Other specialties offer intellectual stimulation, relaxation, diversion, titillation, and fantasy. But business and economics coverage offers information that people need and use. Consumers want easily understood guidance about practical matters
such as how to buy a car or invest in the stock market. They want to understand how
business and economics really work. They want to know who makes economic decisions
for the country, how the Federal Reserve operates, what causes inflation and deflation,
what moves the stock market, why the value of the dollar versus that of other currencies
is important. They want to know what sorts of people run major corporations, their
goals and priorities, their attitude toward ethical questions, how they decide on strategies to pursue and products to make, how they use power in Washington, and their attitudes toward the environment and to their employees’ health and safety.
Newspapers, television, magazines, and other media have been responding to these
needs. Big-city dailies such as the New York Times, the Washington Post, the Los Angeles
Times, the Boston Globe, and the Chicago Tribune have substantially enlarged their news
holes for business. So have papers in smaller cities such as Atlanta, Louisville, Denver,
Miami, and Philadelphia. USA Today publishes one of the nation’s savviest business sections, often scooping the New York Times and the Wall Street Journal. The Journal, probably the most important business publication, has been rapidly expanding its coverage
over the past few years. Both the Times and the Journal, as well as other papers, now have
extensive on-line operations. The Financial Times has emerged as the best-read
European financial newspaper and is expanding into the United States. Numerous new
business magazines have sprung up, including Business 2.0, the Industry Standard, Red
Herring, the Daily Deal, Bloomberg Personal Finance, and Fast Company. Some are very
specialized, such as AlleyCat News, which covers New York’s “Silicon Alley.” Numerous
online financial publications now exist. One notable site is www.thestreet.com, which is
owned in part by the New York Times and covers the securities markets. But the best site
by far is www.marketguide.com, a vast wealth of business and financial information.
Not only does it provide extensive financial data, news, and research, it also offers extensive profiles on corporations. You can get bios of officers and directors as well as information on executive compensation and stock options. There are links to Securities
and Exchange Commission filings and other materials. Most of the site is free, though
some brokerage research reports cost $5 to $25 and sometimes more. Television pays a



good deal of attention to business. Cable TV has been especially aggressive, notably
CNN, CNNfn, and CNBC.
In sum, the quality of business journalism has been improving greatly over the last
decade. Reporters have been doing a better job digging behind the press releases to find
out what really happens. Writing has become livelier and more accessible to consumers.
To capture the drama of events such as corporate takeovers and CEO ousters, stories
now include more personality profiles, color, anecdotes, and narrative. Business editors
have overhauled their tombstone-like page designs and now use arresting graphics to explain often abstruse subjects.
Still, editors staffing business sections realize that to cover the field effectively, reporters need specialized experience and training. Journalism has become more and more
specialized. The old notion has faded that any good general-assignment reporter can turn
out a quick, authoritative story on any subject. Business coverage requires more background knowledge than other fields. The world has become too complex. Readers demand
more-sophisticated coverage. The Knight-Bagehot Fellowship is only one of several midcareer programs established to meet this need. Many large journalism schools offer business writing courses. Baruch College in New York City recently launched a master’s degree
program in business journalism. More reporters are obtaining MBAs and economics degrees. Former Council of Economics advisor Gardner Ackley once remarked that he
wished reporters who wrote about economic affairs had two qualifications: first, that they
had taken a course in economics; and second, that they had passed the course. As the field
of business journalism has progressed, Ackley’s remark may be on its way to coming true.
Business and economics journalism still has plenty of room for improvement. The
quantity of coverage is often more impressive than the quality. Many people, from consumers to corporate executives, still want a much broader perspective on the news. They
want to understand more about how business, economics, and finance work. But too
many older managing editors, who began their careers when the field was a wasteland,
refuse to acknowledge changed perceptions and expect their business sections to get by
with minimal staff. Too many business editors shy away from critical stories and refuse
to allocate resources for investigative projects to take their coverage beyond the daily
news flow. Too many reporters do not venture beyond handouts from and lunches with
public relations people. Too many trade magazines are little more than sycophants for
the industries they cover.
In some ways, there has even been backsliding. Many newspapers have cut back on
investigative reporting and tough business coverage of corporate behavior and other difficult topics. Instead they allocate more resources for personal finance, a course of action
that is less likely to disturb managing editors and advertisers. Indeed, tenacious, iconoclastic investigative reporting is not exactly flourishing these days. Publications such as
the New York Times, the Washington Post, the Wall Street Journal, Business Week, Fortune,



