Monthly Archives: March 2014

Lost & Clueless: CNN in Unfriendly Skies

CNN Airline Image

By R. Alan Clanton Thursday Review editor

(March 15, 2014) The week of March 9-15 (Sunday through Saturday) was a very busy news week, by any standard or measure.

There was the Ukrainian crisis—still roiling—a tense, dangerous military standoff with the chilling possibility of a shooting war between Russian troops, and Ukrainian troops aligned with the pro-western forces in Kiev; not to mention serious economic implications for almost all of Europe if oil and gas supplies are disrupted as a result of war. Crimea may hold elections this weekend to decide on a proposal to break away from the Ukraine, and Russian troops may be even now only hours away from a full-scale invasion.

There was the horrifying case of that mid-rise apartment building in Harlem which collapsed in flames after a gas main exploded, an urban catastrophe which may be one of many recent indications of critical infrastructure problems for many American cities.

There was the growing and dismal specter of humanitarian crisis in Syria, where hundreds of thousands have already died—many of them children and young adults—and where many thousands more have fled, in some cases on foot, into neighboring countries in search of refuge from a brutal civil war now in its fourth year.

That would have kept the news departments of any news organization busy enough, but there was still more: issues surrounding Obamacare and more concerns that millions would miss the looming March 31 deadline for registration; monumental political struggles over deep cuts to the U.S. military at the very moment when several international crisis seem on the brink of conflagration; complex and tricky negotiations between the U.S. and Iran over nuclear weapons programs; a major lawsuit by the FDIC against a dozen U.S. banks; the murder trial of South African Olympic gold medalist Oscar Pistorius; and the widening scandal at General Motors—a case in which GM executives may have deliberately avoided making a simple correction to a design defect, with the result that scores died needlessly over the last ten years.

And, there was that U.S. Airways jetliner with the blown tire skidding off the runway at the airport in Philadelphia.

The major news networks and major news outlets—CBS, NBC, BBC, ABC, Fox News, MSNBC, Reuters, Bloomberg, the Wall Street Journal, the New York Times—had a difficult time knowing which way to turn the attention of their best correspondents and reporters.

But for the team at CNN, there was little struggle at all. CNN rendered the decision-making simple: they turned almost all their attention to the missing Malaysian airliner—this, despite a profound lack of actual news regarding that airplane.

A week ago, Malaysia Airlines Flight MH370 took off from the airport at Kuala Lumpur. The flight proceeded as normal, with no surprises or glitches, until, at some point in the South China Sea as it approached the radar reach of Vietnam, it vanished. A massive hunt for the plane—or debris—now includes 20 nations, hundreds of aircraft, over a hundred ships, and even U.S. Navy destroyers and carriers. In the days that followed the aircraft’s disappearance, dozens of major clues (and hundreds of smaller leads) have largely proven to be blind alleys for those frantically searching for…anything…wreckage, floating debris, electronic equipment, the cockpit data recorder (the “black box”), patterns among scores of radar data, objects in satellite images, even—a few might hope—an intact airliner parked on some remote airfield.

The mystery has deepened as each day passes and as each new lead, promising over the few hours of its lifespan, eventually proves to be a false alarm. Such was the case of those grainy satellite photos of floating material made available by the Chinese. Such was the case of the oil rig worker who claimed to have seen an airliner breaking up and disintegrating off the coast of Indonesia. And so on.

Terrorism was counted as a possible explanation. Then, well, no: we were told that terror was not a factor. Then, a day later: terror could not be ruled out.

But then neither could equipment failure, hijacking, human trafficking, kidnapping and ransom, piracy, sabotage, explosive cargo, bird strike or collision with small plane, accidental shooting, psychological episode by pilot or flight crew, electrical short-circuit and fire, even—we have now been told—the completely surreal possibility that the plane may have landed somewhere, engines still purring while the electronic systems ping their routine messages now collated by satellites and data systems. The search area now may include vast tracts of central Asia, and thousands of miles of Indian Ocean as far south as Antarctica.

In other words: the talking heads on most of the major news services have no idea. The tabloids and (…how to put this delicately…) fringe news websites and non-traditional news services have already begun the slow, inevitable descent into the realm of crop circles and sea serpents under Scottish lochs: alien abduction theories have made the rounds, as have a variety of religious scenarios that seem like chapters from the novels of Tim Lahaye. Conspiracy theories now abound: one is that the jetliner was shot down by the Chinese military; or downed by wealthy Chinese businessmen as retribution against certain Chinese executives aboard that flight. Other theories are so absurd they cross into sci-fi, such as the one that says the passengers were kidnapped to be used in biological/virus experiments at a secret facility deep under the ice of Antarctica. Think X- Files, the movie.

The complete lack of information necessarily fuels such wild speculation.

But CNN was undaunted, and apparently unfazed. By mid–week, complaints began to circulate widely in the mainstream press and those who analyze journalism: CNN was getting obsessed. Huffington Post reported that analysis of CNN’s news coverage of the missing jetliner was crowding out other stories. Some industrious folks had measured content, and their data indicated that CNN was placing 95% of its news airtime—minus commercials and “bumpers”—into the Malaysia Flight 370 story.

Intrigued, we decided to do a little gumshoe work ourselves—not into trying to find that missing Boeing 777 (which we believe will be found somewhere west of Honolulu, USA, but east of Bombay, India)—but into CNN’s newfound love affair with the case of the vanishing airplane.
We expected it to be obsessive. We were wrong. CNN’s enthusiasm is single-minded, insipid, and even, some could argue, journalistically irresponsible. CNN is enamored with that missing plane.
Our analysis: it was much worse than we expected.

Starting at 9:00 a.m. Eastern Time Friday (that would be 8:00 a.m. in the time zone where I live), we monitored CNN’s content off and on all day. In that first sixty minutes, here’s what we found.
At nine, viewers watched as CNN rolled into the top of the news hour. Carol Costello wasted no time, and she quickly summed up what we know: nothing. She transitioned us to Richard Quest, poised in New York City (nowhere near the Pacific, we point out), and for the next several minutes we listened intently as he bellowed through histrionic non-details about things we don’t yet know and facts not available to anyone. His conclusion: we just don’t know. Costello then brought in the traditional multi-screen talking head format. Tom Fuentes, a law enforcement analyst, loomed in one window, while Bob Francis, an entirely likeable fellow (who happens to be the former vice chairman of the NTSB) bobbled about in the right-hand screen.

