June 29, 2008

How Will Print Media’s Financial Problems Affect Its Coverage?

Filed under: Business Moves,MSM Biz/Other Bias — Tom @ 9:58 pm

The question that is this post’s title occurred to me as I read through this report earlier today by Seth Sutel of the Associated Press. I believe the question is important, and that its potential implications are underappreciated.

Sutel first summarized the week’s financial events in the media business. It wasn’t pretty:

Even for an industry awash in bad news, the newspaper business went through one of its most severe retrenchments in recent memory last week.

Half a dozen newspapers said they would slash payrolls, one said it would outsource all its printing, and Tribune Co., one of the biggest publishers in the country, said it might sell its iconic headquarters tower in Chicago and the building that houses the Los Angeles Times.

The increasingly rapid and broad decline in the newspaper business in recent months has surprised even the most pessimistic financial analysts …..

In a supreme irony, a media trade group, representing those who continually demand full disclosure from politicians, parties, political groups, businesses, and other organizations, is reducing the public visibility of its own industry information:

Advertising is by far the most important source of revenue for newspapers. And in the first quarter, their overall ad revenue slumped 12.9 percent, led by a 24.9 percent drop-off in classifieds, compared with the same period a year earlier.

In fact, the industry group that compiles and releases ad revenue figures, the Newspaper Association of America, this month stopped putting out quarterly press releases with the numbers, though it quietly updated them on its Web site.

NAA spokeswoman Sheila Owens said in an e-mailed statement that the organization will now put out press releases only with full-year data “to keep the market focused on the longer-term industry transition from print to a multiplatform medium.”

But it’s the final paragraph in Sutel’s piece that is the most troublesome:

Given the current poor climate for the business, (Emile Courtney, a media industry credit analyst for Standard & Poor’s) said: “I have doubts banks will be as willing as they were in the past to waive or amend covenants.”

“Covenants” are financial requirements borrowers agree to meet as conditions for obtaining financing and continuing to remain in good standing with their lenders. Without getting too detailed, typical covenants could include promises to have annual financial statements audited, and to get “clean” auditor’s reports as a result of those audits; to continually maintain certain levels of liquidity, such as ratios of current assets to current liabilities; to achieve minimum levels of quarterly cash flow; and to limit pay to key executives.

A covenant violation is potentially a very serious matter. Very often, an understanding lender will “waive” a violation if it feels that it was a one-time problem, and that the borrower’s overall financial viability is not in jeopardy. But it’s a fact that any time a borrower fails to meet any one of the agreed-upon covenants, the lender has the legal right to “call” the loan, meaning that it must be repaid in full immediately. Frequent covenant violations, especially if the borrower is in an industry experiencing serious problems, or if the borrower appears unable to get back into compliance, increase the likelihood that the lender won’t grant waivers, but will instead call the loan. If such a call occurs, a borrower unable to find alternative financing can be forced to go into bankruptcy or liquidation.

It doesn’t take a lot of imagination to understand that a highly-leveraged media company in dire financial straits that knows it is in danger of violating covenants — or, even worse, has been doing so for some time and realizes it may be living on, if you excuse the expression, borrowed time — could be a very dangerous player in covering and reporting the news. Among the many possibilities: It might lighten up, or even puff up, its coverage of a person or group with a chance to financially harm it, such as a major advertiser, politician, political party, or the lending bank itself. Or it might overreact and become recklessly aggressive and sensationalist in a desperate attempt to get more attention, readership, and cash flow.

On the plus side, you might hope that serious financial times might cause the media companies involved to question whether they need to move away from the insufferable bias and political correctness that permeates so much of their reporting, and that has been chasing readers away for so many years. That would be nice, but I am not the first to observe many of the journalists at these companies would rather see the ship sink than make this common-sense adjustment.

Thus, I believe it’s fair to say that the conduct and motivations of reporters, editors, and editorialists whose companies are experiencing financial difficulty deserve special scrutiny, especially during this election year.

Cross-posted at NewsBusters.org.


UPDATE: Courtesy of Newsosaur, the Default-o-matic! (HT commenter dscott)

Obama’s Taxes: The $2 Trillion ’1970s Show’ Mirage

Filed under: Economy,Soc. Sec. & Retirement,Taxes & Government — Tom @ 2:52 pm

Note: This post originally appeared on Friday at Pajamas Media under the title “Obama’s Taxes: A $2 Trillion Trip Back to the 1970s.”


Remember how the press made George Bush’s tax-rate cuts look so “huge” in 2001 and 2003?

