No longer just gray: business journalism takes off; Technology, public appetite and far more sophistication in delivery have conspired to radically transform the face of business journalism in recent decades. That's been both good and bad, with many in the profession itself bemoaning a focus on entertainment instead of information.

Put a reader of the business news from the 1930s in a time capsule and spirit him to today's world, and his head would truly be spinning. A world of gray type and subdued coverage has evolved into splashes of color everywhere, charts and graphs, talking or even shouting heads on cable TV (think Mad Money's Jim Cramer on CNBC) and dramatically more attention on the world of business and commerce. Even that bastion of literary excellence, The New Yorker, has a regular business column.

Like virtually everything else, business journalism has been transformed by technology. Computers replaced lead type; color presses created whole new palettes. Television evolved from a small, gray box to high-definition and plasma. Correspondents, many hired less for their knowledge than their looks, now chatter with executives and analysts on cable TV programs. Even now, the Internet now seems to be the future of much of communication in an attention-deficit world in which depth is often disappearing.

That's not to say, however, that serious and important stories about business aren't being done. They remain a staple of major newspapers like The Wall Street Journal and The New York Times, as well as the major business magazines like Fortune, Forbes and BusinessWeek. There's a bigger audience for business news than ever before, and a greater capacity to deliver it. Financial executives, especially public company CFOs, are often in the forefront of those supplying information, be it filtered through analysts or investor relations departments.

Indeed, today's business press does have a real impact on business, perhaps greater than ever. Sometimes the influence is overt, as happened earlier this year when press coverage of a professor's research into backdated options spurred intensified regulatory interest and a stock market response. Sometimes, the influence is subtle.

One study, for example, found that press coverage alone can influence auditors' opinions on a company. Presented with information about companies that had defaulted on their loans, auditors were more likely to issue a negative opinion if the press had covered the default. "What was startling about this research is that there was no new information in the press, just a repetition of information available in the audit work papers, yet auditors were more conservative once they saw an article," says Jennifer Joe, assistant professor of Accounting at the Georgia State University's Mack Robinson College of Business.

Sometimes the influence shapes how business people see themselves and their businesses, and lasts for years. George Gendron, who edited Inc. magazine through the 1980s and '90s, created a publishing phenomenon, a hit with advertisers and readers--not just a magazine, but a community. Before Inc. came on the scene, no magazine was addressing the needs and concerns of entrepreneurial business.

"Six months ago, I get off a plane and I hear this guy shout, 'George! George Gendron? I was number 152 on the Inc. 500 in 1995!' It's like we're blood brothers or something," Gendron says. For two decades, Inc.'s intensely loyal readers supported not only an advertising bonanza but also a healthy conference business.

The Inc. phenomenon is one of the latest developments in what is actually a very long history; after all, business writing has been around almost as long as writing itself. Some of the first cuneiform tablets were financial reports. In his new book, Profits and Losses: Business Journalism and Its Role in Society, University of North Carolina journalism professor Chris Roush relates that lenders set up a network of correspondents to file reports on prices and political conditions as early as the 1500s.

Interest in prices and market moves seems to have been the main driver of business coverage through the 19th century, and as the Industrial Revolution rolled, the press rolled along with it. The first American business newspaper appeared in 1793, Julius Reuters founded his international news agency in 1849 and The Wall Street Journal started publishing in 1889. For most of that history, business reporting addressed a narrow audience of specialists.

Then, as the 20th century debuted, the broader public took at least a fleeting interest in what muckrakers were stirring up. Ida Tarbell scrutinized the Standard Oil Corp. in a series that ran for 19 months in McClure's magazine. In articles that later became books, Lincoln Steffens's Shame of the Cities exposed business and government corruption and Upton Sinclair's The Jungle tackled the meatpacking industry.

Yet for reasons still not entirely clear, the heyday of muck-raking lasted only a few years. By the second decade of the 20th century, it had faded from the scene. Then came the 1930s, the decade of depression, and then the '40s, the decade of war. The public had a lot on its mind besides business. It wasn't until the '50s that business coverage began to come into its own.

A New Focus on Making Money

With peace and prosperity came a focus on careers and money making, and an explosion in interest in business. Marshall Loeb, former editor of Fortune, Money, and the Columbia Journalism Review, and currently a senior columnist with Market-Watch from Dow Jones, says, "I think the material covered in the business section of Time at that time was very well done. We had many individual business people on the cover; maybe eight times a year out of 52 issues there was a business person on the cover." Time even named General Motors President Harlow Herbert Curtice its Man of the Year for 1955.

