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CHAPTER 16 Business and Consumer News
Overview
With the proliferation of cable channels devoted to business, specialized business websites
and online financial tools, the public has become increasingly involved and sophisticated.
Beginning business reporters must master new sources and learn new tools just to stay
relevant. This chapter introduces students to the growing importance of business journalism
and gives them tools to compete in the field. The focus is on where to find business stories
Teaching Tips
Many journalism students are hesitant to consider business reporting opportunities because
they are uncomfortable with math and finance. Taking the time to tackle some of this
ort. Periodic math quizzes
this information by having students read The Wall Street Journal,
Finance, Money magazine, Forbes, Fortune or one of the dozens of other business-related
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an objective piece. Students need t
There are many eye-opening ways to make young students aware of and more comfortable
with business issues. Having them invest imaginary money through an online service or a
stock market game introduces them to the world of investment. Taking them to a local bank
and having a loan officer walk them through the costs of a home mortgage often gets their
Lecture Notes
I. INTRODUCTION
A. Business news is big news.
B. Understand basic business terminology and math, and be able to read financial
statements.
C. Business has broadened to include a featurized approach, catering to specific
audiences.
D. Also needed are the basic skills of any journalist.
II. THE IMPORTANCE OF BUSINESS JOURNALISM
A. Array of ways to focus is both crisis and opportunity.
C. Growth of business news outlets.
D. Specialized business news local newspapers are losing business writers, but they are
being hired at business newsweeklies and trade publications.
E. Global reach more business coverage globally; business journalists must see the big
picture.
F. Wide range of topics consumer focus; personal finance; global and local; disaster
coverage includes economic/business angles; taxes.
III. HOW TO REPORT BUSINESS STORIES
A. Business stories have same structure as other types of stories (inverted pyramid,
chronology, news narrative, focus), but unique challenges.
B. voiding jargon.
1. Explain insider terminology and jargon.
2.
C. Putting sources at ease.
1. A major challenge is getting information from those not legally required to tell you
anything.
2. Be fair.
3. Dress like a businessperson.
4. Check with PR departments, but try to connect with executives.
D. Watching out for biases and conflicts of interest.
1. lf be used; due diligence is required.
2. Conflict of interest and advertisers.
3. Securities laws and insider trading.
IV. WHERE TO FIND BUSINESS STORIES
A. Business reporters must understand their subjects, and that means basic research;
resources include Internet-accessible databases and mobile phone applications.
B. Records and reports:
1. Corporate data
2. Investment data S&P, D&B, Moody Thomson,
Value Line; also scorecards by Fortune, Business Week, Forbes.
3. Financial ratios D&B, S&P, Moody.
4. Company filings U.S. Securities and Exchange Commission filings; corporate
annual reports, proxy statements and 10–
mundane headings.
5. Trade press industry publications, many of which are independent and objective.
6. Newsletters some ideological, but others are valuable.
7. Court records civil action vs. a corporation, or criminal/civil action vs. executives,
can make otherwise private information public.
8. Local regulators business plan filings in city/county offices.
9. Other sources tax and record-keeping offices, Federal Trade Commission, Federal
Communications Commission, Food and Drug Administration, Interstate
C. Human sources:
1. Company executives ous.
2. Public relations sources they are paid to make a company look good, but they are
still a good source of information.
3. Academic experts.
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4. Trade associations.
5. Chamber of commerce officials clearly pro-business.
6. Former employees excellent potential sources, but often biased.
D. Announcements and meetings
annual meetings.
E. Reporter enterprise initiative, combined with hunches and tips, can lead to good
stories.
V. LOOKING AT THE NUMBERS
A. s report, then footnotes, then report from the
chairman or chairwoman.
B. Then go to the numbers balance sheet, income statement, return on sales, return on
equity, dividends.
VI. COVERING CONSUMER NEWS
A. Where to find consumer news:
1. Government agencies consumer advocates and consumer affairs officers on the
local, state and federal levels; Federal Trade Commission; Food and Drug
Administration; Securities and Exchange Commission; Interstate Commerce
3. Private businesses public relations departments.
B. How to report consumer stories exposés (consumer fraud), informational,
cautionary.
