Lukanyo Mnyanda Editor: Business Day
Newspapers are seen at a vendor’s stand along a road in Ikoyi district, Lagos. Picture: REUTERS
Newspapers are seen at a vendor’s stand along a road in Ikoyi district, Lagos. Picture: REUTERS

Michael Katz, one of SA’s best-known lawyers and specialists in corporate governance, delivered a speech to Business Day journalists in 2019 in which he described the three most important functions of financial journalists as: performing a watchdog function, assisting investors in making decisions on buying or selling securities, and shaping corporations’ behaviour — all of which enable citizens to make informed judgments about topical issues.

Having become a journalist in a more hopeful era, in the mid- to late 1990s, I recall financial journalists having an elevated status within the industry, the assumption being that they had superior skills that enabled them to report and analyse technical subject matter regarding the economy and financial markets.

That journalists should play a watchdog role is very much a consensus view, at least outside newsrooms, though the extent to which they are equipped to do this is another matter altogether. It does seem odd that while there is widespread depression about the resource and skills gap in the industry, there is still an expectation that it should effectively be another arm of regulation.

I would argue that this expectation is unrealistic. In the corporate scandals that dominated the news over the past few years, the media’s role was notably reactive. It wasn’t a journalist who broke the Steinhoff story — most of the best work on what is regarded as SA’s biggest corporate fraud so far came after the company announced that it had uncovered “accounting irregularities”. It was only then that the media produced some insightful investigations and analyses.

Financial journalists attract criticism for their lack of investigative skills, as opposed to simply reporting on and analysing financial and other calendar events. They might, with the help of analysts, be good at analysing the financial implications of an M&A transaction that’s been announced but are less likely to come up with groundbreaking investigations of their own.

Very few potential sources of information that expose wrongdoing will share it, at potentially great personal risk, with people they don’t know

So while the lack of accounting and forensic skills, which might otherwise have enabled them to see a Steinhoff coming, is bad enough, due to the nature of newsrooms nowadays they lack the relationships with people in companies that might give them access to potential whistle-blowers.

News doesn’t happen in the newsroom, the saying goes. And very few potential sources of information that expose wrongdoing will share it, at potentially great personal risk, with people they don’t know. That’s not to say we should give up on journalists’ role as watchdogs. As a society we should decide how much value we place on it. Consumers demand it from journalists, but aren’t willing to pay for news.

For years, the financial media were used to being insulated from the vagaries of the market by regulations, especially the requirement that companies publish financial statements in hard-copy newspapers. That will be lost as time goes by, and we are running against the clock to find alternative business models.

We have some time due to a consensus emerging during the capture years that the cost to business of these advertisements is minuscule compared with the harmful effects that their removal would have on the media — one of the vanguards against the destruction of the democratic order. But we can’t count on the kindness of strangers forever.

With the pressure on journalists to do “more with less”, it’s not a shock that investigative journalism has been among the first casualties in an era of rampant cost-cutting.

Investigations take time and money. Performance appraisals of journalists are simultaneously skewed towards quantity. What increasingly matters is the number of stories journalists produce rather than the quality of their work. Having a journalist spend days, let alone weeks or months, on a single story is seen as a luxury that very few media houses think they can afford.

AI capabilities

What most traditional readers regard as “breaking news” is now so easily and readily available on social media and other channels that traditional newspapers can’t compete.

Specialist business newswire agencies such as Bloomberg now have such advanced artificial intelligence (AI) capabilities that they don’t need humans to do the so-called first take on financial results or economic data. Before a journalist at a traditional newspaper can even type the latest inflation figure, the information is already out in the marketplace.

It’s a big shock for those who were raised when newspapers would offer that kind of “news” the next day. That was in fact why daily financial publications existed, and constituted the basis of their business model.

Because they had to, JSE-listed companies placed their financial statements in a newspaper and in return the editor simply published a “news” story repeating exactly what was in the advertisement, without considering who the reader might be.

In the environment nowadays, those statements are history in seconds, while “value-added” is the buzzword in newsrooms struggling to stay relevant. Newspapers that are still producing yesterday’s news — history — simply will not exist in future.

The “how” in the way breaking news is written and presented can add value; there need not be a binary distinction between a news story in the front section of the paper and an op-ed in the second half. By simply choosing what constitutes news, journalists can play an important role in assisting investors to make choices.

SA financial journalists, who are in tune with events in the world of investing beyond the country’s borders, for example have a crucial role to play in protecting ordinary savers from the people they would normally trust the most — their financial advisers and asset managers.

Financial journalism’s failings are structural, driven by business models that have emphasised cost-cutting over quality. This has resulted in newsrooms losing experienced journalists and replacing them with interns barely out of university.

The only way the financial media will survive is by going beyond the headline and producing genuinely breaking news that no-one else has. And when it does cover calendar events such as financial results, the emphasis has to be on analysis and genuinely original insights on the outlook for the company, its sector and what its performance or deal-making tells us about the wider political economy.

• Mnyanda is Business Day editor. This is an extract from the chapter he authored in Recession, Recovery and Reform: SA After Covid-19, edited by North West University Business School professor Raymond Parsons.

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