Keeping up with the News Cycle

More than a week has passed since the release of the "Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings Inc" so naturally coverage of the report is moving beyond reaction to reflection.

I have a few thoughts on the report -- and the reporting on the report -- that I'll write up in separate posts as they're of interest to different audiences. This post offers my thoughts on the "reporting of the report" and the changing media landscape.

It remains popular within the mainstream media to dismiss the blogging community as mostly commentators rather than reporters. What's more, according to the MSM types, most of the fodder for the blogosphere's ruminations comes from reporting in the mainstream media.

The clear implication is that without the mainstream media to painstakingly investigate, write, edit and publish the news in the first place, the blogosphere would be reduced to self-indulgent opinionating and bloviating, like, for example the content you'd expect to find on MySpace.

Even worse, according to the extreme form of the argument, the lack of professional standards and good editing in the blogosphere can lead to reckless "reporting" with potentially costly consequences.

So I was puzzled last weekend when the NYT's editorial page asserted that Lehman Brothers, in the last quarters prior to its September 2008 bankruptcy filing, engaged in repo transactions that removed "troubled assets" from its balance sheet.

My surprise arose not from Lehman's conduct (although the Times professed to being "dumbstruck" and "blindsided") but from the fact that I quite specifically recalled the report, right on page 796 saying:

...the vast majority of securities Lehman utilized in Repo 105 transactions were investment grade, with all but a few of the securities falling within the A to AAA range.

Curious how the Times editors were so perfectly misled on this point, I went back to the paper's original story on the Lehman report, only to find the following correction.

Correction: March 13, 2010

An article on Friday about an examiner’s report detailing accounting maneuvers used by Lehman Brothers to conceal its perilous finances described incorrectly in some editions the assets that were temporarily shuffled off its books. They were mostly high-quality securities that could be easily accepted by other banks, according to the examiner’s report; they were not “troubled” and “mostly illiquid real estate holdings...”

So here we have a Times story, written under deadline, that gets a key fact exactly wrong, followed by a correction. Okay, stuff happens. But what must be especially embarassing to the Times is that the newsroom appears to have noticed and corrected its error before the editorial page went to bed with the wrong fact 24 hours later... kinda like a blogger spouting off his opinion about something he read online, without checking the veracity of the story.

Even worse, a week later (March 17) the New York Post, which apparently gets its facts from old copies of the Times, publishes this:

Among Valukas' findings is that Lehman used an esoteric accounting practice known as 'Repo 105,' which allowed the firm to move toxic mortgage assets off its books in order to make it seem healthier. (emphasis mine)

Update, March 22:

And Wiliam D. Cohan, who apparently has annotated the Examiner's Report, asserts in a March 18 NYT column:

...we now know that one executive after another at the firm signed off on the now infamous “Repo 105” trick in order to move some $50 billion of squirrelly assets off Lehman’s balance sheet at key moments. (emphasis mine)

Don't these guys have time to read the financial blogs?

No doubt the authors of these stories are bright and industrious and take pride in their work. Which makes me think the underlying issue is structural. When it comes to reporting complex news stories, the mainstream media's reporting conventions may leave it competitively disadvantaged versus the blogosphere.

For example, the "inverted pyramid" approach to a traditional news article gives short shrift to second- and third-level details, which may be summarily discarded if the 'news hole' that day is too small. At the margin, this may act as a disincentive to fully vet details that may not get printed.

The need to present both sides of the story "objectively" requires time-consuming phone and email contacts for "On the one hand... on the other hand..." quotes from so-called expert sources who likely possess less knowledge about fast-breaking news than the reporter himself. (Michael Kinsley has written and Kara Swisher has spoken (a little past the 10:00 minute mark) far more eloquently about this issue, so I'll refer you to them.)

Finally, for print journalists, the need for a "static" version of a story to meet the circadian publishing cycle creates constraints that a living story on a blog doesn't face.

Not so long ago, a "Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings Inc" would have been released in a small press conference in New York City, where a smattering of lawyers and business journalists would lug their 2200-page copies back to the office to research potential lawsuits or the news angle. But the public at large would not have had convenient access to the source materials until they arrived at the local library, if at all. So journalists of yesteryear enjoyed quasi-monopolistic access to much of the source material for the important stories of the day.

A recent Pew Research Center study of news dissemination in Baltimore found that 63% of news stories originated with government entities. News organizations originated 14% and the remainder were largely from interest groups. This suggests that 86% of the "news" is originated (that is to say, "published") by government and private non-journalistic organizations. Increasingly, these stories are being published online, where they're immediately available to all interested readers. And for a story of any complexity, the party most qualified to comment may in fact be some guy (a former Lehman repo trader, perhaps) posting in his pajamas from his basement office.

If you've read this far, you deserve a reward, so I'll give the last word on the subject to the writing team on NBC's hit comedy,"30 Rock," who nail the topic with brutally efficient satire. Currently, No longer, Once again available, on Hulu (4:30 into the show).

In the scene, Avery Jessup a fictional, on-air reporter for CNBC (played by the adorable Elizabeth Banks) calls her lover, Jack Donaghy (played by Alec Baldwin) a senior executive at NBC, about a rumored takeover of NBC.

Phone rings in Donaghy's office.

Jack Donaghy: "Hello?"

Avery Jessup: "Answering your own phone on the first ring... It's all hands on deck over there, huh?"

Jack Donaghy: "Whaddya mean?"

Avery Jessup: "C'mon the NBC buyout... what's happening today?"

Jack Donaghy: (Increduously) "I'm sorry... You're calling me as a source? How are you going to explain your unnamed executive to your producer."

Avery Jessup: "I'll tell him it's a guy I'm having sex with... It's a 24-hour news cycle here, Jack. We really don't have time to do it right any more."