On March 17th, 2000, Bloomberg News published a story about Xybernaut Corporation, warning that there was "substantial doubt" about the high flying Internet startup's ability to continue as a going concern, citing its continuing losses and need for more capital. The story set off a flood of sell orders, which in the space of a day sent Xybernaut's stock crashing from $23 a share to 14 15/16.
The only problem was that the reporter, who wrote the story, got the information, from Xybernaut's SEC filings, which like those of many Internet startups include pages and pages of such boilerplate type disclaimers. In fact Xybernaut had been using similar statements in its SEC releases since going public in 1996.
According to Howard Kurtz, author of The Fortune Tellers: Inside Wall Street's Game of Money Media and Manipulation, just as "spin," has taken over politics, so too has it come to define the long bull market that prevailed on Wall Street throughout the 1990s.
Journalists who cover Washington, have little or no power in setting the agenda for the stories they cover, says, Kurtz, a media reporter for the Washington Post, and host of the CNN's weekly program Reliable Sources. But business reporters are key players in the arena they operate. Marketing and public relations officials need to be increasingly aware of their growing influence.
The recent roller coaster ride in technology stocks - especially those on the NASDAQ - has heightened public interest in CEOs that run them as never before, fuelling an explosion in business news coverage.
The advent of business news stations such as CNNfn, CNBC and enhanced market coverage of such Canadian television stations as CBC NewsWorld and CTV NewsNet, are just the start. There is now a flood of business Internet sites and new economy magazines such as The Industry Standard, Fast Company and Business 2.0.
These media feed an ever-increasing number of day traders, who, armed with their Net equipped computer terminals, can access information that hitherto would have been unthinkable. With it, they are cutting out the middlemen financial, and are creating unprecedented volatility in financial markets.
Kurtz's book is a tour of some of the most influential players in the financial media manipulation game including Lou Dobbs, Jim Cramer and CNBC's "Money Honey" Maria Bartiromo.
For marketing and public relations officials, the challenges are enormous. Not only must they ensure that their company's message stays on target, but they must be adept in handling crises such as Xybernaut's. Huge stock fluctuations, and weakness at the wrong time can limit a company's ability to raise capital that could in certain cases result in bankruptcy.
But there are opportunities as well. The vast financial coverage gives companies the chance to talk to an interested audience, not just about their companies, but about their products as well.
So prepping CEOs - the new stars of many of these new media opportunities --to perform well, is now a high stakes game. Just one appearance on CNBC can cause huge fluctuations in the company's stock price, and that's just the start.
The enormous spread of business news has boosted its importance as a medium to get out product, corporate and branding messages. Kurtz's overview is as good an introduction to the sector as you will find.
The Fortune Tellers, By Howard Kurtz, Simon & Schuster Inc., 326 pages
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|© 1998 Peter Diekmeyer Communications Inc.|