Forbes, Consumer Reports, and a handful of other publications routinely produce
groundbreaking work. But after these, the list dwindles rapidly.
One reason for this situation is that regularly taking on tough stories is daunting.
Covering business and economics is more demanding than any other specialty, much more
difficult, for instance, than writing about a football game, a school board meeting, a robbery, a new musical fad, or even a political campaign. Business and economics reporters
must be able to understand the intricacies of the field and write about them in clear, concise, intelligible prose. And the fact that business and economics touch people’s lives so directly puts unusual demands on journalists for accuracy, reliability, and thoroughness. A
careless mistake in an investment story can cost an investor thousands of dollars.
Writing about economics poses other special obstacles. At first glance, it may seem
an easy topic to cover because economists are typically eager to be interviewed by the
press. Unfortunately, economists are notorious for their propensity to disagree with one
another and to change their views from one moment to the next. It is often said that if
you laid a thousand economists end to end, they would not reach a conclusion.
Economic data are often no more helpful; the same figures can often be used to substantiate two completely disparate interpretations. In reporting an economics story, one
discovers that it is virtually impossible to come up with a definitive answer to numerous
conundrums, such as whether the dollar should sell higher or lower in foreign markets,
whether a tax hike’s negative effects on consumer spending will outweigh the positive
impact on the budget, whether the Federal Reserve’s raising interest rates to curb inflation will cause a painful slowdown. Economists still argue about whether Reaganomics
was a dramatic success or a terrible failure. You can find plenty of economists on both
sides of the issue.
Despite appearances to the contrary, economics is as much an art as a science, closer
to sociology than physics. If they work hard enough, reporters writing about a business
event may come up with a reasonable approximation of reality. But reporters covering
an economic trend must deal with far larger numbers of people and far more intricate
patterns. Typically they find precision and tangibility very elusive. The best economics
writers, though, do not resort to on-the-one-hand/on-the-other-hand stories. They
strive to report the direction in which the preponderance of the evidence points.
Reporting on business presents different dilemmas. In their attitudes toward the
press, corporations are quite different from hospitals, schools, police departments, and
other government or nonprofit organizations. Public entities recognize an obligation to
serve the public and thus tend to be responsive to reporters seeking information.
Corporations often do not feel that obligation. Though they are publicly owned in the
sense that their stock is owned by investors, corporations really serve private ends—
making money for their employees and their shareholders. Many corporate executives
feel that the public has no special right to know about the inner workings of their com-



panies, other than Securities and Exchange Commission–mandated disclosure of financial statements and other required materials. Even some of the nation’s largest corporations are extremely secretive about their internal affairs. They actively advertise their
products and employ public relations people to polish their images and spread the word
about positive developments. Yet they are far less forthcoming to reporters about negative events. It is not unusual for a corporation to forbid its employees to talk to reporters
seeking to write about the company.
In recent years, though, corporations have been much more forthcoming. They
have learned that stonewalling usually backfires. Even when a company has bad news to
disclose, such as unusually weak earnings reports, corporate public relations executives
know that cooperating with journalists can be beneficial to the firm. The savvy PR person is eager to talk about problems in order to put a positive spin on the event. But corporations may still have very good reasons to be reticent. They may not want to reveal
their plans to competitors. And even if a company has bags of dirty linen that will eventually have to be aired, its executives may feel it’s better to say little and hope the matter
goes away.
Some business executives suggest that in this age of enlightened PR practices, journalists and executives can reduce the hostile feelings that have plagued relations between
them. That’s certainly worth pursuing. But the fact remains that business and the press
have inherently conflicting goals. One former Fortune editor, Dan Seligman, pointed
out that a corporate executive “is not always looking for the unvarnished truth about his
enterprise” and doesn’t “necessarily want coverage that is comprehensive, thoughtful,
and fair.” He observed that “there is that inevitable collision of interests between a corporation that is concerned with its own public image and is eager to put its best foot forward, and the journalist who wants a story.” The business executive will want the journalist to print things that the journalist doesn’t want to print. And the journalist will
want to print things that the business executive doesn’t want printed.
It’s no surprise, then, that the relationship between business and the press has often
been acrimonious, with heated recriminations on both sides. Business’s beef with the
press is often well founded. Even seasoned journalists allow biases and preconceptions
into their coverage. They tend to be skeptical of authority, large organizations, and
repositories of power. And they are often suspicious of people who have made a lot of
money. This sometimes leads business reporters to believe the worst about a corporation
or about a wealthy executive’s motives, resulting in stories that are slanted or unfair.
Relations between business and the press today are not exactly cordial. But the two sides
seem to work with each other more easily than they used to. One reason: left-leaning,
confrontational sixties-era writers have mostly faded away—except at the Nation and a
few smaller publications. Today’s journalists tend not to hold strong ideologies or political affiliations. If they have such orientations, they tend to be liberal on social issues