A March 10, 2001 New York Times article by reporters Frank Bruni and Richard W. Stevenson typified the approach. The trick was to talk about the (scary) $1.6 trillion impact of the “cuts” while minimizing attention to their time frame. At the linked article, the reporters waited until the ninth paragraph to tell us that it was a “$1.6 trillion, 10-year package” — that is, a less-intimidating average reduction of $160 billion a year.

Using consistent language, Barack Obama’s tax proposals involve tax hikes of at least $2 trillion, and possibly $3 trillion, over the next 10 years.

Obama would bring tax policy back to the 1970s, or about where we were before the Reagan-era tax-rate cuts that triggered The Seven Fat Years of 1983-1989. Despite being partially offset by Bush 41′s and Bill Clinton’s rate hikes, the Reagan rate cuts and their remnants propelled the economy forward almost non-stop for almost 18 years until the 2000 bubble-burst.

Using “static analyis,” the non-business press and rate-cut opponents assumed that Reagan would deprive the government of huge sums of money. Supply-side rate-cut proponents knew better, and predicted that more money, not less, would flow into the federal treasury, as the unleashed economy would grow faster than if rates were not changed.

That supply-siders’ predictions were correct is indisputable. Congressional Budget Office data show that federal fiscal-year receipts increased by 65% from 1983 to 1989 — a compound annual rate of 8.7%.

The Bush rate-cut success story is similar. While the rate reductions on earned income were less substantial than many would have liked, bringing the top rate down only to 35% from Clinton’s 39.6%, the 2003 Bush capital-gains and dividend rate cuts were more aggressive than their Reagan-era counterparts.

Those investment-related rate cuts have favorably influenced behavior far beyond even proponents’ wildest dreams. Federal fiscal-year receipts increased by 44% from 2003 to 2007 — a compound annual rate of 9.6%. Even in fiscal 2008, as the media and Alan Greenspan obsess over a possible recession, federal receipts before economic stimulus payments are on track to increase by about 4%. April 2008 receipts set an alltime single-month record.

If a President Barack Obama gets his desired tax increases, he will show us that supply-side economics has a painful reverse gear. Just as Uncle Sam never had to do without the $1.6 trillion the New York Times and the rest of the media fretted over in 2001, an Obama administration will never see anywhere near the multitrillion-dollar tax-increase windfall it hopes for.

Let’s look at the static Obama numbers. I started with the most recent available IRS tax-return data from 2005 (specifically Table 1.4, a download accessible at this IRS link). Adjusting for estimated inflation since then, and (naively) assuming no change in behavior, here are my first-year lowball estimates of the impacts of the major proposed tax hikes:

  • Obama has said he will let the Bush tax-rate cuts expire for incomes over $250,000. This will push those taxpayers into either the 36% bracket (up from 33%) or the the 39.6% bracket (up from 35%). Estimated annual impact, before considering the investment-related items that follow: at least $110 billion.
  • Although waffling a bit, it appears that Obama plans to increase the capital gains rate nearly to its pre-2003 level, and to once again make dividends fully taxable as ordinary income — again, apparently, on incomes of over $250,000. Estimated annual impact: at least $50 billion.
  • Third, as discussed in last week’s column, Obama plans to impose the Social Security payroll tax on all income from work and self-employment above $250,000. Estimated impact: at least $40 billion.

That’s at least $200 billion a year in tax hikes; if 2007 IRS data were available, we might find that the static impact is really closer to $300 billion. Consistent with media treatment earlier this decade, we’re talking about “at least $2 trillion (over the next 10 years).”

But Uncle Barack will never see most of that revenue, because taxpayers will make adjustments. Among them: CEOs will restructure their pay packages; entrepreneurs will work less hard, and pay themselves lower salaries; investors will move funds between investments less often, and push for smaller dividend payouts. In the Wall Street Journal last week, Lawrence Lindsey estimated that the Social Security payroll tax hike alone will “make the private sector $5 poorer …. (and only) make the government $1 richer.”

Barack Obama, in bringing back the tax structure of the 1970s, would cause many of the highest-earning taxpayers with income from work or self-employment to face a top marginal rate of 60% or more: 39.6% federal, 12.4% Social Security, 2.9% Medicare, and often 5% or higher state and local income taxes.

This is one 1970s show that we don’t need to see. Economic stagnation in the name of class warfare doesn’t play well, even in re-runs.

Yet Another Obama Flip-Flop Flagged, This Time on Iraq

At The Corner over at National Review Online (HT Instapundit via Weapons of Mass Discussion), Pete Hegseth calls it a “zigzag.”

