Stocks: TV’s Newest Sport

Perched above the New York Stock Exchange, CNBC reporter Bob Pisani dabs on some makeup and tries to make sense of the pandemonium below. It’s barely noon on Thursday, the market has already shot up and down, and his report is succinct: “Technology stocks are reasserting themselves,” he tells viewers. “The market seems to be sorting itself out.”

When the stock exchange closes, however, both the Dow Jones and Nasdaq averages plummet and technology stocks lose ground yet again. Pisani, a veteran reporter who taught at the University of Pennsylvania’s Wharton School of Business, concedes the difficulty of his task. “At the end of the day, it’s not easy to make a lot of sense of this,” he says. “But people treat TV business news like a spectator sport now, and this means that you give them winners and losers.”

Amid an unparalleled economic boom and now a period of frenzied equity markets, television screens beaming the latest stock gyrations have become common in gyms, delis, doctor’s offices, airport lounges and malls, replacing the numbing repetition of sports box scores and the political news much of the nation finds tedious.

Once the province of elite executives in Brooks Brothers suits, televised business news on CNBC--and its competitors CNNfn and Bloomberg TV--is now firmly part of mass entertainment, a daily preoccupation for millions who until recently couldn’t tell Compaq from Qualcomm. The rapidly growing field has spawned its own celebrities, including NBC’s Maria Bartiromo and CNN’s Willow Bay, who have been dubbed “Money Honeys” by countless Internet admirers. And with the markets roiling, the business of business news has never been better: Monday was a record-shattering day for CNBC, whose audience jumped 28% in the first quarter of 2000.

Yet some professionals voice concerns that cable financial news has contributed to a hyping of stock movements, at once feeding off and fanning a national frenzy for instant riches. In his newly published “Irrational Exuberance,” Yale economics professor Robert Shiller suggests cable coverage is one of several new forces on the scene--along with the Internet--that has encouraged an infectious “get rich quick” mentality, all but ignoring the treacherous realities of high-stakes investing.

“People should admit when they buy or sell [stocks] off of media chatter that it’s gambling, not investing,” says Bruce Nussbaum, editorial director for Business Week, which recently ran a cover story on the dangers of Wall Street hype.

“I keep warning against people succumbing to the minute-to-minuteness of frenzied guests on cable TV ticker shows, and other media hysterics,” adds PBS’ Louis Rukeyser, who helped invent business journalism on television with “Wall Street Week.” He suggests that breathless analysis on TV can be misleading.

Market Finding More Takers

The surge in viewership is hardly surprising, given that an estimated 50% of the population has a stake either directly or indirectly in the volatile market. More people than ever are micromanaging their 401(k) portfolios, consulting brokers or day trading at home, and they’re anxious to get a piece of the booming stock market action that has grown into a national obsession.

At the same time, corporate VIPs are equally eager to exploit the medium for their own purposes. “We’ve gone from the era of the reluctant CEO, who would never appear on TV, to the promotional CEO, who wants to promote his company in the media,” says Lou Dobbs, whose “Moneyline” on CNN set the standard for such broadcasting before he left the network last year. “The economy is the biggest media story we have now in this country, and there is more sustained television exposure for it than ever before.”

As cable coverage grows, business news has also expanded on Internet sites, network television and radio as well as in print. For better or worse, the country’s infatuation with such news has become a psychological mirror, according to John Pavlik, director of the Columbia University Center for New Media.

“This kind of television is not just informative, it’s become genuine TV entertainment,” he says. “But nothing lasts forever. If the markets were to calm down, and the TV story got dull or predictable, it might be the best thing for the economy--and the worst possible thing for the media.”

CNBC officials say they hope to expand reporting to nonmarket stories such as consumer and labor issues. And they agree that their fast-moving coverage of the business day, no matter how responsible, can be misleading to investors who don’t do their homework. But at CNBC’s sleek headquarters in Fort Lee, N.J., executives, producers and on-air reporters bubble with confidence.

