SeanReadsTheNews

LaMonica: REIT = WTF?

At CNN, Paul LaMonica's dual role is to report what's hot, hence "The Buzz" title to his column but also to confront conventional wisdom when it doesn't make sense.  Those two roles don't always mesh but they did yesterday when he decided to take apart the recent performance of the REIT market.

What's the attraction of REITs in what remains a stormy market for residential and commercial real estate? It's tempting to sum it up in one word. Yield.

Real estate investment trusts pay at least 90% of their taxable income to shareholders in the form of dividends. Doing so exempts REITS from having to pay federal income taxes.

LaMonica starts from widely asserted assumption that commercial real estate is going to be the next market segment to collapse and lines up sources to argue the contrary.  He makes the case in doing so that because of yield,diversification and improving retail climate might actually make sense.

I'm dubious than any asset class that highly leveraged can really be that good an investment but he makes the case solidly while acknowledging the risk areas in another thoroughly interesting article.

Bloomberg: China Is Least of Google's Worries

Ari Levy, Brian Womack and Joseph Galante of Bloomberg News today mark a milestone in coverage of Google, an article on slowing growth in its core search business and calling the company's leaders out on how little else has worked.

As sales gains diminish, some investors are concerned that Google has begun to resemble Microsoft Corp., which generates billions of dollars in cash from its mature flagship business yet has struggled to conquer new markets. Google’s sales increased 9 percent last year after almost doubling in 2005.

While the fact that Google gets almost all of its money from search isn't exactly a secret, I've documented Google PR's remarkable success at generating stories about other topics despite that fact.

The Bloomberg/BW story could mark a turning point, however, when each attempt to grow isn't viewed as the next move by an unstoppable titan but rather as desperation.  All growth companies hit that point eventually and it will be very interesting to see how Google responds.

As a side note, the post-Bloomberg BusinessWeek site is really getting to be a pain in the neck to navigate.  The editors are not differentiating BW and Bloomberg content and in the process the constantly updated wire reports are making it harder to find the magazine content.

Bloomberg already has a wire, terminals and a website.  Why did management buy the magazine if it was just to remake it as extension of what it already has?

WaPo on Employee Productivity

The Washington Post's cerebral economics reporter Neil Irwin takes a long walk to explain a short concept in an article today on why improving worker productivity is dampening hiring but the detail is worth it.

As best as anyone can guess, the crisis that began in 2007 and deepened in 2008 caused both businesses and workers to panic. Companies cut even more staff than the decrease in demand for their products would warrant. They were hoarding cash, fearful that they wouldn't have access to capital down the road.

When demand for their products leveled off in the middle of last year, the companies could have stopped cutting jobs or even hired people back. But they didn't -- payrolls have continued declining.

Instead companies squeezed more work out of remaining employees, accounting for a 3.8 percent boost in worker productivity in 2009, the best in seven years.

Usually, when the boss gets to insistent on overworking someone, he or she quits and gets another job.  Can't do that right now, so productivity keeps rising.

Irwin's story is rich in detail and data so it rises above other stories of this type even if the premise and conclusion are kind of obvious.  He's one of the few prominent business writers at the Washington Post who covers issues beyond the immediate area of D.C. so if you've done your homework and can document a trend, he's worth approaching.

Fortune: How ADP Uses Data to Score Coverage

It's gotten to the point where PR strategy can be its own news hook, as demonstrated by Beth Kowitt's Fortune article on how ADP uses its business data to drive press coverage.

Few companies get as easy and guaranteed a PR hit as Automatic Data Processing (ADP). Each month its eponymous payroll report comes out two days before the government's own and gets reported, dissected, and beamed out to anxious market watchers the world over. "You couldn't buy the coverage," says CEO Gary Butler.

Because it processes paychecks for one in every six employees in the U.S., no company is better positioned to serve as a gauge of the nation's jobs situation than ADP (ADP, Fortune 500).

One hopes that no coverage is bought but rather earned, saving buying for advertising but that's a semantic quibble.

Like my former friends at Adecco Staffing, the nation's third largest employer, ADP is so big in its field that it can score coverage just by packaging its work product.  Kowitt's article is part of a package on America's Best Companies, so the positive press is built into this one by format and Kowitt does a good job of explaining why the mundane task of processing paychecks generates such devotion from its clients.

She also gets the CEO to speculate on a turnaround in the job market.

So when will employers start hiring again? That's one data point ADP doesn't put out, but Butler is hopeful based on his own indicators: "Our salespeople are selling again," he says. "For a year people were doing nothing."

WSJ Feature: New PR Guy at Citi

There's really nothing that exceptional about this article by Michael Howard Saul and Randall Smith regarding Citigroup hiring a new global head of PR, except that it ran on C3 of today's Wall Street Journal above the fold.

I like to note evidence that the practice of PR and communications has moved to center stage in business and this is that.

Also, if I'd know that fiercely protecting your clients by cursing at reporters was a way to fame and glory in this profession, I would have started doing it a long time ago.

Mr. Skyler, recruited by the city Parks Department from the University of Pennsylvania, was just 28 when the mayor made him his press secretary. In that job, he fiercely protected Mr. Bloomberg's image, flashing anger and unleashing expletives at reporters.

Halley's Comet: WSJ on Who Gets Paid After Bankruptcy

Here's another classic business story, the survey feature on corporate bankruptcy, published in today's Wall Street Journal by Dow Jones Daily Bankruptcy Review reporter Eric Morath, whose articles started running on the Dow Wire in March.

Unsecured creditors, including bondholders, are near the bottom of the creditor-repayment scheme in bankruptcy, a reality that is hard to handle when overleveraged companies that borrowed heavily during the credit boom end up in bankruptcy worth far less than they owe. But unsecured creditors and their attorneys aren't just standing on the sidelines; they are pulling out all the stops to scratch out a recovery.

