What Would The Audit Do?
If somehow The Great One were to raise $125 million for a new magazine and then asked The Audit to reinvent business-reporting from scratch — how would I go about it?
The question comes up because, comme le sait le tout New York, this Monday marks the launch of Conde Nast Portfolio. If you have not heard of Conde Nast Portfolio, I think it is safe to say you are an embarrassment to yourself and your family and you will not be getting a good table at Michael’s(1) anytime soon, if you get a table at all. And if you don’t know about Michael’s, well, The Audit cannot help you. Perhaps you can find another blog.
Portfolio is not just another big media rollout, like Talk, 300 or The Insurance Transparency Project. Portfolio is itself an important business story (well-covered in New York, New York Observer and elsewhere), coming as it does amid an historic, some would say, secular, that is, permanent, shift of ad revenue away from print. People who know believe this will be the last big magazine rollout of its kind.
So, Portfolio would be important if it was about science or sports. But it’s about business, and if you believe, as I do, that something fundamental has shifted in the relationship between the economy and the individual, that plausible ideas have been followed out the window to the detriment of broad sectors of society, and that we (one hopes) are reaching the point of another shift, then Portfolio could not come at a better time. If you don’t believe any of that, check for hair on your forehead: You may be working for the Wall Street Journal’s editorial page.
Portfolio is easy to mock – and it has been — for its ambition, its budget, the parade of business-reporting talent it has attracted, and the quasi-super-secret build up to Monday’s launch. I, for instance, considered writing this entire post in French. But if you think business reporting, if you think business, is important, you want this magazine to succeed. So pipe down and subscribe. If The Audit can afford it, you can.
The new magazine has already attracted top talent, including The Audit’s former colleagues and superiors at the WSJ, among them, Joanne Lipman, who created, among other things, Weekend Journal, a conspicuous bright spot during some dark financial years for the WSJ’s publisher, Dow Jones & Co.; Amy Stevens, a dynamite law reporter who, among other things, nimbly succeeded Lipman at Weekend Journal; Ken Wells, a former WSJ page one editor known for his legerdemain with the middle-column Page One stories known as A-heds; Matt Cooper, the former Time reporter; and Kurt Eichenwald, a prominent ex-New York Times business reporter.
The prototype stories posted on its website look good: A piece about a security company described as “America’s most powerful private army;” another on financial jockeying for control of the National Hockey League; an inside look at the empire of an Indian steel magnate who spent $55 million on his daughter’s wedding. Who’s not going to at least start that story?
Like Lipman, I’d also spend lavishly on photos and design, avoiding, if possible, the white-guy-of-certain-age cover for the first issue.
I’d also get Tom Wolfe to write a piece on hedge funds, as Lipman apparently has. I’d call James Stewart, author of “Den of Thieves,” one of the best-written business book ever, and much other great work, including “Disney War.” Indeed, I’m sure that has been done.
But, I’d also go after the guy who wrote this (the emphasis is mine):
KNOCKER, STICKER, SHACKLER, RUMPER, First Legger, Knuckle Dropper, Navel Boner, Splitter Top/Bottom Butt, Feed Kill Chain — the names of job assignments at a modern slaughterhouse convey some of the brutality inherent in the work. Meatpacking is now the most dangerous job in the United States. The injury rate in a slaughterhouse is about three times higher than the rate in a typical American factory. Every year about one out of three meatpacking workers in this country — roughly forty-three thousand men and women — suffer an injury or a work-related illness that requires medical attention beyond first aid. There is strong evidence that these numbers, compiled by the Bureau of Labor Statistics, understate the number of meatpacking injuries that occur. Thousands of additional injuries and illnesses most likely go unrecorded. (2)
Then, I’d find the lady who wrote this:
OAKLAND, Calif. — On the eve of the 1986 leveraged buy-out of Safeway Stores Inc., the board of directors sat down to a last supper. Peter Magowan, the boyish-looking chairman and chief executive of the world’s largest supermarket chain, rose to offer a toast to the deal that had fended off a hostile takeover by the corporate raiders Herbert and Robert Haft.