Costello lobbed more questions that began with phrases like “how is it possible?” and “tell us what we know.” Fuentes and Francis did an admirable job of explaining that since we don’t know anything, they too, can only speculate. For the next few minutes all three engaged in speculation, based on nothing new—not even tasty rumors. “Let’s talk about what we know, and then, what we don’t know.” The conversation went in one, long circle.

Then, to add color and context, we went over to Tom Foreman. He, too, is a likeable and agreeable sort of reporter. Except when there is nothing to report. Foreman stood in a green screen space with giant maps underfoot—strangely illegible in spite of their vast size—and proceeded to show us a flight path on the floor which managed to crash the plane into the studio wall, twice. Now, he said, we learn it is possible that the plane flew west into the Indian Ocean for hours (at which point the studio camera widens and we see what appears to be a small hallway exit to the bathrooms).

The studio floor space is either not wide enough for his theatrics, or someone in charge of graphics in the control room can’t seem to find a better, more comfortably proportioned map. Thank God we finally see the edge of India or we would have panned all the way into the CNN snack room and vending machines. Geography lesson muddled, but complete.

Costello then intimated that it was break time, but before the commercials, she teased us with a look inside a flight simulator in Mississauga, Ontario, where CNN’s own Martin Savidge was standing-by (sitting, actually), and prepared to tell exactly what would have been happening in the cockpit of the missing airliner. Break time. It is now 9:23 a.m.

Back from break at about 9:26. Costello takes us to Martin Savidge inside that expansive simulator. This time, we are relieved that we will learn something. Plus, it’s cool-looking: lots of pretty green lights, and a few red ones. We learn that it is very easy to disable the transponder in a 777: this after a week of telling us that it is akin to brain surgery. Savidge turns a knob on the center console, a knob exactly like the ON OFF switch on the radio in the 1988 Pontiac Grand Prix I drove in college.  A couple of clicks to the left and the transponder is now off.

Savidge also shows us how to punch in a signal on a small keypad that will alert air traffic controllers—just about everywhere—that the flight deck is under the control of someone unauthorized. Paradoxically, that maneuver is harder to perform and seems kind of deliberate. It’s like watching someone struggle with the buttons on an ATM machine. (“Excuse me, Mr. Cockpit Intruder, but let me punch in some non-random numbers here on this little keypad that looks like a security keypad!”)

This part of the CNN hour is actually illuminating to me, and I feel I have learned something. But time is running short. CNN has nothing to report and the whole day in which to report it. Costello takes us to Pamela Brown (no connection to the Pamela Brown who writes for Thursday Review), CNN Justice Department correspondent. More discussion, more conjecture. “Well, there is just so much we don’t know!” The conjecture borders on “blind” conjecture. Break time. It is now 9:39 a.m.

At 9:42 we return, and I am thinking that surely, surely, CNN can’t possibly sustain this for the entire hour. It goes on. Costello takes us to Barbara Starr, a highly competent Pentagon correspondent who has a track record of breaking great defense department and security stories. She has nothing, save for the same speculation that everyone else has already recycled for the previous 42 minutes. Still, she makes a game attempt to provide something.
At 9:44 another break, then, at 9:47, back to Carol Costello. This time she brings in Michael Brown, a former Under Secretary of Homeland Security. He is in a TV studio in Denver, and for several more minutes he and Costello trade theories and conjecture. “We just don’t have enough information.” On it goes. Another break, another return to the studio. More conjecture.

At 9:56 Costello says there is other news, and for the next 65 seconds she breezes through a rapid-fire run-down: that plane on the runway in Philadelphia with the blown tire; freezing temps and harsh, snowy weather in the Northeast; Wall Street concerns over the crisis in the Ukraine. Each vignette takes about 20 seconds.

Another commercial break at the approach to the top of the hour, and then, at 10:00 a.m., we are back at it.  Association; then, some back and forth with Quest. There is lots of agreement between Quest and Cassidy: we just don’t have enough information; there are more questions than answers.

At 10:10 we go to David Gallo at the Woods Hole Oceanographic Institute in Massachusetts. By Skype he tells us “we just don’t have enough information.” He and Costello speculate anyway. After six more minutes, Costello dismisses Gallo, and we go back to Martin Savidge in that flight simulator where, we are told, we will get to relive those moments right before the plane disappeared from radar.

On it went—a more-or-less continuous cycle of speculation, conjecture, and random guesswork. We just don’t have enough information. There are so many unanswered questions. We’ve been lead down so many blind alleys. On and on.

Our plan at Thursday Review had been to monitor CNN for 90 minutes, at the most two hours. But now it had become fascinating to me–I am obsessed with their obsession. They adore this mystery.

At noon, and again at 1:00 p.m., the cycles began again, and repeated the same processes. The only small variables were slightly larger or slightly smaller search radiuses on those big maps, and a few new talking heads to replace the ones who left for lunch. By 1:15 p.m., Wolf Blitzer, now fully in charge of CNN’s main studio, was asking the same leading questions that Costello had asked four hours earlier. And by 1:56, when it was time to go again to the top of the hour break, we had again cycled through the exact same sequence of guesswork and speculation.

The process continued from 2:00 to 3:00, almost entirely unchanged save for a gradual shift in the types of commercials as the afternoon demographics shaped the ad content.

At 3:38 p.m. I left the TV to work at my computer, and when I returned at 4:00 p.m. the same cycle was starting afresh. I moved my laptop to the room with the TV, expecting a break of some kind to other news. There was none. Again at 5:00 we began the process, but this time with only the tiniest shreds of new information. For example, around 5:10 p.m., CNN was able to report that there was now greater search effort by the U.S. and others in the Indian Ocean that had been reported six hours earlier. The search area might have to be widened once again to include the ocean west of the Andaman Islands and well into the Bay of Bengal, and that there may be an effort to look further south as well. Also, there were a few new quotes from the Malaysian authorities, but nothing beyond the fact that nothing was being ruled out.
In other words, all options and scenarios were still on the table. There is just so much we don’t know. And so forth.