"The nature of the Chapter 11 process has changed," said Francis A. Monaco Jr., an attorney with Womble Carlyle Sandridge & Rice PLLC. "Secured lenders are underwater and, on paper, there is nothing left for unsecured creditors."

These stories come up about once a year and always cover who makes money off other company's failures and are great positioning platforms for bankruptcy attorneys. 

The hook for this story, the plight of junior creditors, combined with two examples where lawyers were willing to discuss their own cases on the record, seems to have pushed this story off the wire and into the print edition.  It's a nice bonus for granting interviews with a trade publication, something not all lawyers take the time to do.

No fewer than six lawyers get nice quotes in the article, further evidence that there is no trade media to small to talk to if you want to be noticed. 

Portfolio on Regulatory Revolving Door

Garry Weiss of Portfolio.com today reports on how SEC regulators ignored a hedge fund manager who identified fraudulent accounting at both Lehman Brothers and Allied Capital, alleging that former regulators who worked for those institutions shielded them from real scrutiny.

When the SEC decides to bring charges against a company, it is required to give the company something called a Wells Notice, a notice that the SEC is about to commence enforcement action. Thanks to the “high-powered counsel” hired by Allied, including an unidentified former SEC enforcement director, the company got special treatment. They obtained a highly irregular “pre-Wells” meeting with the SEC Enforcement Division, which apparently resembled the surrender ceremony on the USS Missouri in 1945—with the SEC playing the role of the Japanese. Allied’s lawyers talked the SEC out of bringing fraud charges against the company or its officers, including one found to have overvalued the investments on its books.

The SEC official who set up the meeting went on to work for Allied.  Considering that a similar tale surrounds the Madoff scandal, one has to wonder if paying the SEC to do this makes any sense at all.  If the private sector already produces better investigators than we can hire in the public, how is that an argument for more regulation?

So, there you have the “revolving door” in all its glory. Allied raised $1 billion from investors while the SEC was flubbing its probe, and eventually was acquired by another company after immense losses and the bankruptcy of one of its key units.

Weiss does not come to this conclusion but does produce a detailed look at the Allied Capital scandal and why political considerations may have led regulators astray.  Weiss' beat is "the dark corners of Wall Street." so PR teams representing a whistle blower, attorney or investor with a controversial look at a popular company that may be getting away with something, he's a good person to call.

Fortune's Sloan on the Downside of Low Interest Rates

When everyone is awash in debt, low interest rates sure look like a great thing - but as Allan Sloan of Fortune reminds us today, those rates punish prudent savers, particularly the elderly.

Interest rates are so low, the recent rate uptick on longer-term Treasury securities notwithstanding, that it takes a surprisingly large amount of money to generate even a modest amount of lifetime income.

Sloan does the math on what individuals can expect when purchasing a $100,000 annuity from a top rated provider vs. the equivalent value in a pension benefit and finds that low interest rates are making the annuity look awfully puny at this point - less than $600/month.

He also notes that same-sex male couples can expect a bit more while same-sex female couples will make less based on life expectancies.  It's a small point but interesting to note how mainstream reporting on alternative lifestyles is these days.

This story is noteworthy because the downsides of low interest rates often go unquestioned and anything that might make the stock or housing markets go down is written up as a unilateral evil rather than a cost-benefit whose impact needs examination.

Will Recession Finanlly Shrink U.S. Restaurant Portions?

My non-American friends are always aghast at how big restaurant meals are in the U.S. (and from my trip to China last Fall, I can tell you we're spreading that contagion abroad), so it was interesting to read Bruce Horvitz's USA Today article on how the recession is spurring smaller, splittable portion sizes.

Interestingly, marketing around the idea is based on the idea that millennialis like to share things and don't have much money, rather than a repudiation of big plate dining.

With business still in the tank — and customers hard to lure out of the I-can-eat-cheaper-at-home mentality — a cadre of casual-dining icons, including Houlihan's, Cheesecake Factory, California Pizza Kitchen and BJ's Restaurants, are trying to boost business with value-priced items to be passed around the table.

It's a little story about a trend that may not survive the recession - but you can add smaller portion sizes to the list of things you never thought you'd see as a result of this recession.  Horovitz is reading too much into the cultural implications - but it's a provable thesis and we'll see.  Also, kudos to Houlihan's CEO (and his PR team) for figuring out a way to link his new menu to a social trend, thus capturing a great quote in the story.

Casual-dining chains are trying just about anything. They're particularly eager to attract socially minded Millennials who are just as comfortable sharing a plate of food as they are sharing social media.

"This is how the next generation is eating," says Bob Hartnett, CEO at Houlihan's, which just rolled out 23 small-plate items. "And we're in the business of giving people what they want. If we don't give it to them, they'll find someone else who will."

NYT: Fox Lead in Cable News Widens

We all laughed when Fox News launched.  Not harder than we did when MSNBC launched, but pretty hard.  The network's extended last laugh continues, as Bill Carter of The New York Times reports today.

The ratings are out and it looks like the only people still watching CNN are PR people and their clients.

About the only break from the bad news for CNN was that March was not as bad as February, when the network had its worst single month in its recent history, finishing behind not only Fox News and MSNBC, but also its sister network HLN — and even CNBC, which had Olympics programming that month.

Carter does report that CNN still wins most of the daytime hours when audiences are smaller, so public relations professionals looking for client visibility should still go there if they have the option vs. MSNBC and Fox. 

My clients, an admittedly financial/professional services group, have always said that CNBC gets them more bang than anything else - even The Wall Street Journal - but if you're looking for eyeballs, Fox continues to lead.