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Continue reading “Unrequired Reading: June 13, 2008”
Mobil Eyes
I didn’t take any pix yesterday when I went to NYC to interview an exec at Pfizer, but that doesn’t mean I didn’t see any neat stuff. In this case, I discovered the Mobil Building, a block or so southwest of Pfizer’s HQ. A gent named wallyg posted a neat pix of the building (and the nearby Chrysler building) over at flickr:
Photo by wallyg, who appears to have some other really wonderful shots up at flickr, too!
Full circle!
I’ve long goofed that the Wall Street Journal’s standard headshot drawings look like they’ve been put through The Drew Friedmanizer. Today, the WSJ has a headshot by none other than. . . Drew Friedman!
That sad part of my “Drew Friedmanizer” reference is that Mr. Friedman hasn’t used his pointillist drawing style for more than a decade. But far be it from me to develop new material!
Anyway, the article is an interview with AT&T CEO Ralph de la Vega about his view of the future of wireless (centered on the iPhone, of course).
Taleb and Taliban
I enjoyed this profile of Nassim Nicholas Taleb by Bryan Appleyard. I haven’t read his books yet, but I’m sympathetic to his notion that the radically unpredictable will trump your bitch-ass plans no matter how farsighted you think you are:
Last May, Taleb published The Black Swan: The Impact of the Highly Improbable
. It said, among many other things, that most economists, and almost all bankers, are subhuman and very, very dangerous. They live in a fantasy world in which the future can be controlled by sophisticated mathematical models and elaborate risk-management systems. Bankers and economists scorned and raged at Taleb. He didn’t understand, they said. A few months later, the full global implications of the sub-prime-driven credit crunch became clear. The world banking system still teeters on the edge of meltdown. Taleb had been vindicated. “It was my greatest vindication. But to me that wasn’t a black swan; it was a white swan. I knew it would happen and I said so. It was a black swan to Ben Bernanke [the chairman of the Federal Reserve]. I wouldn’t use him to drive my car. These guys are dangerous. They’re not qualified in their own field.â€
Reading the profile reminded me of a post I wrote about Ahmed Rashid’s book Taliban
The book is also a product of its time, of course. One of the “problems†with Taliban is that oil was priced around $13/barrel in the years leading up to its publication. That fact was a key to his understanding of Russian and Iranian policy, and it’s completely understandable; who would even entertain the notion that oil would someday trade for 5x that price?
Of course, the black swan that I missed was that oil would soon trade for TEN TIMES that price. The profile is filled with some pretty neat anecdotes about the way our sophisticated models — especially the financial ones — can’t stand up to reality. Or, as Mr. Appleyard puts it:
He doesn’t make predictions, he insults people paid to do so by telling them to get another job. All forecasts about the oil price, for example, are always wrong, though people keep doing it.
Condescend much?
A few days ago, Sam Zell’s Tribune Group announced cutback plans at its newspapers. The announcement sparked an uproar because it mentioned the number of pages produced annually by reporters at different papers. The idea was to contrast how writers at some papers — the Baltimore Sun and the Hartford Courant — each averaged 300+ pages a year, while those at the LA Times produced an average of only 51 pages a year. The Tribune’s goal is to reach the magical 50-50 advertising/editorial ratio (which I always manage to miss in my own magazine, coming closer to a 43/57 split. Seriously. I keep track of this stuff).
The rationale as I understand it is that most newspapers are wasting their time and money on national and international news, given that most readers get that sort of news from the internet. Instead, the Trib plans to focus on local news. According to that NYTimes’ writeup:
In his note to employees, Mr. Zell wrote that Tribune papers would be redesigned, beginning with The Orlando Sentinel, on June 22. Surveys show readers want “maps, graphics, lists, ranking and stats,†he wrote. “We’re in the business of satisfying customers, and we will respond to what they say they want.â€
I guess I get where they’re coming from, but I’ve never been a fan of the “shrink to grow” mentality. Cuts may lead to profitability, but they don’t usually create opportunities for growth.
Today, the Times followed up with analysis of the strategy, interviewing publishers and editors. Rather than quote from that, I’d like to share this passage from the NYObserver’s analysis of the Times’ analysis:
“Most readers of newspapers really only consume a small fraction of what the newspaper produces,” [Neuharth] said. “Can you give them the stuff they want, even though there’s less of it over all? I think you can.”
But then again, Neuharth is the founder of USA Today, so we can’t really take advice from that.
Vanity (press), thy name is Observer. Please keep in mind that this newspaper was losing $2 million annually before its purchase by Jared Kushner. No word on how much money it’s losing now.