By evening, the baton was being passed from one A-list anchor to the next. Anderson Cooper carried the cycle for an hour, then, Piers Morgan for another stretch. Same questions, same speculative answers, same blind conjecture. By 9:00 p.m., CNN had repeated the same cycle of activity, through dozens of experts and analysts, and another dozen of its own reporters, with virtually no forward movement for 12 solid hours.

“This just in.” “CNN breaking news.” “Barbara, what are you hearing at the Pentagon?”
By the time I sat down to eat my supper at 9:05, CNN had spent roughly 95% of its non-commercial airtime on the same story, with only a tiny handful of “other news” headlines, each of which would last only 15 or 20 seconds.

What makes that number more shocking is that there was nothing new to report in those 12 or 13 hours of continuous news coverage on the one subject, that of the missing jetliner. No new or genuinely useful developments entered into the story.

Another two hours of monitoring CNN on Saturday produced a marginally more diverse result. There were some items about the GM recall and the potential for massive legal action against the automaker. CNN has been consistently late to this story, and its tardiness showed on Saturday as they reported much of the same information already presented by CBS and NBC days earlier, and as they began interviewing some of the same key players whose faces we first saw on Monday and Tuesday on other networks. Then, the news cycle from 12 noon to 1:00 produced three quarters of an hour of discussion about the missing jet, and what was left was given over to a loose patchwork of GM, weather and sports. Then, at 1:00, the cycle began afresh. More speculation, more guesswork, more interviews with people who said things like “we just don’t have enough information…”

Nearly every bureau had been employed. Even Nick Robertson, CNN’s man in Jerusalem, was brought in for a bit of feedback on Saturday, again shedding very little new light on an already dim set of circumstances. Clearly, the missing plane has been seen nowhere over the skies of Israel.

CNN’s outright obsession with the missing 777—when viewed in the context of our content analysis—seems wildly distorted, and certainly out of proportion when compared to the thin, sometimes scant, new data from their “sources.”

But CNN’s near-total absorption in the mystery may reveal a demographic pattern which has long been at the heart of the sometimes bitter ratings wars between Fox News and CNN. Fox News, not-so-secretly regarding its niche as predominantly “American” in its focus (never mind that it is owned by an Australian), has been largely successful in portraying CNN as the “liberal” cable news source. And, by liberal, some Fox loyalists can easily make the short jump to “foreign,” or even “not American.” Fairly or unfairly, CNN has been slowly nudged in that direction (think of how with every return from break the anchor or principal personality will say “we welcome our viewers from the U.S….and around the world!”) Fox makes few such stabs at internationalism.

Further, Fox has shrewdly heightened the notion that CNN is part of an elitist manifestation of liberal, left-of-center narrative—an easily acceptable (some might argue reasonable) point of contention for many U.S. conservatives for decades. CNN-haters dub the news outlet “Communist News Network,” unfair of course considering its ownership by a huge media conglomerate with enormous profits.

For decades, newsroom infrastructures and cultures were often skewed toward the left, and many surveys and polls conducted throughout the 1970s and 1980s proved that such suspicions were largely correct. Reporting regarding the war in Vietnam and Watergate had a lot to do with the solidifying of that perception. Still, most journalists regarded themselves as neutral: reporter first, liberal second…and they often believed that their progressivism guided them only after they removed themselves from their studios or pushed themselves away from their typewriters at the end of the work day.

But for U.S. Republicans in general—and politically active, attuned conservatives more sharply—much of the work of mainstream reporters and producers has been shaped, consistently and demonstrably, by a deeply held set of leftist and progressive political beliefs embedded in the culture of traditional journalism.

CNN has, over time, lost many of its most important ratings battles with Fox. The majority of those ratings fights were won by Fox over a decade ago.  In the early and mid-aught years, Fox opened up that lead over its competitor’s like CNN and MSNBC even further, and by 2008 was pulling in twice the viewership of CNN, and three times the audience of MSNBC.  And despite CNN’s slight ratings gains during the election cycle of 2007-2008, Fox still maintained it’s 2-to-1 advantage.  According to the Columbia Journalism Review, Fox now draws an average of 1.1 million viewers each night to its primetime programming.  It’s overall ratings give it more viewers on any given day than the combined audience of CNN and MSNBC.  Fox’s Bill O’Reilly has easily clobbered anyone CNN has attempted to place opposite him in the same time slot (though Anderson Cooper actually edged out O’Reilly in Friday hour of coverage of the missing jetliner). CNN has also conceded much of its hard-fought ground in terms of showmanship and stagecraft, eschewing “news” and traditional news-trappings in favor of glitz, glamor and a tit-for-tat acceptance of every electronic trick employed by the more aggressive Fox.

Finally, CNN has in many ways given up trying to maintain the perception (some might argue the illusion) of impeccable balance. Though it has been careful for years to maintain its position in the “middle” between Fox and the passionately progressive MSNBC (which can be even more vociferous than Fox on most days), Fox has taken too much of the forward ground.  There are few on the Red side of the American political and cultural divide who will ever go back to CNN, for any reason. Those on the left, generally, have little patience even for CNN, and flock to MSNBC or other sources online (Huffington Post, for example) for information filtered through a center-left lens.  The great divide, ever-widening as the internet’s freeform platform of blogs and mini-news services obliterate the gatekeepers once charged with maintaining the center of the national conversation, has left CNN poised awkwardly (and perhaps unfairly) on the left side of the chasm.

Further, CNN’s complete devotion to the story of the missing jetliner reveals much of its belief in a more internationalist approach, even anti-provincial, if you will. Fox News’ graphics and logos almost always show that little electronic flag waving, a not-so-subtle reminder to anyone flipping through the channels that they are watching an authentic American news source. CNN may have conceded (if, in fact, they ever had owned it) the high ground of being invented and developed in the U.S. heartland. Therefore, they go in search of audiences elsewhere. Domestic items—the apartment building explosion in Harlem, recent stress fractures in Obamacare as the deadline approaches, a vicious knife fight between the Senate, the NSA and the CIA over who is spying on who in Washington—became small local issues compared to the missing 777. And with an ever-widening search area now fanning out as far west as Iran and as far north as Mongolia, the international angle seems to the CNN to be the best turf to occupy—for now.  Fox News, conversely, has not obsessed over the fate of that missing airplane, though their coverage has been as thorough as the circumstances of minimal new data would allow.

