Beyond the numbers

An analysis of journalists’ comments on business conditions in South Africa shows that, generally, when times are “good”, so is the outlook. When the present situation comes under fire, the outlook becomes strained. In other words: Business media predict the future based on the current situation. It’s similar to looking into a mirror and predicting that within five years the picture will be the same.

We expect of the financial media to assess corporate data, scrutinise it and to tell us as investors, the public and shareholders, what this means for the medium to long term. We do not expect this from the corporates themselves: They are interested in protecting the share price and release future information only if it helps the share price to increase.

We rather consider the opinions of financial journalists. Their job is to dig through the annual reports, to ask the executives the right questions, and come up with a prognosis. Of course, most media were unlikely (but probably not unable) to predict the global reach of the US sub-prime crisis. And certainly they are not to blame for the impact on the South African market. But it is the focus on “horserace” reporting, the numbers and figures and the selective assessment, that is of concern.

A recent report stated that a certain listed company had a 60 percent loss in profit. Despite the loss, the profit was still handsome. In fact, the company had a larger-thanever dividend payout. However, the fact that a company was making a profit despite the global negative sentiment and economic slump, was not considered to be an interesting enough angle. Instead, the journalist focused on the negative figures. Financial media are often unaware of the impact these choices have. Would I be investing in such a company, having read the article? Not likely.

Media Tenor’s analysis of US media shows that a negative journalistic focus in leading financial US media is reflected in a similarly negative sentiment by the public, as is evident from US consumer and business confi dence indices. A similar trend is visible in British and German media and their respective consumer/business indices.

But the media analysis also shows that Swiss media displayed a different outlook on their own economy. Not that there was less coverage on the global negative conditions.

And not that Swiss companies were not involved in the sub-prime crisis (UBS, for example, was one of many financial organisations that was affected). It was the deliberate choice of Swiss financial media not to fall for the same trend of “talking yourself into a recession”. Instead, the coverage focused on the figures behind the figures: Who performed well despite the challenges? Who did not slash jobs? Which executives were making the right decisions? The result? Considerably less negative media coverage on the economy – and robust business and consumer confidence figures. Does that mean that Swiss media downplayed the global crisis? By no means; they just asked different questions.

What then is required from financial journalists, particularly in this country? r /The lessons from Enron and WorldCom were: don’t trust the figures; check all variables. But instead of checking the variables, media seem to continue to rely on data provided to them by the same sources – accountants, analysts and other entities, with clear interest in the outcome of a particular coverage.