But the celebration of business personalities, which accelerated rapidly by the '80s, had a downside. It spread easily and pervasively into every nook and cranny of business journalism, crowding out arguably more important stories. Arguably, it has had profound repercussions at many companies, with lionized chief executives riding herd on passive boards and making ill-considered decisions, especially acquisitions; financial executives, the conscience of their companies, may have found the control function slipping from their grasp.

David Cudaback, former editor of Institutional Investor, sees business and financial journalism to some degree "complicit" in creating a celebrity culture surrounding executives. Founded in 1967 to cover the money management business, the magazine had expanded its scope so broadly that by the mid-'70s, little in finance was beyond it.

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"The premium was on story-telling and personalities, and on the international side, celebrating finance ministers and heads of syndicated lending," says Cudaback. "People loved it. Advertisers loved it and readers loved it, and you couldn't be too outrageous. But I never wrote a story asking, 'Will Brazil or Nigeria or Hungary be able to repay all those recycled petrodollars they borrowed?'"

Complicit may not be too strong a word. It is rare for the press to raise troubling questions during any boom, whether it was Latin lending in the '70s or the tech stocks in the '90s. And every one in the press knows why. After all, if it's true that the press impacts business, it's even truer that business impacts the press.

Bob Teitleman, editor of The Deal, observes, "As the bubble burst, you had all this recrimination. Why didn't we know about Enron? Why didn't you tell us about tech stocks? People forget that if you had written about it, if you wrote story after story about why these tech stocks were duds, you wouldn't be writing any more. That's not what the audience wanted, and it's not what advertisers wanted, either."

Cheerleading Is a Popular Choice

There can be tension in business journalism as well between printing what people should know and what they want to know. Cheerleading is often not only more profitable, but also more popular. "We wrote and wrote on the stock market bubble, and one day it broke, and people said, 'Why didn't you warn us?' We did warn them, but nobody wanted to hear us," recalls Newsweek's Wall Street editor, Allan Sloan. "The high-tech companies, the genius CEOs, that was a much better story than the one that said this is coming to an end."

Idealists have a noble view and high expectations of the press as a force in society. Business journalism historian Chris Roush speaks of the business press as "a watchdog on corporate America," for example. Researchers in Finland, a country formerly under strong Soviet influence, credit the "increasing professionalism of the business journalists" for pushing politics and government in the direction of "western-style open financial reporting standards and a more critical public scrutiny of business issues." The World Bank Institute sponsors courses to train young business journalists in developing countries "to operate as effective reporters in a democratic society and within a market economy."

Yet in the U.S., a different model of the business press is ascendant. Robert Dilenschneider, founder of the PR and investor relations firm The Dilenschneider Group, says, "I think the business media are less influential today." Marshall Loeb adds, "Surely much of the business press is spending less of its resources getting to the deep and complicated stories."

Media critic Marek Fuchs of theStreet.com faults business journalists for their lack of business experience, business understanding or even interest in business. "Very few grow up with any interest in business, and it shows all over the place," he says. Yvette Kantrow, who writes a closely watched column on media matters as executive editor of The Deal, points out that after the experience of Enron, "You would think that people would want the business press to be more serious, to crunch numbers. But nobody wants to read it, unfortunately, or not a big enough audience. A lot of people bemoaned the state of business journalism, but it went farther, fluffier."

Jim Michaels, editor emeritus of Forbes, sees in the move to the Web not only a threat to advertising dollars but also a force in the dumbing down of journalism. "In a magazine, you have to give readers what they want or they won't take it, but you also give them things they may not be passionate about but ought to know.

"On the Web, everything is driven by hits, and if it doesn't get hits, you won't run it. So what are they hit on? Look at anybody's website, and usually they'll list the five or 10 most popular stories of the day. Look at what they are: women are sexier than men, new study shows; eating tomatoes protects you from breast cancer; some movie star and her husband go to Namibia to have a baby. I'm not kidding you!"

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George Gendron notes, "There are hugely significant scoops that highly ambitious journalists in the past would have loved to tackle, and they're not even being done. It's not a question of being done badly--people don't bother pitching them any more."

Medicine and Sugar

One high-minded view of business journalism sees it as making some compromise with such public tastes by offering the medicine of information in a sugar coating of entertainment. Now that the Web makes it possible for readers to take the sugar without the medicine, serious journalism is under threat. But what if serious journalists were kidding themselves all along? What if providing information wasn't ever their real job? There's some dispassionate economic analysis to support the argument that the public never looked to the press for information.