Like ABC during the early days of the Iranian Revolution of 1979 and the ensuing hostage crisis, CNN may be betting that they have the pulse of something bigger. Plus, maybe they are the right network in the right place at the right time. They were, after all, on the air when the Challenger exploded in 1986, and they were ingenious and tenacious enough to wrangle their way into a high rise hotel suite in downtown Baghdad for the start of the Gulf War. In January of 1991 the entire world watched CNN, electrified, when the voices of Bernard Shaw, John Holliman and Peter Arnett sent those live dispatches from room 906 of the al Rasheed Hotel. Maybe this time they have caught that same perfect wave. People love a good mystery, and the story of the missing 777 is loaded with possibility.

Still, it is hard to explain the sort of single-minded news cycles viewers experienced between Thursday and Friday of this past week, especially when so little information was coming in. In the absence of news, the once-great network became a repository of speculation, guess-work, conjecture, parlor games, and outright self-inflicted, unintended satire. Indeed, for many watching, CNN became a kind of parody of its former, sensible self.

On the other hand, CNN may be obsessed and crazy, but they may also be crazy like a fox (pun intended). Preliminary ratings by Neilson show that CNN had managed, by mid-week, to have regained ground long ago lost to Fox News. By Friday (the day we did our continuous analysis) they had briefly bested Fox News, and that night, for the first time in years, Cooper trounced O’Reilly.

Related Thursday Review articles:

Of Showmanship & The News; R. Alan Clanton; Thursday Review; January 7, 2014.

How to Zuck Up the News; Thursday Review staff report; December 29, 2013.

– See more at: http://www.thursdayreview.com/CNNmissingAirliner.html#sthash.2gnnkBMw.dpuf

How Much Will You Pay for Coffee?

Columbia Java

By R. Alan Clanton Thursday Review editor

(March 14, 2014) A few weeks ago we ran an article called “Coffee Prices: The Woes of Joe,” in which—among other things—we examined the severe drought which has affected the coffee output of Brazil, a nation currently supplying nearly one third of the world’s coffee. The reaction on social media and in emails was swift and vocal: the hardcore coffee drinkers would be undaunted by any price spike.

One reader on our Word Press blog said she would give up electricity and even food in order to keep coffee around in her kitchen. Another follower on Facebook wrote “sell the car, sell the house; keep the coffee maker and my last bag of Peet’s.”
Coffee enthusiasts, it seems, have to have their coffee fix.

Over the last six months, U.S. coffee prices have spiked, climbing by 29%, faster than the much-discussed increase in the cost of food and groceries (you can thank the California drought and the combined forces of multiple Polar Vortexes for that), the big surge in home energy prices, and a dramatic rise in insurance rates in the scores of states most affected by a harsh winter where mortgage insurance jumped.

In fact, coffee prices have risen disproportionally faster than almost anything, especially when compared to food and groceries. The reasons: a perfect storm of negative conditions.

The drought in Brazil has been one of the worst of recent decades. And though dozens of other countries around the world produce high quality coffee (Vietnam, Indonesia, India, Costa Rica, Guatemala), Brazil’s production still outstrips all others combined, even that of its famous coffee-producing neighbors, Columbia, Ecuador and Peru. Any significant dent in Brazil’s supply can have an immediate effect on prices worldwide, but especially in the U.S. and Canada where demand has risen in recent years.

The other problem is disease. Coffee, which is difficult to bring to maturity and grow, is also sensitive to pests and diseases. A blight which has affected vast tracts of coffee farmland in Costa Rica, Honduras and El Salvador has effectively cut 35% or more from Central American production, part of which feeds the supply chain right into grocery store brands like Seattle’s Best and retail shops like Starbucks.

The principal antagonist is a fungus called Leaf Rust. Rust has spread its nasty affliction widely across Latin America, damaging crops and forcing coffee farmers to experiment with a variety of techniques— grafting plants, testing hybrid seeds, deploying fungicides, even developing experimental nurseries—in an effort to push back against the disease. This make this aspect of the problem more troublesome is the fact that the tenacious, irascible Rust can quickly evolve and morph, sometimes in a matter of weeks, rendering any long term solution useless.

Another problem is a bug known as the cherry-borer, which tunnels into coffee cherries while they are in the fruit stage, effectively destroying the beans before they can reach maturity. The borer, many farmers and botanists believe, may be on the rise because of climate change; warmer temperatures give the pest a greater lifespan and longer opportunities to do its damage, even at higher altitudes where temperatures are traditionally cooler and less hospitable to the bug. Both leaf rust and the cherry borer problem can be solved by deeply pruning plants, or cutting them back completely, but that can result in the plants producing no cherries for two to three years while the plant regains its maturity. For some farmers, that wait can be financially catastrophic.

In the meantime, coffee speculators and investors, eager as always to make a buck on the front end of the trouble curve, have driven prices even higher. On the commodities markets, arabica coffee futures saw a jump of over 85% in a matter of months, and some analysts predict that the price could go even higher, especially if demand does not show any signs of slowing down.

The Brazillian drought will hurt major coffee makers Folgers and Keurig-Green Mountain the most, since Brazil is their dominant supplier. But the ripple effect will eventually hit everyone who drinks coffee, including those who love the high end operations like Starbucks. Starbucks, which sells almost as much coffee in stores as it sells in its coffee shops, says it plans to hold off on any immediate price increase—at least for now. The Seattle-based firm cites their large inventory and backup supplies, carefully and copiously secured before the crisis, as the central reason they can be patient.

But some coffee industry analysts suggest that even Starbucks will be forced to make some kind of adjustment soon, either in the form of price increases, or through alternate buying patterns (which could have the negative effect of rankling customers accustomed to Starbuck’s carefully crafted flavors and blends).

Demand is unlikely to slow. The vast majority of coffee drinkers readily admit they would pay more for the same cup of coffee, and they are generally loathe to consider substitutes—even cheaper brands of coffee.

The two main types of coffee are arabica and robusta. The former is used to produce many of the world’s high-end flavors and blends; the latter is used primarily in low-end brands, institutional coffee and instant coffee. Last year, Brazil produced nearly half of the arabica sold worldwide.

Other big producers of Arabica include Columbia, Honduras, Peru, Ethiopia, Mexico and Guatemala.

Related Thursday Review articles:

Some Sweet Financial News; Thursday Review; March 14, 2014.