Given how fundamental Barack Obama’s former position was to his credibility as a candidate during the Democratic primaries, I’d say it’s yet another a full-fledged, full-throated flip-flop, accompanied by a fundamentally flawed reading of the Bush Administration’s current policy — both of which we can be confident Old Media will try to ignore.

Hegseth explains (link to transcript added by me; other links are in original; bolds are mine):

Recent reports and rumors have indicated that Senator Obama plans to aggressively move to the middle on Iraq in the coming months. This is a good political move for Obama, if only because he’s finally starting to recognize reality. However, it’s no surprise that he will continue to try and have it both ways: moderating his withdrawal language without giving any credit to surge/Petraeus advocates.

….. Standing alongside Hillary (Friday in Unity, NH), Obama said:

“We can follow a policy that doesn’t change whether violence is up or violence is down, whether the Iraqi government takes responsibility or not; or we can decide that it’s time to begin a responsible, gradual withdrawal from Iraq.

….. Just months ago, Obama clamored for an “immediate” withdrawal, regardless of the situation on the ground; today, his withdrawal would be “gradual.” Maybe he was channeling Hillary Clinton, or maybe he finally realizes that very few people—except the MoveOn crowd—want an immediate withdrawal. His website, I should note, still touts an “immediate” withdrawal.

Despite this move, Obama insists that America’s policy in Iraq “doesn’t change whether violence is up or violence is down.” This is verifiably false. ….. What was the new counter-insurgency strategy, Mr. Senator?

….. True to form, Obama is trying to have it both ways—attempting to use moderate rhetoric to mask an irresponsible Iraq policy, all the while unwilling to recognize the incredible progress on the ground. His website says the surge has only reduced violence to mid-2006 levels. Again, verifiably false. Today, we are at the lowest violence levels in Iraq in four years.

Here’s the “mid-2006″ reference Hegseth cited, from Obama’s web site (also saved at host for future reference, for fair use and discussion purposes):


In fact, Obama’s web site not only is not in sync with what the candidate said on Friday it’s not even in sync with itself, even within that very same web page:


Much as he might think that he’s already got the election in the bag, even arrogantly having his own “presidential seal” designed in advance of the election, a President Obama would not take office until January 20, 2009. Sixteen months from that point in time would be May 2010, not “the end of next year.”

As to Hegseth’s first-paragraph claim that all of this flipping, flopping, and flailing by Obama is “a good political move”: Baloney. It is instead a cravenly cynical strategy that only has a chance of working as long as Old Media stays in the tank for him. Howard Kurtz at the Washington Post noted that the strategy largely worked in the Heller ruling (so far). But there have been some defectors, including PBS’s Bonnie Erbe (at NewsBusters; at BizzyBlog); there will be more if (or is it as?) the flagrant flip-flops continue. And there’s always New Media, which has shown little patience, even in some cases on the left, for much of Obama’s recent nonsense.

One sign that Old Media is worried about Obama’s frequent flip-flopping: Newsweek’s Jonathan Darman came out yesterday with a howler about how “flip-flopping has a noble history in this country.” Uh-huh.

Cross-posted at NewsBusters.org.

WaPo’s Kurtz Notes Media’s Free Pass Given Obama’s Heller Flip-Flop

Filed under: MSM Biz/Other Bias,Taxes & Government — Tom @ 8:45 am

Full disclosure: I have reasons, explained here and here, not to be particularly fond of the Washington Post’s Howard Kurtz.

Having said that, it should be noted that Kurtz is one of the few in Old Media who has called out his colleagues for whitewashing the difference between Barack Obama’s pre- and post-Heller statements on the now-unconstitutional District of Columbia gun ban.

In a Friday column entitled “Pretzel Logic” (HT Instapundit via Weapons of Mass Discussion), the Washington Post columnist first recited the contradictions in Obama’s statements (links are in original; bold is mine):

Barack Obama is under hostile fire for changing his position on the D.C. gun ban.

Oh, I’m sorry. He didn’t change his position, apparently. He reworded a clumsy statement.

….. Regardless of what you think of the merits of yesterday’s Supreme Court ruling overturning the capital’s handgun law, it seems to me we’re entitled to a clear position by the presumed Democratic nominee. And I’m a bit confused about how the confusion came about.