Michael C. Jensen, Jesse Isidor Straus Professor of Business Administration, Emeritus, at the Harvard Business School, is best known for his writings on corporate finance. However, in the 1970s, he turned his attention to the press, arguing that it is economically rational for people to merely tolerate information as an accidental by product of the entertainment they seek in the press.

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Jensen drew heavily on the work of the jaded Sage of Baltimore, H.L. Mencken, who in the early decades of the 20th century wrote that the newspaper with aspirations to profitability should pander to the simple minds and baser instincts of the masses, scaring them with threats and then reassuring them with simplistic and unchallenging remedies. Jensen's analysis suggested that it would be economically irrational for people to seek anything but entertainment from the press. After all, a rational economic actor would recognize that nothing he or she did as an individual could affect the outcome, so investing resources in a serious consideration of issues doesn't pay.

"In addition," Jensen wrote, "Peoples' intolerance of ambiguity causes them to demand answers to questions; including those that are unanswerable. As a result, the media is generally in the business of providing simple answers to complex problems whose answers are unknown, and it must do so in an entertaining way."

Although Jensen published his articles on the press in the '70s, they were prescient. Indeed, his analysis neatly accounts for every great business scandal story of the past few decades. "Michael Milken, what he did for the economy and the world of finance was remarkable, and he ended up being pilloried as a crook, which he isn't," says Jensen. "You see what's being done with Wal-Mart. Here's a company that has contributed more to consumers getting low prices and an amazing selection of goods, even in the boondocks, and providing work for people on the margin of the labor force. Now, they've become a national icon of evil."

People will get the kind of press that they demand, or settle for. If people are really looking for entertainment, it makes sense when the press stokes and strokes the public mood instead of digging and prodding to get obscure, difficult, expensive-to-unearth but momentous facts. If people are really looking for entertainment, it makes sense that journalists don't invest time in learning to read financial reports or understand the trade-offs involved in a free market economic system.

It even makes sense if the press spends one decade building up celebrity CEOs, and the next decade attacking CEOs who get paid like celebrities. That's a game H.L. Mencken would have understood perfectly well--indeed, he wrote the playbook.

It's hard to find much justification for a noble view of the press's role, or for optimism that business journalism will raise its standards. Yet, it's not impossible. Author and historian W. Joseph Campbell, author of the new book, The Year that Defined Journalism: 1897 and the Clash of Paradigms, sees grounds for encouragement.

Events in that pivotal year, Campbell says, defined journalism for the next century: newspapers were struggling against a background of new communication technologies and fickle public tastes. Scrambling for solvency, newspapers were laying off reporters in droves. Out of the turmoil, a new model of journalism emerged. "The rip tide of change has swept American journalism in the past, and we've emerged the better for it," he concludes.

A New Form of Creative Destruction?

That could happen again in the new century. Creative destruction at the beginning of the 20th century resulted in industry consolidation and the formation of great media empires. Creative destruction in this century may result in their dissolution, but it's possible that breaking up media conglomerates could lead to a more efficient and effective journalism industry.

Meanwhile, the school of hard knocks may already have begun the job of educating the audience to greatness. A public shocked to discover that it couldn't believe what it read in the papers about Enron and WorldCom and tech stocks may simply have turned to entertaining fluff in a transient fit of pique, as a respite.--to forget, the way an adolescent turns from a heartbreaking summer romance.

Any day now, the audience may return, more mature and wiser, to demand and reward incisive, competent, deep and challenging business journalism, the kind that requires massive investment of time and money and the willingness to risk legal challenges. Readers may be on the verge of tossing the sugar aside to go straight for the medicine.

A few business publications, such as The Deal, have managed to weather the industry storm by focusing on a narrow audience that does demand quality, competence and seriousness of purpose. If such audiences expand or multiply, it's reasonable to expect that one way or another the press will be there to serve them.

And in the larger sweep of history, business coverage has improved in many ways. Loeb says it is "a hell of a lot better than it was 50 years ago or even 25 years ago." That may be one of the few points on which Loeb and his former Forbes archrival, Jim Michaels, agree. "I joined Forbes in June of 1954, and business journalism was very much a backwater," Michaels says. "Newspapers would put their drunks and burned-out cases on the business page. The New York Times would almost never put an economic or investment story on the front page--you could go weeks and weeks without seeing it. The business media was pretty small."

That's no longer true, of course. It's much larger, and more fragmented as well, with the growth of investor-oriented magazines like Money and Smart Money, and the slew of technology titles (like Wired) that have sprung up in the past decade. Trade magazines, too, have emerged and grown to fill perceived voids in specialty subjects.