Coffee Prices: The Woes of Joe; R. Alan Clanton; Thursday Review; February 5, 2014.

– See more at: http://www.thursdayreview.com/CoffeePrices3-14-14.html#sthash.tbGz2CGO.dpuf

Why Joe McGinness Changed Our Perception About Politics

IMGP5168_crop

By R. Alan Clanton Thursday Review editor

(Published March 12, 2014) The first book by author Joe McGinniss was one of the central reasons I became interested—at the tender age of 12 years old—in the overlap between politics, advertising and electronic media. It was an expensive purchase at the time, especially since I was using only my allowance and neighborhood lawn care earnings. But for $5.95 (roughly equal to the value of a new vinyl record album in those days) I bought a copy of The Selling of the President, 1968 at a small bookstore in a nearby mall.

I consumed that book in a matter of days. I reread it again when I was 15, and again when I was 18. If that qualifies me as a nerd, well, guilty as charged. I still have that edition of the book, then already in its third printing.

McGinniss arrived on the national scene in large part because of the intimate descriptions of politics found in that book—a form of political reality which had less to do with handshakes and baby-kissing (the sort of stuff that Richard Nixon didn’t particularly enjoy anyway), and had more to do with the craftsmanship and care taken to make Nixon look good in front of the television camera. Madison Avenue and West Coast advertising was in its golden age, and Nixon and company weren’t going to make the same mistakes that had been made in 1960.

Eight years earlier, a couple of debate confrontations between a young vice president Nixon and the junior Senator from Massachusetts, John F. Kennedy, had been about as decisive as any televised event could be in the arena of politics.

Though he was as qualified to become president as any man could be, Nixon came across as uncomfortable and ill-at-ease. On the TV screen that night he could be seen sweating; his eyes shifted nervously under heavy eyebrows; his dark five o-clock stubble shown through the hastily-applied makeup; his grey suit made him wash into the background; his skin color was pallid and powdery. Having banged his already injured knee into the door of his limousine moments before he entered the TV studio, he was forced to shift awkwardly at the podium to give relief to one leg. His appearance that night could not have been worse.

At the opposite podium stood Kennedy: handsome, poised; tanned; comfortable in his skin and tidy in his neatly-tailored dark suit; engaging; at ease at the podium, even witty. The contrast between the two men—powerful and effective in 1960—still resonates even to this day. Those who listened to the debate on radio thought Nixon had won, but those millions who watched it on TV, an all-time record number of viewers that night, gave the win to JFK.

That debate forever changed American politics.

As a young political reporter for the Philadelphia Inquirer, Joe McGinniss was assigned to cover the Nixon campaign of 1968. Nixon’s long comeback from the wilderness had been something of a miracle, and McGinnis sought to report on Nixon’s phoenix-like return from a different angle than the usual dispatches from the primaries and the typical fare found in most newspaper accounts. McGinnis asked for, and received, unusually close access to Nixon’s ad men, strategists and handlers. Among them was a very young Roger Ailes, the man who would later invent Fox News and shepherd it into national prominence.

McGinniss dug in to the convergence where the slick ad hucksters worked alongside the political operatives like John Mitchell, Herb Klein and Bob Haldeman. After his losses in 1960 and again in California in 1962 (Nixon ran, but lost to Governor Pat Brown), Nixon’s entourage realized that the former vice president would need to be repackaged. And that’s where McGinniss turned his observational skill and writer’s instincts.

A man of an older and more stoic generation, author Theodore White was by then the king of the magisterial epic—American presidential campaigns as a metaphor for the pageantry of Democracy in the post-War age. Landscapes rolling gently by train windows, the faces in crowds in places like Peoria, Boise, Evansville and Richmond, the colors of flags and signs and confetti at rallies, the panorama, the grandeur–that sort of thing.

McGinniss, representative of a new generation, saw the process in a different light, and wrote something far more intimate about the confluence of TV and politics than many were prepared to digest or understand. Given nearly unlimited access to the campaign, McGinniss spared nothing. The result was a book which was not always flattering of Nixon, and a complex rendering of the smart men around Nixon which—some have argued—seems a strangely prescient prequel to Watergate. Even the title of the book was meant to repudiate the magisterial series forged by Theodore White, whose handsome volumes had titles like The Making of the President, 1960, and so forth, every four years.  McGinniss’ fly-on-the-wall retelling made more than a few people squirm, especially for its unflattering depictions of a deeply cynical business.

Even now there are those intimately connected to Nixon’s 1968 campaign wondering aloud how McGinniss bore witness to some of the scenes painted and some of the moments described. Likely, he employed a kind of cloaking device—a tool of invisibility which allowed him to fade into the wall, or perhaps become one with a studio lamp. No matter, politicians would rarely allow writers such access again, and the notable exceptions—Bob Woodward, for example—are few even to this day.

McGinniss also let loose a form of writing which endures and endears to this day. Like Hunter S. Thompson, McGinniss was deliberately careless in concealing his distaste for the grimy side of politics. His dislike of Nixon shows its colors many times throughout the book, but even conservatives and lifelong Republicans readily admit that the book is a must-read. William F. Buckley, Jr. chided McGinniss for the unscrupulous ambush the book becomes, but also commended it for being a smooth and entirely likeable read.  It remains entertaining, as well as uncanny in its dry, sometimes cynical observations. In chapter 12, McGinniss says that Nixon “depended on a television studio the way a polio victim relied on an iron lung.”

The book contains remarkable early glimpses into the inner workings of a major modern political campaign in the age of cinema verite, along with the complex power struggles, the egos and the infighting, and the tension between the hucksters and their counterparts among the old school political street-fighters. Many of the book’s players would go on to fame (or infamy): Ailes, Haldeman, Mitchell, Fred LaRue, Dwight Chapin, Kevin Phillips, Len Garment, Ron Zeigler, Patrick Buchanan, advertising men Harry Treleaven and Frank Shakespeare, former New York Herald-Tribune writer Ray K. Price. The appendix included verbatim scripts, media battle plans, and lengthy internal memos by Treleavan, Garment and others—memos peppered with so many references to Marshall McLuhan that the reader cannot help but chuckle at the unintended irony.

Once one starts reading the book, one cannot put it down.