Class Activities and Discussion Questions
Activity 1: To help students gain a greater understanding of investment and the stock market,
set up a stock market simulation that will last several weeks. One website that allows students
to experience the stoc
Games site (www.marketwatch.com/game). Students enroll online, either on their own or in a
campus computer lab with Internet access. Even though you will probably not teach business
and consumer news until late in your course, have students start this activity early in the
how much students can invest, commission on trades, margin buying/selling, etc. Students are
ranked in the game, and they can see how other students invest. As part of debriefing the
simulation, have students pair up and brainstorm a list of possible stories that are relevant to
the companies in their individual portfolios. Discussion questions: Compare the top- and
Activity 2: Choose eight investment or business topics, and find three different stories
including, if possible, Web stories and TV/radio transcripts on each topic. Post the eight
sets of stories on the walls of your classroom, and assign students to groups of two or three.
Have students analyze each trio of stories and list the sources for each story. Discussion
Activity 3: Obtain the annual reports for several different publicly traded companies. (You
can access annual reports through the U.S. Securities and Exchange Commission:
www.sec.gov/edgar.shtml.) In the interest of time, you might focus on companies that have
recently been in the news or are headquartered in your region. Or you might have students
1. Summary of the a
2. Summary of at least one footnote.
3. Two key points from the Report to Shareholders.
4. Balance sheet assets, liabilities, equity, year-over-year trends.
Finally, using this analysis, students should prepare at least two story ideas focused on the
firm. Discussion questions: What story do the numbers tell? How would you get the human
element into the stories?
Activity 4: Bring several copies of trade publications to class, or have students look them up
online. (Trade publications, like other media, are migrating to the Internet. Put students in
groups, and give them a hard copy or an online link for a trade publication. Ask them to study
the publication and do the following: (1) Decide if the publication is independent and
Activity 5: Divide the class into groups of two, and give each student a copy of bad business
of poorly written memos.) Have students edit the memos into intelligible English. Then have
them trade with their partners and read the edited versions. The pair should decide which
Going forward
Bandwidth
Cascading
Drill down
Low-hanging fruit
Traction
Offline
After they have completed their memos, they should trade with their partners and rewrite the
memos. Then ask pairs of students to read the original memos and the translations to the rest
Solutions to Textbook Exercises
1. This exercise gives students the opportunity to practice translating numbers into
2. Your journalism blog. Typically, students will find newspaper (or specialty magazine)
stories to be the most detailed and have the most sources. Of course, those will turn up in
a search of the Internet. (A thorough Internet search should also lead to some original
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3.
preparing for this interview, students should, of course, learn all they can about the
4. A stockbroker or financial adviser can help students understand the different investment
strategie
future and therefore willing to take some risks, or looking for conservative, steady
5. Have students use the 10-K report to decide whether they would like to invest in the
company, or have them try to find a story buried in the numbers that might be of interest
Solutions to Workbook Exercises
1.
current in the real world. The national stories, of course, will likely be based on
government reports and include both descriptions of broad trends and comments from
national-level experts. It will be interesting to compare those with the business and
2. This exercise will encourage students to dig into local business coverage more deeply.
Unfortunately, business coverage in local daily newspapers has suffered in the newspaper
3.
deeply into some of the more important stories and trends in business. One way to extend
this exercise is to ask students to compare newspaper and business magazine coverage of
the same story.
4. a. The lead should be fairly close to this one:
Universal Conglomerate Co. announced today that it plans to merge with
International Conglomerate Co., becoming the largest company in the United States.
b. Questions: Why is the merger taking place? What does the government say? What will
happen in areas in which the two companies now compete? What are the terms of the
merger? What will happen to the stock?
c. If your department does not provide access to the necessary equipment, students may
be able to use their own electronic equipment to do this part of the exercise. Given free
rein, students probably will try to produce a webcast that looks like the local news.
5. A possible approach:
The chairman of Universal Motors Corp. complained today that car prices have been
forced up $1,000 by safety equipment urged by consumer groups and required by the
government.
