September 24, 2004
From the desk of Jane Galt:What Dan hath wrought
The Wall Street Journal Asia is reporting that Sumner Redstone, the liberal president of Viacom (CBS's parent company) is supporting George W. Bush.
It seems more likely to me that a reporter garbled what Mr Redstone said, than that Mr Redstone has suddenly gotten in touch with his Inner Republican. But if it is true, his conversion is awfully recent: Fundrace reports that he's already given thousands to John Kerry this year. Too many thousands, in fact: either the website has an error, a nasty joke has been played on him, or someone's been a little bit naughty--Fundrace shows $3,000 given to Mr Kerry, instead of the $2,000 legal maximum.
And while the statistician in me cries that correlation is not causation, unfortunately that cry is faint. My Inner Statistician is a tiny, pitiful creature, weak at birth and starved ever since. Which is why it's terribly hard for me to believe that Mr Redstone's sudden revelation, if it plays out, doesn't have something to do with distancing himself from the big, fat mess his company's in.
Posted by Jane Galt at September 24, 2004 2:17 PM | TrackBack | Technorati inbound linksDidn't McCain Feingold increase the limit on individual contributions to two thousand per election, with the primary and general counting as one election each? If so, then Redstone is actually one thousand dollars under the limit.
What's this "big fat mess" everyone is so certain is going to happen to CBS? What, everyone thinks the government is going to prosecute them or something?
The worst thing that can happen to a news organization is that people stop believing what they say. CBS News lied to their viewers on two specific points. First, they said they had an eyewitness who had seen the douments prepared, and second they said they had an unimpeachable source. If CBS is willing to knowingly mislead their viewers, why would anyone watch them?
The big fat mess is what the big fat mess is for any non-public company: money. The show makes money from advertising; advertisers like to see ratings from shows they advertise on; CBS is experiencing ratings difficulties. QED.
My inner statistician is weak too. It tells me that perhaps S. Redstone owns a schlode of Viacom stock. That stock's value will remain in a precarious position if the CBS news division loses respectability. Network news divisions are pricey assets; most of their value lies in goodwill. Redstone's own weak inner statistician may have told him to spout pro Bush sentiments to counterbalance the image that CBS is pro Democratic and willing to shill for their party. Would a true pro-business, conservative owner (like Rupert Murdoch) have allowed Rather, Mapes, et al. to stay at their jobs, at the expense of the network's credibillity and prestige? Unlikely. Redstone is Hollywood and he's doing a schtick routine as a business conservative.
I have no idea of how profitable the 60 Minutes franchise is, but if it's credibility suffers a tremendous setback, Dapper Dan's Excellent Adventure could prove costly. Anecdotally, I find this a credible prospect, given the number of clients in the show's prime demographic who have told me in the past couple weeks that they will not watch 60 Minutes, even the Sunday version, again. Nielson will let us know.
I dunno, Der Stern survived the Hitler Diaries fiasco, and CNN that war crimes "discovery" (can't remember specifics) from the mid-1990s.
I think everyone's overestimating how damaging this is going to be.
Jason McCullough,
I think everyone's overestimating how damaging this is going to be.
I'm afraid you're probably right. It ought to be much more damaging than I think it will prove to be. I mean, leave the shoddy-to-nonexistent document verification (and CBS' ignoring the warnings of its own hired experts) aside; it's clear now that for the initial story they didn't attempt to talk to Knox, or to Staudt (despite basically accusing him of corruption on primetime TV), or to Conn (the man Burkett allegedly told CBS was the source of the documents). They hardly attempted to talk to anyone apart from the two prominent Bush opponents who formed the backbone of the story. And they stood by Burkett as an "unimpeachable source." [snicker]
Really, I've read stories in free weeklies better sourced than that. Come to think of it, almost every investigative story I've read in a free weekly was better sourced than that. This ought to be MORE embarrassing because CBS is so venerable and Rather is a household name, but I'm afraid that that's the precise reason no one really wants to talk about it any more. It's getting smoothed over frighteningly fast.
"I think everyone's overestimating how damaging this is going to be."
That may very well be true. Remember Howell Raines ' fall from grace, when the NYT was at its peak of influence, only to have the paper remain "the paper of record" that is still up to its old tricks? And Jayson Blair was quoted recently as saying how he knows how Dan Rather feels about all this!
Perhaps the only difference is that CBS belongs to the TV medium and so its whopper was brought into middle America's living room. For all its vast influence, the NYT is not often read in fly-over country. Maybe the more sensational medium of TV will bring on some serious karma for CBS?
Hard not to be cynical about all this.