such as welfare reform, but conservative on financial issues such as free markets.
Whatever their leanings, journalists’ ideologies rarely seem to taint their writing. In
short, the business versus press issue seems to have subsided.
But many other issues complicate the journalist’s job. Business writers are frequently
under pressure from their editors and publishers to take a softer line. Unlike story subjects in other fields, corporations have the power to exert considerable pressure. They
sometimes retaliate against negative stories by canceling their advertising. Patrick J.
Buchanan, who worked in the Nixon and Reagan administrations, once advised, “These
puppies of the press need to be given an occasional jerk on the leash of the advertising
dollar.” Journalists also have to reckon with the fact that their publishers often have
close business and personal relationships with corporate executives and don’t like to embarrass their friends. Fear of angering advertisers or publishers often causes editors to
spike negative stories. Some newspapers and TV stations have reassigned or even fired
reporters who offended business interests.
Large media organizations, which have broad advertising bases, can easily withstand
these pressures. The Wall Street Journal, for instance, is seldom accused of caving in to
business interests. But the situation is much different at smaller newspapers or broadcast
stations, where the displeasure of only a few members of the local business community
can have devastating financial consequences. Few small newspapers are willing to risk incurring the wrath of local bankers, realtors, insurance agents, or supermarket managers.
In many communities, business doesn’t have to flex its muscle; self-censorship by editors
usually ensures that business has little to be upset about. John F. Lawrence, former assistant managing editor for economic affairs at the Los Angeles Times, once observed that
“the media are far more guilty of being too soft on business than being too hard.”
The Internet and the World Wide Web are posing new issues for journalists. At a
time when anyone can put up a Web site and start Webcasting, “The Internet makes us
all journalists, broadcasters, columnists, commentators, and critics,” said Lawrence K.
Grossman, a former president of NBC News and PBS, in the Columbia Journalism
Review.2 Equipped with computers, cell phones, and other gadgets, amateurs are producing video, reviewing books, creating chat groups, and essentially covering the news.
Tom Rosenstiel, director of the Project for Excellence in Journalism and Bill Kovach,
former curator of the Nieman Foundation for Journalism at Harvard, are alarmed at the
trend: “A journalism of unfiltered assertion makes separating fact from spin, argument
from innuendo, more difficult and leaves the society more susceptible to manipulation.”3 Adds Grossman, “Notwithstanding their lack of professional training in journal2

Lawrence K. Grossman, “From Marconi to Murrow to—Drudge?” Columbia Journalism Review, July/
August 1999, 17.
3 Tom Rosenstiel and Bill Kovach, “And Now … the Unfiltered, Unedited News,” Washington Post, February
28, 1999, B5. Rosenstiel is director for Excellence in Journalism, funded by the Pew Charitable Trust.



