Brits – Trust – Media: Report from London
July 12, 2011
David R. Kotok
Brits are obsessed with the demise of their most popular newspaper, News of the World. This publication, currently owned by News Corporation, had been in existence for 168 years. At the center of this rapidly growing scandal is Rupert Murdoch, well known for many reasons, including his notorious methodology in business management and cutthroat manner of acquisitions.
Murdoch is embarrassed. The behavior and actions of his staff at News of the World are in question. Today, allegations from Former UK Prime Minister Gordon Brown threaten to mar the reputation of The Sun and Murdoch Sunday Times. Two arrests were also made this morning in London related to the phone hacking scandals that now implicate police receiving payoffs. What a mess this has become.
In contemplating the breakdown of this newspaper in the UK, one may find solace in the fact that this holds no direct significance to financial markets, except for isolated and related stocks.
Markets will move on to focus on different situations, such as Bernanke’s testimony in the United States, the European Central Bank’s reaction to Italian debt, or the Chinese monetary policy deals with inflation. Markets look at primary issues, respond in the short term, and set themselves up for difficulties, surprises, and perhaps even shocks.
What do we know about this developing Murdoch saga? There were young people purported to be journalists who crossed the line, violating all aspects of journalistic trust. Investigations, arrests and possible jail time are their new reality. However, the conclusion of this newspaper’s demise is much broader than the newspaper itself.
There was a rather long period of time in the Western world when reporters, journalists, and television anchors (remember Walter Cronkite?) were trusted. When we listened to Edward R. Murrow, we believed him. The history of journalism was originally marked with professionals who were dedicated to factual reporting with integrity and accuracy, at any cost.
Truth and honor in reporting was the foundation on which newspapers were built. One may disagree with the New York Times or the Wall Street Journal, but never did one question if their reporting was based on facts, as they found them.
The reality is that the other shoe in the demise of truth has now dropped. We can no longer accept what is given; we must suspect. The burden of proof is now on the journalist to establish credibility to every word given.
This tragedy in mass media is also a critical element in the evolution of politics. Many Americans, Brits, Europeans, and others throughout the world have no trust in their politicians. They doubt the skill and accuracy of their economists. They certainly have reason enough not to trust their financial and market professionals. Now, we can add journalists to the list.
Mass media is at a crossroads. Do you tell the truth, or do you hype? Do you adhere to honorable practices, even if that translates into not being given airtime? Do you sacrifice your principles, appeasing the powers that be for self-advancement?
The Murdoch issue is really about ethics, standards and truth. As a financial market professional who also often puts his hand to writing, it is doubly sad. It affirms that as an independent firm, we must never trust anyone.
David R. Kotok, Chairman and Chief Investment Officer