The network’s daily parade of market forecasts, interviews with CEOs and “post-game” analysis “is playing directly to America’s 401(k) culture--where George and Martha woke up and realized: ‘Holy cow! We own stocks!’ says Senior Vice President Bruno Cohen. “The economy is the big story, because Lewinskys come and go, but the market affects everybody.”

CNBC Holds Huge Lead in Viewership

The network says it enjoys one of the most upscale audiences in America, and while CNBC’s average business-day audience is relatively small by TV standards--around 413,000, according to Nielsen data--that number is deceptive. Nielsen surveys don’t measure viewers outside the home, and given CNBC’s growing attraction in offices and other public places, some experts believe its actual audience could be 40% greater.

Right now, it has a huge lead. CNBC reaches an estimated 72 million households, while CNNfn can be seen in 13.3 million homes. The 11-year-old CNBC, which also features Geraldo Rivera and Chris Matthews, is considered one of NBC’s most profitable divisions.

Heralding the newsroom “synergy” that some believe will become increasingly common, CNBC has entered into a partnership with Dow Jones, which owns the Wall Street Journal. The network, which pays the Journal a licensing fee plus a share of its ad revenues, can in return tap into the paper’s vast newsroom resources; two full-time Journal reporters are stationed at CNBC. CNNfn and Bloomberg can also call on hundreds of reporters stationed around the world.

As its viewership grows, CNBC has become a daily routine for many viewers, beginning with its lively 7 to 10 a.m. show “Squawkbox,” a preview of the day’s action on the Street. Later, the network features wrap-up and analysis from anchors Ron Insana and Sue Herera, who were pioneers at the Financial News Network, the nation’s first such venture, which began in Santa Monica in 1981 and was eventually acquired by CNBC. The network’s biggest star, however, is Bartiromo, who is the subject of several adoring Web sites and was dubbed “the Sharon Stone of cable” by the National Review.

Now, however, as the markets gyrate, a grass-roots backlash may be developing. Last weekend, as investors recovered from steep declines Friday, some Internet chat rooms were filled with talk denouncing TV and radio shows, as well as Internet sites, for fanning a false investor optimism.

“I blame myself for getting so obsessed,” said one online day trader, who confessed to losing “a bundle.” “But I think a lot of this TV media coverage is really overheated . . . and sometimes it just carries you along.”

The ability of CNBC and others to influence stock prices is well-documented. With so many analysts offering hints on where a stock might be headed, or where bargains may be found, it is inevitable that professionals in New York and viewers at home may be tempted to buy--or sell--based on what they’ve just seen.

In one case, Business Week cited an example of the so-called “squawk bounce,” where stock market analyst Joe Kernen mentioned OSI Systems, an optical parts producer, in connection with a favorable news report, and the stock jumped from 14 1/2 to 28 in 30 minutes.

‘The Market Is a Casino’

Mark Haines, the show’s crusty but genial host, says he and his co-hosts present information responsibly and with an eye to helping investors make wise decisions. But he concedes that “the market is a casino with incredible volatility, and with new technology people can place bets at home, like with off-track betting.”

“There have been lapses occasionally in coverage,” says Dobbs, explaining that he would rather see long-term perspective about business trends instead of bits about stocks rising and falling. Still, he says, viewers “are better served than ever by the new market information given to them.”

But it’s questionable how much this information really amounts to, especially when it’s dispensed with the speed of a stock ticker. As he sorts through the noon wreckage of another day on Wall Street, Pisani uses computer screens and charts to monitor about 1,400 individual stocks.

In his hypnotic, rapid-fire patter, he reminds his audience that “old” technology stocks are down, while “new” technology stocks are rising. It’s the opposite of what took place, for no apparent reason, 24 hours before.

“We have a very simple market today,” he says. “Just take what I said yesterday--and invert the whole thing.”