As people consider the role of the financial media in the economic collapse of the past several years, a common refrain is that the media fell down on the job. The point has its merits: While there was some intrepid work done on individual mortgage lenders, for the most part neither the financial trees nor the economic woods were particularly well-illuminated. The Columbia Journalism Review has assembled a thorough, and gimlet-eyed, analysis of the media's failures.
Too often, though, critics underestimate the difficulty and the cost of doing aggressive business journalism that companies don't like. There is an ugly truth to doing investigative reporting on a company's financial state of affairs: It is far from a precise science. A curious business reporter can frame the gap between a company's otherwise decent profits and weak cash-flow generation but can't responsibly go much further than laying out some accounting considerations. The vastly more worrisome issues that a company chooses not to disclose can be kept safely from the public's view for decades.
Then there is the push-back. Corporations have everything to lose from bad press: credit-rating downgrades, regulatory investigations, lost business, and, above all, a possibility of stock-price declines. So as often as not, they fight a tooth-and-nail battle with investigative reporters and editors to tone down, delay, or even kill looming bad press. Outside public relations and law firms can turn an extraordinary amount of heat on increasingly over-matched editors and lawyers on the reporter's side of the fence.
The most extreme form of this behavior comes from Overstock.com (OSTK), a Salt Lake City-based Internet retailer that is in the news almost as frequently for the outrageous pronouncements of Patrick Byrne, its founder and chief executive, as it is for selling retailers' surplus inventories. Byrne is best-known for his quest to eradicate naked short-selling, a violation in which a trader fails to borrow stock adequately prior to selling it short. He believes that a far-reaching conspiracy of reporters, hedge-fund managers, and regulators are in league to abet naked shorting. He calls this "The Miscreants Ball" and says that the whole process is controlled by a legendary 1980s vintage criminal mastermind whom he terms "The Sith Lord."
I am, in fact, one of the business reporters Byrne has castigated most frequently. While he and his colleagues at his DeepCapture.com site have spewed venom at many business reporters, I am one of only two reporters"”the other is my former Fortune magazine colleague Bethany McLean"”apparently evil enough in his eyes to warrant a reference to oral sex and ejaculation in his assessment of our ethics and reporting skills.
Before examining just how abusive Byrne can be to the press, some back story is warranted.
Want to reply to a comment? Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to.
In addition to the less than professional adjectives used by America's Nastiest CEO to describe Ms. McLean and Mr. Boyd, similar less than professional remarks were made about numerous persons currently and/or formerly employed at the Securities and Exchange Commission.
Terms such as "bot bitch," or "prison bitch" come to mind.
Read Full Article »