As Markets Yo-Yo, CNBC Steadily Rises

Mary Johnson has a long day ahead of her, but right now it’s 6 a.m. and that means it’s StairMaster time. She’s in from Chicago for business and has a day pass at the Sporting Club, this city’s toniest gym.

But as she puffs and sweats up those simulated staircases, her eyes are transfixed on the soundless TV above her. Half a dozen other TVs in the vast room filled with early-morning workout folk on sophisticated machines have on the same network: CNBC. Charts of all types are flitting past.

“MSFT 300 @ 55.63” floats by in red. “S&P; Futures 1.40” is there with a green up arrow. Oil prices by the barrel-full flash on in white.

“I’ve got to have my CNBC fix,” she says. “It’s the background music, the Muzak, if you will, for the business life.”

And as the financial markets flip around like a fresh-caught flounder on the dock, CNBC’s viewership has burgeoned. The Nasdaq may be down 52% since Sept. 1, 2000, but in that same time period, the cable financial news network’s Nielsen ratings are up about 30%, and scenes such as the one at the Sporting Club are being played out in cities nationwide.

As the Dow Jones industrial average hit its lows for the last two years the week of March 19, CNBC’s audiences hit all-time highs.

Granted, those CNBC Nielsen numbers are not humongous by major-network standards, reaching 489,000 households last Monday, which is about how many people miss the $100 question on “Who Wants to Be a Millionaire.” But this audience hardly needs Regis’ money. According to a survey commissioned by CNBC and done by Mendelsohn Media Research Inc., regular watchers of CNBC average $1.14 million in net worth.

That means they do their shvitzing in places like the Sporting Club and their lunching in upscale places like Cutters, a high-windowed hangout for lawyers and the like a block from the Philadelphia Stock Exchange, where CNBC is regularly seen on the TVs by the expansive bar.

And it means that they are apparently insatiable when it comes to getting financial news, especially when the markets are moving as rapidly as they have been lately. But there are some critics who think CNBC is hyping those moves.

The cable channel’s shows can terrify “the general public, who does not understand half of what [the CNBC commentators] are talking about,” said Fred Sherman, a financial commentator on KYW-AM, Philadelphia’s all-news radio station. “For a long time, they were extremely positive. Now they are negative. I have to watch because it is my business, but I can’t stand the programs where, every 30 seconds, the Dow is in bad territory. If they don’t dramatize it, they can’t get ratings.”

Martin Kaplan, the associate dean of USC’s Annenberg School for Communication, concurs.

“The purpose of television networks is to sell eyeballs to advertisers. Any other purpose is ancillary,” said Kaplan. “Informing an educated citizenry is an appropriate role, but it is wholly discretionary. And if saying the sky is falling will get people’s attention, some people may do that.

“It may be finance, but it is also entertainment and CNBC’s job is to keep you watching,” he added. “They do a good job of it, at least for 490,000 people.”

Those at CNBC, if not exactly taking offense, think it is somewhat laughable that they have hyped either the market run-up of the 1990s or the downswing of late.

“There is no question the run-up of the bull market made financial news more relevant to more people, and that helped us,” said Bruno Cohen, senior vice president of business news at CNBC. “Frankly, one of the things we have done is that when the market was going up, part of what we did was sound a cautionary message. Now that it’s going down, we give a reverse message, that you should not necessarily be selling.

“Look, this is still a relatively new program service. We have been evolving our skills and techniques,” Cohen said. “We have a long way to go, and we have an audience of essentially affluent viewers. I think they would see through it if we hyped everything.”

Not everything on CNBC is dry numbers and predictions of which semiconductor maker or drug company will be the next market darling. The morning show, “Squawk Box,” anchored by Mark Haines, can be as wry and entertaining as any morning chat show. After all, on the East Coast, it has to compete with “The Today Show” early on and “Live With Regis and Kelly” in its last hour. (In fact, Regis Philbin is a confirmed CBNC-aholic, which may well account for the tryout CNBC reporter Maria Bartiromo had as Philbin’s co-host last year.)

On “Squawk Box,” for instance, one of the ongoing features is the Greenspan Briefcase Index. Each time Federal Reserve chief Alan Greenspan walks into a Fed meeting, CNBC takes video. If his briefcase is overflowing, it generally means a rate change will come out of the meeting; if it is thin, no change is expected.

“A viewer from Harrisburg, Pa., e-mailed us about four years ago to check it out,” Haines said. “Now it’s taken on a life of its own. I think it’s been right 20 out of 24 times we’ve tried it.”

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The “Squawk Box” crew has other video fun. One time, the staff wanted to mock analysts, who were all predicting doom, so they looked for video of lemmings dropping into the sea. They couldn’t find any, but bond reporter Kathleen Hays came up with some of penguins jumping into icy water. So the penguins come up on screen when signs of analysts predicting things in a pack arise.

“We also have Momentum Moose, as opposed to a bear or bull,” said Haines. “Whatever the market momentum is, we can use him. It fits our needs nicely.”

But Haines says that fun is only an aside to serious financial reporting. On a recent Monday, for instance, Amazon.com Chief Executive Jeff Bezos was in the studio for Head Honchos week, and Haines challenged him continually about when Amazon will actually make money. On Tuesday, Phil Condit, CEO and chairman of Boeing was a guest, and the mayors of Dallas and Denver, two of the cities where Boeing had threatened to move, were on, live, in remotes from their cities, doing their best to attract Condit and his company.

“I understand that people who come on have interest in spinning things their way,” said Haines, echoing a complaint critics of CNBC have of analysts and CEOs who appear on the network. “But just like anyone else who does this type of interview, I try to keep them on point. You use all the tricks. You act incredulous. ‘Really!’ you might say. ‘But don’t you have to. . . .’ ”

Jeremy Siegel, author of “Stocks for the Long Run” and a professor of finance at the University of Pennsylvania’s Wharton School, said he is in general a supporter of the network but isn’t very impressed that big-time CEOs go on its programs.

“I generally stop listening when I see a CEO on. I almost never get the straight dope from what they are saying there, where they think they have a platform,” said Siegel. “But while it doesn’t substitute for hard learning, if you listen to CNBC a lot, you will find some interesting opinions.

“Everyone should remember that it is not meant to be a TV course in finance,” he said. “But their anchors are generally bright people who know what is going on and know the basic arguments being offered.”

Half a dozen years ago, CNBC too often had on financial analysts from minor firms with little or no track records. They would depend on barely known statistics like the McClellan Oscillator and the Arms’ Index. Now, interviewees tend to be secretaries of Labor or the Treasury or analysts from major firms. The network has guidelines for those who appear that say, in part, “if you are an analyst, you will disclose any current investment banking relationship between your firm and those companies whose securities are discussed during your appearance.”

Cohen made explicit, too, that anyone who works at CNBC has major restrictions on what they can do with stocks and bonds. They can’t, for instance, play risky futures or options markets and they must hold any stock they have for at least four months before selling. He said the trust that people are getting good financial information on the network is what has caused its popularity to grow. But he also realizes his network may have little to do with the upsurge in interest in financial news.

“There is no question the run-up in the bull market made people more aware,” he said. “But it’s more the 401(k) movement. Now more than 50% of Americans have a share of stock. Ten years ago, that just wasn’t so. These days, more people care, whether they are exercising at a fancy gym or sitting at a local bar. We’re just fortunate our brand is what they are looking for.”