….. Here’s how the Illinois senator handled the issue with the Chicago Tribune just last November:

“The campaign of Democratic presidential hopeful Barack Obama said that he ‘ . . . believes that we can recognize and respect the rights of law-abiding gun owners and the right of local communities to enact common sense laws to combat violence and save lives. Obama believes the D.C. handgun law is constitutional.’”

Then Kurtz got into how the media mostly free-passed the blatant contradiction:

And here’s what ABC reported yesterday: “‘That statement was obviously an inartful attempt to explain the Senator’s consistent position,’ Obama spokesman Bill Burton tells ABC News.”

Inartful indeed.

But even though the earlier Obama quote and the “inartful” comment have been bouncing around the Net for 24 hours, I’m not seeing any reference to them in the morning papers. Most do what the New York Times did: “Mr. Obama, who like Mr. McCain has been on record as supporting the individual-rights view, said the ruling would ‘provide much-needed guidance to local jurisdictions across the country.’ ”

Supporting the individual-rights view? Not in November.

Even the Tribune–the very paper that the Obama camp told he supported the gun ban–makes no reference to the November interview. Instead: “Democrat Barack Obama offered a guarded response Thursday to the Supreme Court ruling striking down the District of Columbia’s prohibition on handguns and sidestepped providing a view on the 32-year-old local gun ban. Republican rival John McCain’s campaign accused him of an ‘incredible flip-flop’ on gun control.”

So McCain accuses Obama of a flip-flop, and the Trib can’t check the clips to tell readers whether there’s some basis in fact for the charge?

Kurtz then cited similar shoddy reporting by USA Today, his own Washington Post, and New York Post columnist Charles Hurt. He then notes the substantial critical response to Obama’s Fosbury-like flip-flop from conservative bloggers, and that he was “not seeing much” on the liberal blogs.

By the way, here’s a memo to the “articulate” Obama: “Inartful” isn’t a word.

Positivity: Kevin Everett recovers, reaches out

Filed under: Positivity — Tom @ 7:01 am

From Houston:

June 21, 2008, 11:58PM

Mornings are the worst time for Kevin Everett. That’s when the pain is at its most intense, when he’s reminded that things probably will never be the way they once were.

“I’m still faced with challenges,” he said. “I pray every day that things will get better. I’ve got to cope with ‘em the best way I can in everyday life.”

He knows he shouldn’t complain. Lord knows, it could have been so much worse. He thanks God every day that he can walk and talk and do the things thousands of others can’t. Therein lines the contradiction.

“I want people to know I’m blessed,” he said. “You’ve got to maintain your faith in the good times and the bad.”

He knows this better than almost anyone because he has etched the faces of other spinal cord patients in his heart and mind. He has heard the desperation in their voice, seen the hopelessness in their eyes.

He knows they see him as a medical miracle, as the reason they continue to grind through those torturous rehab sessions. They want their own Kevin Everett miracle.

He’s a living, breathing, walking advertisement for landmark treatment and a wonderful medical team. He was injured in the right place with the right hospital nearby and the right doctor available.

And yet.

His life is nowhere close to normal and might never be. That’s the harsh truth for Kevin Everett nine months after he lay on that football field in Buffalo, N.Y., his spinal cord crushed.

“It’s the spasms,” he said. “They say it could be like this for the rest of my life. They don’t know. I’m not 100 percent. I don’t know if I’ll ever be 100 percent. I’ve just got to pray every day and try to keep doing the right things.”

Yes, the spasms. They scream through his body, through his legs and hands and arms.

Some mornings, he spends hours in bed waiting for his body to unlock, for the pain to fade. Those Sundays when he would fly down the field throwing his body around like a missile are gone for good. His life is lived an inch at a time.

“Around midday, the blood starts flowing, and everything seems to get a little better,” he said.

Someone slides a book in his direction, and he’s asked to sign it. This happens all the time, a product of his amazing recovery and those few weeks last fall when he had one of the most recognizable faces in the country.

Fatigue comes easily

He carefully places the pen in his hand and signs his name, not with his hand, not in the usual way, but by keeping his hand steady and guiding his entire arm across the page.
“I can’t really write,” he said. “I just scribble a little bit. I’ve got the motion down pat.”

His handshake is weak, his walk slow and cautious. Things that you and I take for normal exhaust him.

“I fatigue real easy,” he said. “It’s just my whole body. It happens with this type of injury.”

He’s 26 years old and still adjusting to all of this. He misses football. Yes, after everything he has been through, there’s a certain disappointment. He’s so lucky, and yet he still hurts and he still misses the thing he once loved so much. In other words, he’s human. …..

Go here for the rest of the story.