Donnel, the really amusing thing is that Jayson Blair's reaction came when he was contacted by a blogger who wanted to hear his thoughts on the mess. Blair said that no mainstream-media people had gotten in touch with him, apart from one feeler from (I think) CNN about a possible panel appearance, which was not followed up.
My observation: it's possible that Redstone is abandoning what he sees as a sinking ship in Kerry. It will be telling if other corporate executives with liberal Democratic track records begin to do the same.
On the other hand, it's also possible that Redstone is knowingly lying through his teeth for PR purposes. After all, he does have a track record of retaining folks who are either outright liars or stunningly incompetent (specifically, Mapes and Rather).
Since we have a secret ballot, it's likely we'll never know which is the case.
If there's one thing Big Business is astonishingly good at -- even businesses that tend to be dominated by liberal thinking, like MSM -- it's sucking up to the pro-business political wing whenever the bottom line is threatened, and for the present, that means cozying up to Republicans. If Redstone is indeed supporting Bush, it smells purely green.
Viacom stock won't see much fallout from the debacle at CBS because the news division produces about 1% of their profit. It might be a smart business decision to pull plug on the news division and air reality shows instead.
Two questions:
1)Doesn't the news division fulfill some sort of public service requirement for the networks?
2) What does Bernie Goldberg have to say about this?
Howard Veit's got ya covered on this one, and he's in fine style :
I think too much is being made of Redstone's pro-Bush statement. Look, the guy was speaking at Forbes' annual Global CEO conference. That kind of audience has no trouble seeing another CEO separate what's best for his company from what he believes personally, and where he chooses to donate. Redstone didn't go there to get into a political pissing match, and the statement he made was appropriate under the circumstances. That he really said more about the internals than the minimum required should have the crowned heads at CBS News poppin' the Prozac all weekend, though.
"the news division produces about 1% of their profit." But in the short term, stock prices depend less on actual profits than on public perception of where they are heading. And stockholders who see this story as CBS news utterly discrediting itself in public are apt to forget that the other 99% of Viacom is unaffected. OTOH, I wonder how many people buy Viacom stock without even knowing that CBS is part of their business...
I'm not sure if it's still in effect, but the FCC did once have a "public service" requirement that a cetain number of minutes a day be devoted to news coverage, and that a proportions of these minutes be in close-to-primetime slots. I don't think there was ever any requirement that there be anyone watching the news, so in theory you could satisfy the requirement at near-zero cost by just keeping a camera focused on the AP tickertape. However, that also means giving up all advertising revenue from those time slots, and so they'll produce slick so-called news programs as long as producing them costs less than the ads they can sell on them.
So in a business sense and assuming that they can't switch those slots to non-news (perhaps by pretending that reality shows are news), CBS now has several options:
1) The high road - publicly admit to great screwups and bias, and publicly move to correct it and rehabilitate their reputation by firing Dan Rather and many others, and instituting a strict fact checking bureaucracy. It would push the news division well into the red in the short term, as it would raise costs permanently and lose viewership temporarily until the reforms made a visible difference.
2) The low road - let Dan continue to obfuscate and keep the viewers that he can fool all the time. Match falling revenues by cutting costs such as what little fact checking and real investigative reporting they have.
3) The really low road - re-style Dan and his merry persons as a comedy news team...
4) The middle road - fire Dan's team and hire all the Fox news people they can get.
I have developed what I call the 'CART' recommendation for CBS, which I offer for Mr. Redstone's consideration:
C - Confess the documents are forgeries
A - Apologize to all concerned
R - Retract the story
T - Terminate those involved
As I read the CBS statements, they have actually done none of these things to date.
Their continuing emphasis on 'not being able to authenticate' the documents is like saying "so far, we have not been able to show General Franco has a pulse."
Viacom stock has been floundering for the last 6 months. It looks washed out, and it might actually be time to buy.
The point about the public service requirement is an interesting one. Since nearly 90% of Americans get their television from cable, it might make sense for Congress to auction off the on-air bandwidth rather than present it as gift to large corporations. The money could go toward the deficit and CBS could bid for the bandwidth if they wanted it.
From a practical standpoint, CBS should replace Rather. His ratings are poor, and CBS would do better with a fresh face.
I agree with Shamus. The focus on Viacom right now is more on the company's exchange offer for Blockbuster. The only way Dan Rather's mess will equal a financial impact on Viacom is if advertisers begin pulling spots. Even then the worst case scenario is that it will have a tiny impact on the profitability of one quarter and will have a negligible impact on DCF valuations. To think otherwise is wishful thinking. The people that actually care about this story are a minority of right-leaning political news junkies.
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