business journalism
Business journalism refers to reporting and writing about businesses and the economy. In addition, it commonly includes other beats such as labor, the workplace, technology, personal finance, investment, and consumer reporting, as well as investigative reporting focusing on these topics. The field is also known as financial journalism, particularly in countries other than the United States. The common theme in this coverage is moneyâwho spends it, who earns it, who makes it, and where it comes from.
As more consumers of journalism become aware of how the economy and the stock market affect their daily lives, they are increasingly turning to business journalism to explain the significance. This entry first discusses the role of business journalism in the United States, then looks at the historical roots of business journalism and its development alongside the growth of American business and the economy. Finally, it discusses the growth of business journalism since the 1980s and problems that have developed along with that growth, as well as initiatives to improve business journalism.
Role of Business Journalism in the United States
Business journalism in the United States has grown in importance over the past century due to significant changes in the economic makeup of American society. At the time of the great stock market crash of October 1929, less than 10 percent of U.S. households owned shares of any stock. By 2002, more than 50 percent of homes owned stock in at least one company, typically through mutual funds or retirement plans. Also feeding public interest in business news is the fact that fewer people in the 21st century remain with one company throughout their careers, which had been typical from the 1940s through the 1970s.
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The amount of business journalism exploded since the 1970s, with daily newspapers creating standalone business sections; personal finance magazines such as Money, Worth, and Smart Money launching; and the number of business journalists working in the country tripling in number to more than 12,000. That number declined to below 9,000 during the second decade of the 21st century as the overall number of journalists fell. There are now more business journalists working for online-only publications, however.
Business journalism is presented in various media forms, including the business section of most daily newspapers, weekly business newspapers found in every major metropolitan market, websites such as TheStreet and MarketWatch covering specific segments of business journalism, and two cable television networks, CNBC and Fox Business Network. There are also business-only newspapers, such as The Wall Street Journal and Investorâs Business Daily, as well as magazines, such as Bloomberg BusinessWeek, Forbes, and Fortune, devoted to business journalism.
Business journalism, in its role as a watchdog on companies and regulators, can be credited for uncovering illegal and unethical practices that have caused investors to lose millions of dollars and workers to lose their jobs. A 2007 Harvard Business School study studied 263 cases of accounting fraud and determined that 29 percent were identified by the business press before the U.S. Securities and Exchange Commission or the company itself announced an investigation. Further, in 36 percent of those early identifications, the reporter conducted original financial analysis to support the story.
Early History
Business journalism can be traced back to the earliest forms of communication. David Forsyth argues that the genesis of writing and the establishment of a numerical system in the Bronze Age stemmed from economic activity. Even the Hammurabi Code, a set of laws created by the sixth Babylonian king in approximately 1760 bce, established forerunners of todayâs interest rate and minimum wage laws.
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During the 16th and early 17th centuries, wealthy families in Europe employed correspondents throughout the continent to provide them letters with business information useful to further their power. One of these families was the Fuggers, a German family of bankers and traders who needed to keep abreast of events that might affect the interest rates they charged their clients. From 1568 to 1604, hundreds of letters were written by correspondents hired by the Fuggers, and the information in them was used to determine whether or not to loan money and at what rate. They also included prices for products and services in the city from which the letter originated. These Fugger newsletters began what has evolved today into the complex system of providing information about business and the economy, which in the early 21st century is available almost instantaneously through the Internet and other media forms.
Many newspapers in the 18th and 19th centuries were created to allow businesses to notify members of the community about the products and services being offered for sale, and early newspapers carried such business information as the cargo of ships arriving in a cityâs harbor. These newspapers were commonly called price currents because they listed the current prices of various products offered for sale by local merchants, and they rarely, if ever, contained any editorial content. The papers were strictly informational and extremely numbers intensive. Among the products listed in most price currents were cotton, flour, furs, leather, oil, animal skins, tobacco, and wheat.