Kushner’s dad recently served time in federal prison for tax evasion and campaign finance violations, as well as hiring a prostitute to seduce his sister’s husband, videotaping the hookup, and sending his sis a copy of the tape, in retaliation for her cooperation in an investigation of the aforementioned tax evasion and campaign finance violations.
USA Today isn’t hip or NYC-relevant like the Observer, but its ad revenue was up 2% in 1Q08, despite a drop in overall ad pages.
(Update! Here’s a big-ass interview with Jared Kushner, in which he says that the Observer’s revenues were up 61% in 1Q08. It’s privately held, so he could just be lying, or he could be inadvertently showing how truly disastrous the paper’s numbers were before. Anyway, here’s an excerpt —
People are hysterical about the death of newspapers and I would say they’re not dying, they’re just kind of reinventing themselves. What the ultimate body count is in reinvention is still to be determined, but the difference between a weekly and a daily is that my product is a country home, whereas a daily is your primary residence. You need a primary residence so people may choose one primary residence over the other, and internet and the newsprint to some degree are interchangeable for certain people. You’re only going to buy a country house if you know you’re going to use it. You’re only going to buy a country house if you want to go to it. You are only going to subscribe to the New York Observer if you’re going to make time to read it and if it adds something to your life that’s kind of special. The way I look at it is, there’s obviously a lot competing for readers’ attention these days, but the goal of the Observer is to be something very unique. It’s a hyper-unique product. I’d like to think that our editorial mission is to give our readers every week one or two things that they just can’t get anywhere else that would make them smile, or a little bit smarter. We have the smartest readership probably in the world of any publication.
— in which he ignores the definition of the word “unique”.)
Miller Bear
Bear Stearns’ sale to JP Morgan was approved by shareholders yesterday. As a buildup to the vote, the Wall Street Journal ran an epic three-part article (1, 2, 3) chronicling the sudden collapse of BS. I know most of you aren’t as interested in the machinations of business and finance as I am, but I think Kate Kelly tells a pretty amazing story, not least because it supports my thesis that Miller’s Crossing can be used to explain almost anything.
In this case, I’d like to contrast this passage from Ms. Kelly’s series of articles —
The brokerage’s sudden fall was a stark reminder of the fragility and ferocity of a financial system built to a remarkable degree on trust. Billions of dollars in securities are traded each day with nothing more than an implicit agreement that trading partners will pay up when asked. When investors became concerned that Bear Stearns wouldn’t be able to settle its trades with clients, that confidence evaporated in a flash.
— with this moment when Tom Regan confronts crime-boss Leo with the precariousness of his position after the great Danny Boy scene:
Last night made you look vulnerable. You don’t hold elected office in this town. You run it because people think you run it. Once they stop thinking it, you stop running it.
I make light of it, but it’s truly frightening, how huge a role perception plays in finance. Once the loss of confidence is even a rumor, an 85-year-old company can collapse within days.
(You could argue that BS’s collapse was actually an internal rot that took several years to manifest itself, like an elderly cancer patient who puts of going to the doctor until it’s far too late. I don’t think there’s a Miller’s Crossing analog for that, but I can go check.)
Then there’s the great passage when JPM is negotiating to buy BS. JPM originally offered $8-$12 per share, then came back with an offer of $2 per share — the final price turned out to be $10/share, down from $131.58 last October — reminding me of Tom’s negotiations on the phone with Bernie Bernbaum, the shmatte kid:
I figure a thousand bucks is reasonable. So I want two thousand.
Seriously, I think these articles are pretty important, if you’re looking for perspective on how the seize-up in credit markets is impacting, um, everything in our day-to-day. If they’re registration-required, lemme know and I can e-mail them over to you.
Bottoms up
Sorry I didn’t post earlier in the day, dear readers. I was just building up my courage for the plunge into our annual Top Companies Report, where I profile the top 20 pharma companies and top 10 biopharmas. I just have to tell myself, “Come July 2, it’ll all be done.” It used to be daunting, but the past few years of awful pipeline progress have made it awfully depressing, too.
This morning, I sat down with Pfizer’s 2007 annual report to run the basic numbers on drug revenues, and realized that two of its drugs that went generic dropped a combined $3.3 billion in revenues, while one of its biggest up-and-coming products just got banned by the FAA (in pilots and air traffic controllers) because of a variety of messed up side effects. The company’s biggest seller (the top-selling drug in history) was flat for the year, now that similar drugs have gone generic. I knew they have a tough slog ahead, but the numbers make it even starker. I thought, “I really should’ve started with another company.”