And then there is television. Channels like Bloomberg and CNBC haven't been with us that long, but they are filling the airwaves will all kinds of data, much of it arguably short-lived. Some of the analysis that used to appear only in print has now moved to the Web, where it has far more immediacy. The Web has also abetted the emergence of journalists as quasi-celebrities, as authorities whose views you can call up with a quick click of a mouse.

During the technology bubble, CEOs and CFOs were lining up to tout their stories, and their stocks, on cable. That phenomenon has cooled, but surely there will be another wave of business information, another surge of excitement--perhaps from somewhere we can't even yet envision. For financial executives, the challenge will be to sort out the noise and the chaff, and understand the best ways to glean information they need and to communicate their stories to stakeholders.

Gregory J. Millman ([e-mail]) is a freelance writer in New Jersey and a frequent contributor to Financial Executive.

RELATED ARTICLE: How Financial Executive Viewed the Communications Effort

The explosion of business news, especially in the past generation, hasn't been a core subject for FEI or Financial Executive--but it has been touched on time and again in connection with investor relations and the information disseminated to analysts and stockholders. The biggest source of the publicity wave for corporations, the emergence of the celebrity CEO, arguably goes back quite a few decades. After all, if that doesn't define Henry Ford or John D. Rockefeller, what does?

But it was in the 1980s and '90s, especially, when more modern versions of the chief executive become glorified in magazines like Fortune, BusinessWeek and Forbes. There were names like Lee lococca at Chrysler, Michael Eisner at Walt Disney, James Robinson 3rd at American Express and Walter Wriston at Citicorp. Features and profiles highlighted their strategies and power; the CFO and the finance suite, in contrast, rarely garnered much ink.

It's probably in the evolution of corporate reporting and investor relations that finance, and especially the public-company CFO, have had the biggest impact on the news that makes it to the business press, television and cable channels. Certainly, the situation these days is a far cry from what it was like back in the '30s.

In the October 1935 issue of The Controller, an article, "What Is the Most Satisfactory Form of Reports to Shareholders?", noted: "It seems to be the experience of our leading companies, and doubtless of others, that they get from stockholders very few inquiries indeed for more information than is contained in the annual report ... it is only after some action of the board that has excited their attention, or something has gone wrong, that they will for a brief time become inquisitive."

By 1964, security analysts were clearly demanding more of the finance executive's time. William A. Crichley of Diamond Alkalai, writing in the July issue of Financial Executive, urged members not to "wait for the analyst to seek you out; go seek him out. Don't go so often you wear out your welcome, and above all, don't hide when the results are poor ... These specialists want to know the bad news also. They're in the business for the long pull, and they have memories like the proverbial elephant."

The power of the business press drew notice in an August 1974 article, "Seven Steps to Better Investor Relations." It noted that "feature articles in Fortune, BusinessWeek and elsewhere reach not only the analysts, but their clients as well. Such articles are part of the effort to provide continued visibility of the corporation to its various financial publics--security analysts as well as customers, creditors and present shareholders."

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Disclosure, and the growing demand for corporate information, were reviewed in a June 1980 article, "Corporate Disclosure in the 1980s." The author noted that "the historical pattern of 'more and more'--which some seem to equate mistakenly with 'more is better'--can be illustrated by comparing the space used for financial disclosure in a typical 1970 annual report, as opposed to the space used for a 1979 annual report. That space has probably doubled or more."

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In the March/April 1992 issue of Financial Executive, Joe Rodgers, executive vice president and CFO of Quantum Corp., related how the role of investor relations had grown at his company and become structured so that the company could send a consistent message to investors. Rodgers confessed that he was spending 40 to 50 percent of his time on various elements of investor relations, including meetings with individual institutions and analysts.

By late 2000, even as a red-hot stock market began to cool, clamor erupted over the perception that some analysts were getting privileged information from companies. A new rule, Regulation Fair Disclosure, or Reg FD, required that all investors be made equally aware of potentially market-moving information.

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Jim Davis, senior vice president and CFO of Tulsa-based Parker Drilling Co., told writer Gregory Millman in Financial Executive early in 2001 that compliance with the rule may expose companies to other legal risks. "If you put out a forecast, whether in a press release or webcast or whatever, if you don't caveat every statement you make, you run the risk that some enterprising shareholder or attorney is going to compare actual results with forecasted results and sue you if actual doesn't meet forecast," Davis said.

Fortunately for CFOs, that blizzard of suits has never materialized.

--Jeffrey Marshall