McGinniss went on to write other books. Some were successful, others were not so. Perhaps his most widely known book outside of the rarified world of politics is Fatal Vision. In this book, McGinniss tells in chilling detail the story of the former Green Beret turned Army physician, Jeffrey MacDonald, who was accused of murdering his entire family in North Carolina. McGinnis was granted access to MacDonald and his entire legal team, as well as rare access to the crime scene itself. Dr. MacDonald’s attorneys concluded that McGinniss might be useful to them to craft a narrative of innocence, and, perhaps when the book reached publication, lead the public and the media toward a reversal of a potential guilty verdict.

Unfortunately for the charming and handsome Jeffrey MacDonald, McGinniss came slowly—sometimes painfully—to the conclusion that the doctor did in fact murder his family, and McGinnis said as much in the conclusion to the book. A bitter lawsuit ensued, followed by multiple documentaries, films, books, scores of essays, and a famous series of 60 Minutes investigations which stretched out over the decades. MacDonald has maintained his innocence, blaming the gruesome murders on a home invasion by drug-addled hippies and cultists. MacDonald has his defenders, including some writers who have been critical of McGinniss’ journalistic methods. The case remains in legal play even today. In 2012 the former Green Beret was given a hearing to consider new evidence.

Later, McGinniss wrote Blind Faith, another grisly crime story in which the author was given unusually close access to the parties involved, in this case the family members of a New Jersey businessman who was accused—and convicted—of hiring mob hit men to kill his wife in order to use the resulting insurance cash to pay off heavy gambling debts. He also wrote Cruel Doubt, published in 1991, which describes the chain of events surrounding a group of teenagers who, acting out particularly violent scenes from the role-playing game Dungeons & Dragons, commit murder.

McGinniss did not invent the genre, and most literary students and historians trace the style to Truman Capote and his groundbreaking In Cold Blood. But McGinniss forged deeper into the terrain than many previous crime authors had been willing to go, most of the other authors copying the form invented by Capote. Capote had also developed a personal friendship with the accused killers, and especially Perry Smith. McGinniss went further, forging the sort of partnership with MacDonald (and others) that many journalism purists felt crossed the line.
His much-awaited biography of Teddy Kennedy, The Last Brother, an unflattering look at the third Kennedy brother of their greatest generation, was roundly panned by critics upon its release in 1993.

Still, McGinniss was unfazed over the years by the complainers and the criticism. His writing style generally won the day with those who read his books, and they either became best sellers (Fatal Vision; The Selling of the President: 1968) or they fell flat. Years later he was paid a handsome advance to write a comprehensive book on the O.J. Simpson case. After sitting through the legal proceedings for months, he concluded that the trial was a made-for-TV farce. He declined to write about the case and famously returned the money to the publisher.  Some years after that, while writing about politics in Alaska, he got into a public dustup with Sarah Palin.

McGinniss was not a Boomer, despite his boyish appearance and the near total co-option of his writing and his persona by the Boomer Generation. He was born in 1942, which made him a War Baby, too young to be a part of the Greatest Generation’s struggles, but young enough to give him ample leeway as a mentor to a much younger generation of writers and authors. Though his books brought him financial independence, he taught for many years at the exclusive, pricey Bennington College in Vermont. Among his students were late-Boomers Donna Tartt, Jill Eisenstadt and Bret Easton Ellis, all of whom would go on to moderate success as novelists—Ellis for books like Less Than Zero, which chronicled the empty, shallow lives and drug-addled culture of teens and young adults in Los Angeles in the 1980s (later made into a movie starring Andrew McCarthy and Robert Downey, Jr.); Tartt for The Little Friend (2002) and The Goldfinch (2013).

Many of McGinniss’ student successes became part of the 1980s fiction movement often dubbed “The Literary Brat Pack,” a cadre of young writers which included Jay McInerney and Tama Janowitz. Ironically, fiction was never McGinniss’ bag, though the consensus among his students at Bennington was that he was an generous mentor and excellent teacher.

McGinniss died Monday, March 10 from complications of prostate cancer.

– See more at: http://www.thursdayreview.com/JoeMcGinniss.html#sthash.OEM6jnsY.dpuf

Good Putin, Bad Putin

Photo courtesy NBC News

Photo courtesy NBC News

By R. Alan Clanton Thursday Review editor

One of the roles incumbent upon any nation that willingly accepts the title “the world’s policeman” is that of referee in neighborhood disputes and domestic disturbances. When the call comes, the cop can intervene, sometimes with appropriate violence, or he can ignore the call, concluding that it is in someone else’s jurisdiction.

The U.S. has played that role often since the collapse of communism and the dismantling of the Berlin Wall, and American presidents from Bill Clinton to George W. Bush to Barack Obama have all sought to minimize the inevitable historical linkage: this could become another Vietnam. In fact, Afghanistan did become another Vietnam—only worse—and Iraq is slowly devolving into chaos and fragmentation despite billions spent and thousands of lives lost.

Irony and bad timing (often combined) frequently play roles in the global cop’s schedule. Vladimir Putin put on his best face, let down his hair, and even smiled a little while his country served as host to the Winter Olympics in Sochi, Russia. The world watched as the opening ceremonies drew close; millions braced for what seemed the inevitability of an act of terror by separatists or jihadists. But other than a lack of snow and a few electronic failures, the games went off without major incident.

Meanwhile, the Ukraine rapidly descended into the abyss of political turmoil, then, violent upheaval. Even before the Olympics ended, it was apparent that the stress fractures in Kiev had the dark potential to overshadow other world events. Then, less than a week after Defense Secretary Chuck Hagel announced significant cuts to U.S. military spending beginning this year, the inevitable result of post-war budget adjustments as the last troops begin their careful withdrawal from Afghanistan, the Ukraine became the new international flashpoint, suddenly displacing all our worst fears (North Korea, Iran, Syria) with a shocking reminder that some strands of post-Cold War DNA remain embedded, dangerously, in the international fabric.

It’s never the cartoonish bad guys who pose the genuine threat. Indeed, for how many decades has a belligerent and incorrigible North Korea threatened the stability of the Asian neighborhood? Syria’s descent into a humanitarian abyss is now in its fourth year; if we were going to enter that fight, the time has long since passed.  And the Iranian mullahs have been stoically going about the business of hating the west, inciting the burning of lumpy American presidential effigies, and threatening the existence of Israel since the day after the Shah flew out of the country, nearly 35 years ago.