ism’s canons of objectivity, accuracy and fairness, some, like Matt Drudge, are bound to
become the next century’s media stars.”
More disquieting is the crumbling barrier between advertising and editorial, a variation on business versus the press. Advertorials, infomercials, and “sponsored” editorials
are relatively easy to spot. But more complex, sophisticated, and elusive arrangements are
emerging. Perhaps the seminal example, in 1989, was an ingenious deal between Kmart
Corp., Martha Stewart, Family Circle, and Better Homes & Gardens. Here’s how it went:
Kmart would spend $20 million to publicize Stewart’s reconstruction of her country
house in Connecticut, using products carried at Kmart. Family Circle would cover the
project in a series of articles and would carry three advertorials purchased by Kmart.
Stewart’s project would also involve Family Circle radio ads and sweepstakes developed by
the publication for Kmart customers and employees. Stewart would become Kmart’s
“lifestyle and entertainment consultant,” for which she would be paid $5 million a year.
She would also become a contributing editor of Family Circle and would write home renovation articles. Kmart would buy more than 60 pages of advertising in Family Circle.
The advertorials would also be featured in Better Homes & Gardens, and the magazine
would be distributed in Kmart stores.4 Question: Is Martha Stewart (a) a journalist, (b) a
consultant, (c) an entrepreneur, (d) a promoter, (e) a remodeler, or (f ) all of the above?
The Internet is creating new twists on the traditional counterbalance of advertising
versus editorial. In a recent issue of BusinessWeek, legal affairs writer Mike France detailed the blurring editorial distinctions in Web publications, such as joint ventures between media companies and electronic communications networks that trade stock.
Especially insidious are new arrangements where media Web sites collect not advertising
sales but a percentage of the sites’ online product sales. Said France, “This fundamental
shift in the way the media make money could potentially change the way they cover the
news. The more the press gets in the business of hawking products, the harder it will be
to criticize those goods—and the companies making them. . . . E-commerce is going to
force journalists to buddy up to advertisers in ways they never have before.”5
The ultimate threat to journalists may be the swift consolidation in the information/entertainment business. In a 1996 New Yorker article, writer Ken Auletta likened
the industry to a Japanese keiretsu, a multi-industry cartel or “web of relationships.”
That could lead to “implicit or explicit collusion” to raise prices, said Justice
Department staff lawyer Philip Verveer. A chart accompanying the story showed how
the major media companies—Microsoft, Disney/ABC, Time Warner, General Electric/
NBC, TCI, and News Corp.—both compete and collaborate with each other. Auletta
4 Randall Rothenberg, “Magazine and Retailer Join Forces [Martha Stewart],” New York Times, January 18,
1989, D16.
5 Mike France, “Journalism’s Online Credibility Gap,” Business Week, October 11, 1999, 122.



quoted Peter Barton, then president of TCI’s Liberty Media, which has interests in
many media companies: “We make connections. The six executives of Liberty Media sit
on more than 40 corporate boards. Their function is to act not just as watchdogs for our
investments but as relationship managers [sic] with our partners. In this way, we can link
pieces of our portfolio to create strengthened alliances, new business, and shared economics.” Said Auletta, “That’s not a bad definition of keiretsu.”6 Dean Alger, author of
Megamedia: How Giant Corporations Dominate Mass Media, Distort Competition, and
Endanger Democracy (Roman and Littlefield, 1998), takes the point a step farther. These
cozy ties, he argues, fly in the face of “a fundamental democratic premise” that people
should have a “diversity of truly independent sources of news and ideas on public affairs.” But that’s not happening, he says. “If a few Megamedia corporations control most
of the major print, broadcast, cable, and other media that people most rely on as their
main sources of information, opinion, and other creative expression, then this fundamental pillar of democracy is likely to be seriously weakened.”
So take your pick. Lawrence Grossman says the traditional media are endangered
species. Dean Alger says the traditional media may virtually squelch free speech.
Whatever the case, there’s some good news for the journalist. Reporting has been undergoing a revolution. Not long ago, a typical investigative reporter’s MO would be to
haunt the courthouse, dig into the innards of obscure government agencies, and thumb
through thick files in library catacombs. Reporters still do that, of course. And face-toface interviews will never go out of style. But journalists spend much of their time these
days gathering information on-line. It’s become essential for journalists to be well versed
in these rapidly evolving techniques.
The Internet and the Web let you gather more information faster than you ever
dreamed possible. They can also make you more frustrated than you ever dreamed possible. That’s because you often have to wade through countless Web sites and other electronic venues to get the information you want. One very useful book is A Journalist’s
Guide to the Internet (Allyn and Bacon, 1999) by Christopher Callahan, an associate
dean of journalism at the University of Maryland at College Park. He details a wide variety of strategies on making the Net a reporting tool. His site, http://reporter.umd.edu,
has numerous linkages to other sites. One ingenious feature is ProfNet, an e-mail system
for finding expert sources. A request can be distributed to about 2,000 institutions
worldwide, including 760 universities; 500 corporations; 380 PR firms; 300 nonprofit
organizations and government agencies; and 100 think tanks, scientific associations,
and labs. Queries should be directed to profnet@profnet.com.
If you’re an investigative reporter or want to become one, you should join
Investigative Reporters & Editors Inc., the nation’s biggest and most enterprising organ6

Ken Auletta, “American Keiretsu,” New Yorker, October 20–27, 1996, 225–27.

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