A Philadelphia price current from 1783 also listed sample wages for workers such as carpenters, sail makers, and blacksmiths, and later price currents included information about shipping traffic. Price currents were published in the cities of Baltimore and Boston in the late 18th and early 19th centuries. The Boston Daily Advertiser was one example: it listed prices for foreign and domestic goods on the front page, and most of the rest of the four-page broadsheet contained shipping information and small advertisements from merchants.
As American business and the economy began to flourish in the 19th century, so did the relevant journalism. James Gordon Bennettâs New York Herald was the first newspaper that regularly devoted a large amount of space to business and economic news. Started in 1835 on Wall Street, the Herald developed the best financial section of any of the mainstream newspapers, according to Forsyth. Bennett was a former economics teacher, and he often wrote what he called the money page, which was used to explain why stock prices rose and fell. A member of his financial reporting staff, Thomas Prentice Kettell, began writing a financial column for the Herald in 1835 and is considered the first financial editor of any daily newspaper in the country. Kettell went on to found United States Economist in 1852.
Perhaps the most influential business journalism in the United States during the 19th century occurred in an industry newspaper, the American Railroad Journal. Edited by Henry Varnum Poor from 1849 to 1862, the publication extensively covered the booming railroad industry. Poor expanded business journalism from its tendency to simply regurgitate facts and figures of products for sale by requiring the railroads to provide financial statements to his publication. He then dissected these financials for his readers, reporting whether he thought the company was a good investment. This was the first time that business journalism explored the profits or losses of companies in any depth. Poor collected his data into a book. His company later became Standard & Poorâs (today known as S&P Global Ratings), which tracks the finances of every major industry.
Important Developments
By 1840, the Industrial Revolution had resulted in larger companies with more complex structures and control of local communities, and as a result, journalists began to pay more attention to business. The Wall Street Journal was founded in 1889, providing investors with information about the stock market and business news in New York City. Acquired by Clarence Barron in 1902, it expanded with editions in Philadelphia and Boston and then started a weekly newspaper named after its founder in 1921. While muckrakers Ida Tarbell, Lincoln Steffens, and Upton Sinclair were not considered business journalists, they wrote widely about business practices and their impact on government and society. Tarbellâs âHistory of the Standard Oil Companyâ set the future standard for how companies would be covered by journalists because she used public records such as lawsuits and depositions to make her argument that the company had undue control of the U.S. oil market.
The first three decades of the 20th century saw an important development in business journalismâthe creation of magazines devoted solely to business and the economy. The now-defunct Financial World started in 1902 and the U.S. Chamber of Commerce began publishing Nationâs Business in 1907. Forbes was started in 1917 by a syndicated business columnist for the New York American. McGraw-Hill began publishing The Business Week in 1929 and Time Inc. founded the monthly Fortune early in 1930.
Most publications focused on business journalism suffered circulation declines during the Depression, but none was hurt more than The Wall Street Journal. It was seen as a stock market booster, and 1932 congressional hearings uncovered that some investors had been paying the paperâs journalists to write favorable stories about companies whose shares they held. The Journal remade itself in the late 1930s and 1940s into a more critical business newspaper and one that provided a business angle to nearly every news story. Its lead after the Japanese bombed Pearl Harbor on December 7, 1941, stated that âWar with Japan means industrial revolution in the United States.â
As the postwar economy expanded exponentially in the 1950s and 1960s, business journalism grew as well. The New York Financial Writersâ Association, which had been created in 1938, and the Society of American Business Editors and Writers, which started in 1964, took on increasingly important roles in promoting business journalism in the country. Both have developed professional standards and ethics codes that prohibit business journalists from participating in the stock market or from accepting gifts from companies they coverâtwo common practices in earlier years.
Business journalism on television began to gain traction in the late 1960s. Louis Rukeyser began covering business and economics stories for ABC News in 1968, and in 1971, he started hosting Wall Street Week on public television. Irving R. Levine began reporting regularly about business and the economy on NBC News that same year. Both became news fixtures in the 1970s, discussing the Arab oil embargo, inflation, price controls, and the changing stock market. The first business news program on U.S. television was Nightly Business Report, which began airing in 1979 on public television stations around the country. It remains a fixture today, airing on more than 250 stations, but is now owned by CNBC.
