The Wall Street Journal has a very good page-one story on how Wall Street gives hedge funds access to key executives in exchange for their business.
The lede is great:
One day in early March, the phone lines of hedge-fund traders around London and New York suddenly lit up. A stock that many of them had placed hefty bets on—Pride International Inc., an energy company in the process of being sold to a rival—was falling. The traders had no idea why.
They soon figured it out: J.P. Morgan Chase & Co. had hosted a meeting that day between a handful of hedge-fund traders and executives from a company that was considered a prime candidate to start a bidding war for Pride. One of those executives had indicated they weren’t likely to make a bid.
And this is good reporting:
Many banks nevertheless continue to hold closed-door meetings with hedge funds on a regular basis, according to traders, bankers and other industry officials. Banks try to differentiate themselves from rivals by dangling access to key players—coveted by hedge funds, for which incremental bits of information can be extremely valuable.
But this is even better:
Some bankers say the meetings make them uncomfortable because they feel under pressure from the investors to divulge sensitive information.
“It made me congenitally nervous,” said a banker who until recently worked at a top Wall Street investment bank. “It certainly should be on [regulators’] radar.”
“There’s clearly an element of risk in it,” another banker said. “You’re relying on a banker’s judgment and on him not having too much to drink.”
Brendan Nyhan writes that he was shocked to see the conservative Tax Foundation sharply criticize the Journal for the graphic, saying “this chart is a textbook example of how to lie with statistics” and a “breathtakingly misleading image” and saying that “we shouldn’t resort to misleading charts that pretend to show that those with high incomes don’t make the majority of the money in this country— they do.”
Shortly thereafter, the Tax Foundation says it “withdrew the post for editorial and content reasons.”
— Justin Ellis of the Nieman Journalism Lab notes a survey finding that just 15 percent of under-25,000-circulation newspaper publishers aren’t planning some form of paywall.
In a recent study of small and mid-sized newspapers, 46 percent of newspapers with circulation under 25,000 say they are already charging for some online content, compared with only 24 percent of papers with a 25,000+ circ. And of the papers surveyed that don’t charge for content, only 15 percent said they have no future plans for a pay model.
The findings were presented at the Reynolds Journalism Institute at the University of Missouri as part of RJInnovation Week, a series of presentations and discussions on paid content and new business models. The survey was a random sample of the nearly 1,400 daily newspapers in the US, of which most who responded — 77 percent — had circulation under 25,000. One third of publishers said paid subscriptions could account for as much as 20 percent of their digital revenue, while almost 50 percent thought an online pay model wouldn’t have much of an impact…
One common theme for these papers: The print product pays the bills. And what pays gets protected first.
No doubt.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum. Tags: Business of Journalism, Insider Trading, Paywalls, Taxes, The Wall Street Journal