The lobbyist as reporter: the future of the business press?

Media criticism.
Dec. 20 2006 6:45 PM

The Lobbyist as Reporter

Is this the future of the business press?

For a preview of the future of business journalism, read the Dec. 8 Wall Street Journal Page One article "Hedge Funds Hire Lobbyists To Gather Tips in Washington" by Brody Mullins and Kara Scannell. (A slightly abridged version was reprinted in the same day's Pittsburgh Post-Gazette.)

Lobbyists, who usually work the back alleys of power to advance or stall legislation, are increasingly shaking down members of Congress and their staffs for potentially market-moving information, the piece reports. They, in turn, advance that information to their "political intelligence" clients—private investors, private-equity funds, investment banks, and hedge funds.

"There are a lot of savvy investors who have realized that there is a lot of money to be made from what Congress does," says lobbyist-lawyer Elliott Portnoy of Sonnenschein Nath & Rosenthal LLP, whose political intelligence division has two dozen clients and a staff of 18. Examples of market-moving news chased on Capitol Hill by lobbyists include the future of legislation on asbestos liability, Internet gambling, and new regulation for Fannie Mae and Freddie Mac. Political intelligence outfits charge hedge funds and others as much as $20,000 a month for their "tips and predictions," according to the Journal.

What political intel units do seems indistinguishable from what newspaper reporters do, except that their wealthy clients pay much more and fewer readers get to see their product.

But does that make it journalism? If you regard what the Wall Street Journal, Business Week, Forbes, Bloomberg News, Reuters, the Financial Times, and Fortune do as journalism, you call the political intel reports anything but high-priced, low circulation journalism. Like the Wall Street Journal, the political intel groups exist to give their clientele an information advantage over the competition that will translate into profits.

The first journalism marketed both financial information and political intelligence. In the 15th and 16th centuries, the Fugger banking family established a network of correspondents throughout Europe to keep tabs on local business, Chris Roush writes in his new history of business journalism, Profits and Losses: Business Journalism and Its Role in Society. Correspondents filed the prices of goods and services to the Fuggers, who then used the information to set the price of loans. The family's business newsletter alerted its exclusive clientele to a wide array of commercial, exploitable news, including the "deaths of kings and queens, wars, the arrival and departure of ships, the burning of the exchange in Antwerp, executions, and the demise of the Spanish Armada," Roush writes.

Even the mass-circulation Wall Street Journal owes its origin to the information demands of a wealthy few. Roush notes that three reporters named Charles Dow, Edward Jones, and Charles Bergstresser launched Dow Jones & Co. in 1882 "to sell news and gossip items to stock brokers, bankers, and speculators." A few years later they started the Wall Street Journal, "a four-page newspaper devoted solely to stocks and bonds."

As a business news operation gets better at distributing information—i.e., building circulation—a strange thing happens to the value of information collected. Only the first readers who receive and act on the information can profit from it. For example, the Wall Street Journal provides a rich data dump six days a week, but it's futile for all 2.7 million readers to act on it, because the commercial advantage is quickly harvested.

The circulation successes of business publications are only one force driving lobbyists to practice journalism. Every new government rule or regulation forcing businesses to become more transparent in their financial reporting and disclosure comes at the expense of Wall Street veterans and benefits the civilian investor poking around on the Web. As the business-journalism arms race spirals outward, the painfully rich must dig even deeper into their pockets to pay for their precious tips. The pricey, limited circulation business newsletter gets outflanked by the ultra-expensive Bloomberg terminal delivering the news instantaneously. You see the pattern.

If early intelligence on unfolding legislation is as valuable as the Wall Street Journal article makes it out to be, then maybe The Politico, the soon-to-be-launched third newspaper of Capitol Hill (and home to Jim VandeHei and John Harris), isn't such a bad idea.

What other fields contain a trove of unreported, market-moving news? The Journal explains that the greatest hedge-funds interest is in government actions that will have a financial impact on a small number of companies, such as which airline will win the new daily nonstop flight to China from Transportation Department regulators and what the timetable is for FDA approval of a new drug.

A few years ago, my friend Dirk Olin, now editor-in-chief of, tried to interest his employers in funding a news operation that would track market-moving litigation. He hypothesized that prospective readers could make profitable adjustments in their portfolios based on, say, granular reports about motions to stay filed in liability lawsuits.

They passed. I'll bet he could find an investor today.


Pretty soon the lobbyists will be chasing news with tweezers and micrometers. Send your nomination for a potentially lucrative political intelligence beat: Thanks to Dan Gross for his coaching. (E-mail may be quoted by name unless the writer stipulates otherwise. Permanent disclosure: Slate is owned by the Washington Post Co.)

Slate's machine-built RSS feed.

Jack Shafer was Slate's editor at large. You can follow him on Twitter or email him at



Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

Even When They Go to College, the Poor Sometimes Stay Poor

Here’s Just How Far a Southern Woman May Have to Drive to Get an Abortion

The Most Ingenious Teaching Device Ever Invented

Marvel’s Civil War Is a Far-Right Paranoid Fantasy

It’s also a mess. Can the movies do better?


Sprawl, Decadence, and Environmental Ruin in Nevada

Space: The Next Generation

An All-Female Mission to Mars

As a NASA guinea pig, I verified that women would be cheaper to launch than men.

Watching Netflix in Bed. Hanging Bananas. Is There Anything These Hooks Can’t Solve?

The Procedural Rule That Could Prevent Gay Marriage From Reaching SCOTUS Again

  News & Politics
Oct. 20 2014 7:13 PM Deadly Advice When it comes to Ebola, ignore American public opinion: It’s ignorant and misinformed about the disease.
Oct. 20 2014 6:48 PM Apple: Still Enormously Profitable
Oct. 20 2014 3:16 PM The Catholic Church Is Changing, and Celibate Gays Are Leading the Way
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
Brow Beat
Oct. 20 2014 6:32 PM Taylor Swift’s Pro-Gay “Welcome to New York” Takes Her Further Than Ever From Nashville 
Future Tense
Oct. 20 2014 4:59 PM Canadian Town Cancels Outdoor Halloween Because Polar Bears
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.