As it turned out, the next 7 or 8 companies on my list weren’t in great shape, either. The European firms got a little boost on my chart because of the exchange rate (I always put in a disclaimer that shows results in local currency, because I’m all about value), but I have a feeling I’m going to be hard pressed to find good stuff to write about in their profiles.
“Come July 2, it’ll all be done.”
On the positive side, I’m just about done with my review/ramble on the Kindle
What It Is: 5/26/08
What I’m reading: Lord Jim, Joseph Conrad, and vol. 1 of Cromartie High School, an incredibly funny manga.
What I’m listening to: That new Portishead album
What I’m watching: Kung Fu Hustle, which remains one of the most entertaining flicks of all time, and The Big Lebowski, which I need to write about.
What I’m drinking: Blue Point Brewing Co.’s Blueberry Ale (a gift from this weekend’s houseguests).
Where I’m going: Maybe out to see Iron Man today, but otherwise, nodarnwhere special this week.
What I’m happy about: Having a nice, long, relatively relaxing weekend. (“Relatively,” because Saturday involved a lot of cleaning and cooking, as we had those aforementioned houseguests. Also, I was a nervous nellie because one of the sets of guests had a 1-year-old child, and I was afraid Rufus would get overstimulated and eat the kid. Everything turned out fine.) Oh, and taking a vacation day on Tuesday, just to get a little extra time before diving into the big Top 20 Pharma and Top 10 Biopharma issue of my magazine.
What I’m sad about: Last night, Rufus appeared to have developed a case of Ringworm in Ringwood. Fortunately, we already had a vet appointment scheduled for tomorrow.
What I’m pondering: Why the Coen Brothers use voiceovers in some of their flicks and not in others. Also, how long the natives will let the new Mars probe transmit.
What I’m updating: Rufus’ status! The vet says that they’re just “mayfly” bites, nothing that requires any treatment! Wanna see all the gories? Glad to oblige!
Random House’s Salute To Fireworks
I’ve goofed on my history of (incredibly) small press publishing for years. While there are plenty of specific reasons why I was a failure, there are also some pretty enormous structural problems with the business of book publishing. I think most of those problems can be traced back to bookstore returnability, but it’s a complex argument that I don’t feel like making right now.
What brings me to this topic is the news that Bertelsmann, a privately held German media conglomerate, looks ready to announce a new president for Random House, one of the largest publishing companies in the world. Perturbed that Random hasn’t had any blockbuster hits in the last year and revenues have slipped, ownership (and new CEO Hartmut Ostrowski) decided to promote from within. Of course, when you’re a major conglomerate like Bertelsmann, “within” can be a pretty broad term.
In this case, Random House’s new president, Markus Dohle, comes from Bertelsmann’s Arvato Print unit. What’s Arvato? Why, I’ll let the WSJ explain:
While Arvato is so unglamorous a business it was once referred to inside Bertelsmann as “Siberia,” it has served as a major growth engine for Bertelsmann in recent years. Arvato has been plunging into far-ranging businesses such as repairing mobile telephones, storing pharmaceuticals and running call centers and billing systems. Last year it booked almost [$7.8 billion] in revenue, or about a quarter of Bertelsmann’s turnover.
I’m sure Mr. Dohle’s a fine executive, and I’m sure Mr. Ostrowski (another Arvato Print alumni) has some big ideas for how Bertelsmann can make book publishing a major contributor to its bottom line (it’s currently at 10% of company revenues), but this sort of pedigree sounds a lot like the appointment of Jack Donaghy to the role of Vice President of East Coast Television and Microwave Oven Programming.
What It Is: 5/19/08
What I’m reading: Lord Jim, Joseph Conrad, and the first 8 issues of the new Omega the Unknown miniseries, sorta written by Jonathan Lethem, whose prose I’ve never tried out. I oughtta sample some of his stuff on my Kindle
What I’m listening to: A new Mad Mix. More to come.
What I’m watching: Game 7 of Cavs/Celts, and wondering if the LeBron/Pierce matchup was going to live up to the ‘Nique/Bird shootout in 1988. It was pretty awesome.
What I’m drinking: Wet by Beefeater.
Where I’m going: Nowhere, not even for Memorial Day weekend. Sigh.
What I’m happy about: Getting out for a fantastic meal at Saddle River Inn on Saturday night, even if Dad raised the stakes on inappropriate conversation by launching into a discourse on the method used by my mohel. Seriously.
What I’m REALLY happy about: My pal Tina got married!
What I’m sad about: The Celtics won.
What I’m pondering: Microsoft’s strategy. Post to come.