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6. As of September 2016:
a. Google: Sundar Pichai
b. Yahoo: Marissa Mayer
c. General Motors: Mary T. Barra
d. Gulf & Western: became defunct in 1994, succeeded by Viacom, interim CEO is Tom
Dooley (until Sept. 30, 2016)
7. Business co
reporters write business stories for a general audience, they need to keep in mind the
importance of explaining terms without making the definition too simplistic. For general
reference, here are simple definitions of the terms listed in this exercise.
c. The Consumer Price Index is a tool used by the government to measure the rate of
inflation. CPI figures, reported monthly by the Bureau of Labor Statistics of the U.S.
Department of Labor, compare the net change in prices between the current period and
d. The Dow Jones Industrial Average is the most widely used indicator of the overall
-weighted average of 30 large companies chosen by the
e. An individual retirement account is a tax-advantaged vehicle for retirement savings. In
a traditional IRA, individuals contribute their pretax dollars; any future investment
f. In a Roth IRA, individuals save their post-tax dollars; any future investment gain is
tax-free upon withdrawal because the initial investment was already taxed.
g. Mutual funds are pools of funds contributed by many investors for the purpose of
collectively investing in stocks, bonds and money markets. Many are managed by
professional money managers who invest the funds and try to produce investment
h. 501c3 corporations are those that have filed with the federal Internal Revenue Service
to be a nonprofit or public charity.
i. 403b7 accounts are available to nonprofit workers such as teachers and nurses and are
otherwise similar to IRAs.
j. A hedge fund is a limited partnership of investors that uses high-risk methods to
generate capital gains and income.
8. In this exercise, students should be thinking beyond the scope of their college experience
to consider those stories taking place in close proximity that are much less likely to
9. The necessary directories are discussed in the chapter and should be available in the
college or public library. The current officeholders can also be found online in corporate
profiles.
10. Social media is an increasingly important source of story ideas for business journalists.
Students should consider the role of public relations in shaping the image of a company as
11.
students to call the company directly. Students will need to read the annual report, 10-K
12. You will need to analyze at least some of the same stories because the bias of students as
well as that of the stories is being tested. Que
to think through their answers.
13. This exercise encourages students to examine the impact of news stories on the market.
Students can also do this assignment in teams.
14. Online corporate profiles analyze the history and potential of companies. They also list
15. a. In dollars, the total raise will be $3,938. It would not be different if it were given in a
different order. To find this number, multiply $25,000 by 1.06 to get 26,500. Multiply
b. They were being paid $24,175.82. To find this number, divide 22,000 by 0.91. (The
c. The answer is 50 percent (6 minus 4 is 2, and 2 is 50 percent of 4). Students may see
this as a trick question.
d.
e. kly payroll is $136,621.88; its annual payroll is $7,104,337.50
($7.1 million).
The multiplier effect is a term used by economists to explain the idea that people
cash their paychecks and then spend money in the community. That money then
f.
stock. The loss is $126.50. To find this number, divide 3 by 8 to get 0.375. Subtract
37.5 cents from your $32 per share price to get $31.625 per share. Multiply this by the
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g. The salaries would be $154 apart the first year, $250 the second, and $329 the third.
The school district would save $42,350 the first year, $68,750 the second, and $90,475
h. Red-flag numbers are those that are incredibly unlikely because of some pre–existing
limit, such as the population of the town, state or country. If a local pizza outlet claims
it will sell 100,000 pizzas this weekend, but your town has a population of only 50,000,
CHALLENGE EXERCISE
16. a. Net income is the money left over after all income and costs, including extraordinary
ones, are considered.
b. Earnings per share equals the net income divided by the number of shares outstanding.
c. If the net income is divided among fewer shares, the earnings per share will be higher.
d. A possible lead:
Gannett, the company that publishes USA Today, saw its net income more than
double in the first three months of this year. The company made a profit of $119.4
million, compared with $57 million at the same time last year.
e. The Gannett company has subsidiaries throughout the United States. Perhaps the