“Letting Sleeping Watchdogs Lie”

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Strong majorities in Brazil (80%), Mexico (76%), USA (74%), and Great Britain (71%) believe that the concentration of media ownership in fewer hands is a concern because owners’ political views emerge in reporting.”

Letting Sleeping Watchdogs Lie: The business press rediscovers regulators”: Dean Starkman of the Columbian Journalism Review observes that the best coverage of the mortgage crisis was coverage that played the role of “of financial coroner, drawing chalk lines around a financial system that has already hit the pavement.”

Zing! I do love a good metaphor.

The business press has written about the mortgage crisis as a predatory-lender problem, a naïve borrower problem, a compromised rating-agency problem, an irresponsible debt-buyer problem, and, first and foremost, a problem manufactured on Wall Street, which fueled the subprime expansion with loans to front-line borrowers, sold the bad paper into the global markets—and, to keep the fee-engine going, bought much of its own product.

Never smoke your own crack.

Sleeping watchdogs:

If the business press has a blind spot, it is that it failed to understand the crisis for what I think it really is: a regulatory failure of mammoth proportions.

Atlas shrugged:

Now comes The New York Times this week with a devastating account of regulatory failure, under the headline: “Fed Shrugged as Subprime Crisis Spread”


Post-cow escape malfunctioning barn door repair:

But even as we celebrate good work, it’s fair to point out that the piece comes fully eight months into the crisis, advances only marginally what is already in the record, and includes material that was publicly available at the time the events were happening. It is, in the end, a particularly well-executed example of explanatory reporting, a time-honored and respected journalistic form that has but a single limitation: it is, by definition, late.

What follows is a plea for a return to beat coverage of regulators.

Judy Miller started out as a beat reporter covering the SEC, but wanted to be where the action was.

She wound up running around the Iraqi countryside looking for nonexistent WMDs that would retroactively vindicate the leak journalism used to underwrite the theory of the imminent mushroom cloud.

Much as Enron wound up running around looked for nonexistent cash to meet its margin calls and retroactively vindicate the creative accounting it sold to Wall Street.

The problem is that regulators tend to be extremely boring institutions.

It might interesting to look at another case from this angle — another future disaster waiting to happen. The FCC has relaxed rules on concentration of media ownership in local markets this week.

But that recent BBC poll, for example, showed a very high level of public concern over such concentration.

The only really anguished alarm I have seen raised over this development came from Alberto Dines of Brazil’s Observatório da Imprensa, who basically said, in essence, that we gringos are allowing our media sector to be Brazilianized without fully understanding the consquences of Brazilianization.

The Brazilian news media is heavily, heavily banana-republican.

In banana republics, political power comes out of the barrel of a gun and the free-beer campaigning and vote-buying is funded by the mafia, which then owns their friends at City Hall.

Sort of like New York a century ago:

The Tweed Ring looted the city and the state of New York of an estimated $200 million, yet few newspapers tried to expose the problem. Why? Smythe explained that, “The ring bought off the newspapers through lucrative advertising contracts.” When editors published critical stories, advertisers were outraged and boycotted their publications. Dozens of journalists either experienced or knew of a boycott. Typically, Chapin said he knew of several big companies that withdrew their advertisements because an editor refused to suppress, “some perfectly legitimate piece of news.

For Tweed, read Maluf.

  1. Ted Smythe, “The Press And Industrial America, 1865-1883,” in The Media in America: A History, ed. Wm. David Sloan, James G. Stovall, and James D. Startt (Scottsdale, Ariz.: Publishing Horizons, Inc., 1993), 223.
  2. Charles Chapin, Charles Chapin’s Story (NY: G.P. Putnam’s Sons, 1920), 202-203

    While its media is banana-republican, Brazil is not a banana republic, however. It is a recovering banana republic. But the recovery effort is arduous, expensive and takes decades.

    Serious voices on the other side of the debate are relegated to marginal Internet alt.media with stupid names like BuzzFlash, whose Jeff Fleischer observed last week

    It’s hard to remember now, but as recently as 1983, America had about 50 large media companies. By the time President Clinton and the Republican Congress followed in Ronald Reagan’s footsteps by further deregulating the industry in 1996, that figure was down to 10.

    Brazil has six major media groups, and now so does the Federative Republic of Anglophone North America. One more six and we will be able to point to the factoid as a sign of the imminent Apocalypse.

    These days, of course, it’s fallen to exactly six, and those six companies have a combined reach that the bygone 50 probably never dreamed about. Thanks to a Dec. 18 ruling by the Federal Communications Commission, the situation’s only going to get worse.

    Party-line vote:

    In a 3-to-2 vote that split — like many FCC decisions — along party lines, the commissioners loosened a 32-year-old ban on companies owning both a newspaper and broadcast outlet in the same market. And by “loosened,” read “virtually eliminated.”

    Brazil’s Observatório da Imprensa reported that the vote was 3-3. They should hire a revisor.

    For the first time, it’s now possible for the major companies in the country’s 20 largest markets to exert significant control in both print and broadcast media in the same town at the same time. The day after the ruling, The New York Times quoted experts citing it as “paving the way” for Rupert Murdoch to own two New York TV stations along with the Wall Street Journal and New York Post. (Murdoch currently owns the two TV stations along with the two newspapers.)

    New York can handle it:

    That’s in New York, of course, where the marketplace is big enough to handle a Murdoch empire as well as the Times, The Village Voice, The Daily News and a number of local news stations. Apply that same concept to a smaller city without such an established and diverse media scene, and you see the danger of this ruling.

    The Village Voice is a zombie corpse of its former self.

    The Brooklyn Papers is owned by a former Post columnist best know for a book of investigative journalism on the hair regrowth industry which tends to suggest that the hair regrowth nostrums actually work. See

    Brooklyn is America’s fourth-largest city by population. It does not have a decent newspaper of its own, and the Global-Metrosexual Times has scarcely set foot on a bridge- or tunnel-bound conveyance since the Tammany men invaded us in 189x.

    A day that will live in infamy..

    For now, the rule requires eight “independent” sources of news in a market if cross ownership is going to occur. But its definition is broad enough to include free weeklies, college radio, niche-driven publications and other sources that can’t fully compete with a major news outlet dominating multiple channels. And, except when it comes to fines for obscenity, the FCC has always moved toward further deregulation once it starts heading in that direction.

    Surveys show a strong majority of people strongly against it.

    Your government does it anyway.

    Your intrepid newsrooms — whose bosses benefit from the  government doing what most people do not want it to do — do not cover the story. And not necessarily because they do not want to, either. See

    That could be you. And sooner than you think.

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