But Putin, the ex-KGB officer and former Cold War apparatchik, is no frothing, unhinged madman. He is instead a coldly calculating, savvy politician with a very old and very bloody axe to grind, which makes him far more dangerous than the serial cranks in North Korea or the latest bearded and bespectacled supreme leader in Iran. For Putin, this is no roll of the dice: Russia’s recent takeover of the Crimea and his icy disregard for Ukrainian sovereignty reflect his belief that the U.S. will sit this one out. Like his former Soviet comrades from the Old Days, he can turn his back to diplomatic leverage and harsh language, and he may be accurately judging that the threat of economic sanctions by the U.S. and some of its allies will be offset by a general reluctance on the part of oil-dependent European Union member states to engage in a dustup with a major supplier of oil and gas.

This is not where the Obama administration wanted to be, and the Ukrainian crisis is a stark reminder that foreign policy challenges often arrive as a surprise. Almost overnight, the Ukrainian narrative turned from that of an odorous, self-aggrandizing strongman, ousted by the sheer force of democracy, non-lethal fireworks and social media, into a full-scale invasion by Russian tanks and armored personnel carriers, and against the specter of what looks to be a dismal, grey replay of the Hungarian Uprising or the Czech Revolt of past generations.

A brief geography lesson: the Ukraine is much larger and much more broad-shouldered than many people realize. In fact, it is immense. At 233,000 square miles (603,000 kilometers) it is the largest European nation, if one does not count the European half of Russia. To its northeast and its west, it shares over 800 miles of border with Russia. To its northwest and west are Belarus, Poland and Slovakia, and along its southwest borders are Hungary, Romania and Moldova. Then, along its southern shores is the Black Sea, where the aforementioned Crimea—an autonomous region—sits surrounded almost entirely by water.

Winding its way more-or-less through the country’s middle axis is the Dnieper River, slicing the nation in half through the capital city of Kiev before emptying into the Black Sea. There, on the sunny, mild waters sits Sevastopol, home of much of the Russian fleet, and a port leased from the Ukraine by the Russians. For Putin, this is the jewel in the military crown. Ukrainians on the eastern side of this divide share a kinship with, for the most part, their former paternal masters in Russia. Ukrainians on the west side of the Dnieper are, by and large, inclined toward European values, the European Union, and the United States and its economic model. The Ukrainians west of the Dnieper are also more agreeable to an alliance with NATO, whereas those on the eastern shore feel a closer connection to the Warsaw Pact nations and Moscow’s guidance.

This cultural and political schizophrenia has rumbled just beneath the surface of Ukrainian politics ever since its creation upon the dissolution of the Soviet Union in 1991. The give-and-take nature of the electoral processes have been a seesaw for Ukrainians, as Viktor Yanukovych, then, his rival Victor Yushchenko, traded roles as the nation’s leader. Yanukovych first won the presidency in an election that most observers say was rigged, Soviet-style. Yushchenko challenged that outcome, and the political nastiness has continued to this day. (Imagine if George W. Bush and Al Gore had traded power, back and forth, between 2001 and 2008, each contesting the other’s legitimacy).

Perhaps as a direct result of this internal discomfort, the Ukraine has suffered economically despite its remarkable gifts—a robust technology and communications sector, stronger-than-average manufacturing output, and one of the most fertile agricultural tracts in the world (The Ukraine was once known as the breadbasket of Europe). Oil and gas shortages and economic pain came when Russia cut off the Ukraine’s supply lines, as political retribution, in 2006 and again in 2009. In those crises even the Ukraine’s trading partners in Europe suffered. The Great Recession hit Ukraine’s economy hard in 2008 and 2009, and the country saw its economy shrink by over 15%.

Despite this, the majority of Ukrainians fostered an ever-deepening desire to establish stronger economic ties with Europe, and, by extension, the U.S.

Yanukovich, however, did not share this love of all things western, and ignoring a mass movement for the Ukraine to join the European Union, he refused to sign off on any alliance with the EU, vetoed any further discussion, and instead unilaterally tied the country to Russia. Then, beginning months ago and as the world watched, mass protests began in Kiev’s public spaces and central parks. The confrontations were non-violent at first, then, escalated into increasing violence as Yanukovich’s police and military attempted to crack down on the protesters and clear Kiev’s public spaces.  When the protests reached their crescendo, and at the moment when it appeared the Ukraine was descending into bloody civil war, Yanukovich fled Kiev, leaving citizens and tourists to peruse his vast estate and his opulent multimillion dollar villa.

Caught up in the news of daily humanitarian horrors emerging from Syria, entrapped in a complex shell-game with Iran over weapons of mass destruction and economic assistance, and ever-watchful of North Korea’s Kim Jong-Un, a third-generation Marxist-Leninist tyrant who now commands the Earth’s fourth-largest standing army and presides over a nation ranked as the least-Democratic on the planet, the administration of President Barack Obama seemed unprepared for the rapidly-moving events in the Ukraine, and its startling next chapter as Putin, like his predecessors Joseph Stalin and Nikita Khrushchev, rolled in tanks and heavy weapons.

Now, if the political processes continue in Crimea, Ukrainian citizens on the peninsula may be allowed to vote for their independence from the rest the Ukraine as early as Sunday. This would put Crimea squarely and neatly into Putin’s jacket pocket, and perhaps partially legitimize the Russian invasion. It may also embolden Putin to take the additional military action that some analysts suspect is next—a full-scale invasion of southeastern Ukraine. That means a shooting war.

This was clearly not the tense confrontation the president’s strategists were expecting to face in Obama’s second term.

Putin, who has shown no hesitancy to use maximum force in the region, is little troubled by U.S. threats of sanctions and diplomatic action. The Russian president perhaps correctly reads the American mood as being a mixed bag of war-weariness and heavy domestic distraction—reductions in military spending, growing concerns about the stability of Afghanistan upon the removal of the last pair of U.S. boots, endless handwringing over the Keystone Pipeline project, another round of budget troubles ahead, and more print and web space devoted to Justin Bieber, Kim Kardashian, Kanye West and Miley Cyrus than to foreign policy or its direct economic implications.