Growth and Problems
The dramatic growth in the stock market throughout much of the 1980s and 1990s caused a dramatic expansion of business journalismâand led to many problems. Dozens of journalists began covering business and economics stories without a real understanding of the issues and the nuances of how to properly report and write about those topics. Business journalism in the 1990s was criticizedâalbeit after the factâfor being too boosterish to industries such as the Internet and telecommunications while turning CEOs of some companies into celebrities, praising them for their operationâs results without examining the underlying warts, which included the fact that many of them were not making money for their shareholders.
After the tech bubble burst and the stock market began to drop in March 2000, companies such as Enron, WorldCom, Adelphia, and others were exposed as having duped investors, workers, and the business journalists covering their respective industries into believing fraudulent accounting practices that made the companies look stronger than they actually were. As tech companies began to fail because of their accounting practices, the accounting techniques of other companies began to be reviewed. Some business journalists were criticized for having failed to uncover the scams earlier.
Most of the bigger media outlets compete against each other with their business coverage. The New York Times and The Wall Street Journal, for example, go toe to toe on many business news stories, such as mergers and acquisitions and corporate scandals. In addition, wire services such as Reuters, Dow Jones Newswires, Bloomberg News, and the Associated Press compete to have the best coverage on almost every story every hour of the day. Like most mass communication forms, however, business journalism is undergoing dramatic change in the early 21st century. Virtually every daily metro newspaper has cut its standalone business section and business news now appears in other sections of the paper. In addition, printed stock and mutual fund listings have been dropped from many newspapers and now appear on related websites, primarily as a way for newspapers to trim printing costs.
Business magazines are struggling to overcome a decline in print advertising that has led to fewer pages for stories. Some business titles, including Time Warnerâs Business 2.0, Dow Jonesâ Smart Money, and Time Inc.âs Money, ceased publication because of the advertising decline. The decline in business magazine advertising has been attributed to the increase in Internet advertising by companies such as computer makers and automakers.
However, business journalism on cable television and in specialized newspapers is growing. The Fox Business Network launched on October 15, 2007, to compete with CNBC, which had the cable business journalism market to itself after Time Warnerâs dedicated financial news channel, CNNfn, stopped airing in 2004. The Fox Business Network surpassed CNBC in total viewers in 2016, although CNBC argues that the Nielsen ratings do not reflect its true audience, which primarily view it in offices and trading floors. The Wall Street Journal, acquired by News Corp. in 2007, has continued to see overall subscription gains. Weekly business newspapers owned by American City Business Journals and Crainâs Communication continue to boast advertising and circulation gains as they focus their business news on small- and medium-sized companies that often go unnoticed by the larger business media. They too are now charging for online access to their content.
Several developments in business journalism may improve the quality of reporting. The expansion of the Internet has made it easier for business journalists to gain access to documents and public records that allow them to cover companies in more depth. Until the mid-1990s, documents filed with the Securities and Exchange Commission by the 12,000-plus public companiesâthose whose shares trade on one of the major stock marketsâcould only be obtained for a fee from a service based in Washington, D.C. The Securities and Exchange Commission now provides all corporate documents online, as do many other federal and state regulators.
Another major initiative is the Donald W. Reynolds National Center for Business Journalism, launched in 2003. First based at the American Press Institute, it is now part of the Walter Cronkite School of Journalism and Mass Communication at Arizona State University. Despite advances in the quality of business journalism, the training is sorely needed. A study in the Newspaper Research Journal found that journalists believed that education about business was needed for them to be able to do their jobs more effectively. They also believed that such education should apply for all journalists, not just those covering business and the economy.
The original version of this article was published by SAGE Publications in The SAGE Encyclopedia of Journalism.