“Through your efforts, a true disaster was averted,” the 44-year-old Mr. Magowan told the other directors. By selling the publicly held company to a group headed by buy-out specialists Kohlberg Kravis Roberts & Co. and members of Safeway management, “you have saved literally thousands of jobs in our work force,” Mr. Magowan said. “All of us — employees, customers, shareholders — have a great deal to be thankful for.”
Nearly four years later, Mr. Magowan and the KKR group can indeed count their blessings. While they borrowed heavily to buy Safeway from the shareholders, last month they sold 10% of the company (but none of their own shares) back to the public — at a price that values their own collective stake at more than $800 million, more than four times their cash investment.
Employees, on the other hand, have considerably less reason to celebrate. Mr. Magowan’s toast notwithstanding, 63,000 managers and workers were cut loose from Safeway, through store sales or layoffs. While the majority were re-employed by their new store owners, this was largely at lower wages, and many thousands of Safeway people wound up either unemployed or forced into the part-time work force. A survey of former Safeway employees in Dallas found that nearly 60% still hadn’t found full-time employment more than a year after the layoff.
James White, a Safeway trucker for nearly 30 years in Dallas, was among the 60%. In 1988, he marked the one-year anniversary of his last shift at Safeway this way: First he told his wife he loved her, then he locked the bathroom door, loaded his .22-caliber hunting rifle and blew his brains out. (3)
And The Audit likes the cut of the jib of the young fellow who wrote about a lady from Montana who set aside grocery money to buy a long-term care policy for when she got old, then got old.
But when she filed a claim with her insurer, Conseco, it said she had waited too long. Then it said Beehive Homes (her nursing home) was not an approved facility, despite its state license. Eventually, Conseco argued that Mrs. Derks was not sufficiently infirm, despite her early-stage dementia and the 37 pills she takes each day.
After more than four years, Mrs. Derks, now 81, has yet to receive a penny from Conseco, while her family has paid about $70,000. Her daughter has sent Conseco dozens of bulky envelopes and spent hours on the phone. Each time the answer is the same: Denied.
The young man seems like a self-starter; he reviewed 400 insurance cases, among other things, so he could say this:
“Yet thousands of policyholders say they have received only excuses about why insurers will not pay. Interviews by The New York Times and confidential depositions indicate that some long-term-care insurers have developed procedures that make it difficult — if not impossible — for policyholders to get paid…. In California alone, nearly one in every four long-term-care claims was denied in 2005, according to the state.”(4)
Audit fans, that denial rate means that 25% of all California insurance claimants are either a.) ignorant or b.) dishonest. For insurers, there is no third choice.
If you think all this is all too Mother Jones-y, let me say, first of all, it’s my magazine. The Great One said so, so back up.
But actually I would do it this way solely for the most crass, nakedly careerist of motives. The Audit senses another shift, this one in the public’s reading tastes, including among the Acura buyers and Fidelity investors who are Portfolio’s target demographic. Readers will want to know both how Mike Bloomberg does it and that they’re reading the next Ida Tarbell.
Tell you what, Great One: I’ll do it for a tenth of what it’s costing Conde Nast and cut you in for a piece of the gross. My extension is 42373.
1. For a “table map” of media celebrities at Michael’s — no kidding — click here and scroll down.
2. Fast Food Nation, Eric Schlosser, Houghton Mifflin, 2001.
3. “The Reckoning: Safeway LBO Yields Vast Profits But Exacts a Heavy Human Toll,” Susan Faludi, Wall Street Journal, May 16, 1990.
4. “Aged, Frail and Denied Care By Their Insurers,” Charles Duhigg, New York Times, March 26, 2007.
Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.
CORRECTION: An earlier version of this post included a graphic that contained a BusinessWeek cover that turns out was not genuine. The Audit sincerely regrets the error.