And rather than mellowing and tenderizing Putin, his $51 billion Olympics may have instead given him cover for taking a more proactive role in the region. Though transparently dishonest, he can nevertheless easily transfer regional fear and paranoia about Chechnya’s terror cells into one of hooliganism, civil unrest and outside agitation—applying all of it to his justification for the invasion. Putin has been openly testy about the possibility of a Ukraine aligned with the European Union, and he seems little troubled by any scenario in which he uses force to reshape the political template in Kiev to his satisfaction.

Still, some are optimistic that economic leverage can bring results—even if that result is a de-escalation of tensions. Russia’s economy has seen four or five years of measurable decline, and almost any form of sanction or market punishment will have a negative multiplier effect on Russia’s future. Russian oil, gas and technology companies have already lost money this year, and sanctions could inhibit those sectors even more. Among Putin’s friends are several oil and gas billionaires whose fortunes could be quickly altered—and decimated—by even modest levels of global market pressure. Want to squander the political friendship of a half dozen billionaires? Try being the guy instrumental in losing half or more of their projected earnings.

This alone may give Putin pause, and may be reason enough for him to stop at the narrow bottleneck frontier between Crimea and the mainland of the Ukraine.

The U.S. and NATO have sent AWACS early warning planes and other aviation hardware into the area, and the surveillance aircraft will begin closely monitoring the airspace of Crimea and southern Ukraine. Some AWACS planes will also begin routine flights along the eastern borders of Poland and Romania. Neither the President nor the Pentagon have indicated whether they plan to use unarmed drones for more extensive, closer surveillance.

Ukrainian Prime Minister Arseny Yatseniuk plans to speak to the United Nations general assembly this week, and his remarks will include the official Ukrainian position that the Russian incursion is unwarranted and uninvited. He will also ask for worldwide condemnation of Russia’s invasion.

British Prime Minister David Cameron, while indicating that military action is unlikely, nevertheless suggested that if diplomatic efforts fail, stringent economic leverage will be necessary to punish Putin for the incursion. But not all European leaders want to engage in heavy market sanctions since Russia can easily cut off oil and gas supplies, and such shortages can have immediate and often catastrophic effects.

In the meantime, polls in the U.S. indicate that the majority of Americans are not interested in going to war with Russia. According to Pew Research (and other polls conducted recently) fewer than 29% of Americans want to use force to oust the Russian invaders from the Ukraine. Well over half, however, favor the use of economic sanctions to compel Putin to back down.

– See more at: http://www.thursdayreview.com/UkraineCrisis.html#sthash.kZ9wMhd2.dpuf

Radio Shack’s Image Deficit

radioshack

By Thursday Review staff

Electronics retailer Radio Shack may have had one of the best ads in the 2014 Super Bowl—many people voted the retro 1980s piece as among the ten best of the big budget ads seen by over 111 million viewers—but Radio Shack’s business numbers have not fared as well lately.

The Fort Worth-based Radio Shack has been losing money. Some analysts would use the word hemorrhage to describe Radio Shack’s position. About the same time that J.C. Penney announced it planned to close 33 stores nationwide, rumors were circulating in the business press in February that there would be some layoffs and perhaps some store closures for Radio Shack.

Overall, Radio Shack’s sales were down 19% over the previous year.

When the announcement came this week its their fourth-quarter sales were far worse than expected, and that its profits so far this year were even worse, those familiar with the company braced for the bad news: Radio Shack plans to close over 1000 stores and lay off thousands.

Like many of the big retailers, Radio Shack suffered over the holidays for a variety of reasons. The two big problems were the Target hack, which may have inhibited credit card sales for all retailers in North America, and a particularly harsh winter which began its fury of snow and ice in the weeks before Christmas. Almost all retailers felt the pinch, and online sales spiked as many gift-buyers chose to shop online instead.

The Super Bowl ad, which featured a montage of images and icons from the 1970s and 80s, was meant as a light-hearted way to address a problem the company has had for a decade: the iconic electronics chain has been unable to transform its image from that of a “radio parts” and battery store, into the 21st century of high tech gadgets, smart phones and digital communication. The perception is strong that the typical Radio Shack has shelves stocked with audio cassette tapes, incandescent tubes, VHS head cleaners and “C” batteries. As a result, younger shoppers rarely visit Radio Shack.

Some marketing surveys indicate that few people realize that Radio Shack sells smart phones, laptops or other high tech swag.

Still, Radio Shack’s new CEO Joe Magnacca says that a reversal of this misfortune is possible, and, in fact, under way now. Much will depend upon the retailer wooing younger shoppers and technophiles back to the store, and this will almost certainly involve heavy advertising to transform its image. Time to fire the ad agency responsible for that clever, slick Super Bowl ad and hire a team which can turn Radio Shack’s image around, quickly. Radio Shack’s stock value fell by 15% on the news of recent losses.

Related Thursday Review articles:

Target Faces Profit Loss; Thursday Review; February 26, 2014.

JC Penney to Close 33 Stores; Thursday Review; January 18, 2014.

– See more at: http://www.thursdayreview.com/RadioShack3-4-14.html#sthash.bRJ7buZS.dpuf

Albertson’s & Safeway to Merge

albertsons

By R. Alan Clanton, Thursday Review editor

(Originally published March 8, 2014) The private equity firm Cerberus announced this week that it intends to foster a merger between grocery store chains Albertson’s and Safeway, each of whom have struggled in recent years to compete with the emergence of online food sales and the ever-expanding footprint of online retailer Amazon. Albertson’s and Safeway have each also taken serious hits from the superstore models offered by Wal-Mart and Target, and from membership-only operations like Costco.

To allay fears of serious problems and to avoid a stock devaluation, Cerberus said that it has no immediate plans to eliminate stores, though there may be a few reductions in management roles, as well as streamlining in other areas such as purchasing and distribution. Though neither Albertson’s nor Safeway expect any major problems with regulators, both chains may have to divest themselves of some stores to comply with Federal Trade Commission rules.

Spokespersons for Albertson’s and Safeway said that the merger was designed to be a proactive step toward remaining competitive with the larger chains, like By-Lo/Winn-Dixie and Kroger—which recently announced a buyout of Harris-Teeter. Cerberus—the private equity firm which already owns Albertson’s—framed the merger as a positive step in the face of recent falling sales.

Robert Edwards, Safeway’s current CEO, will become the chief executive in the newly merged grocery giant.

Recent innovations by online food sellers and a resurgence of interest in web-generated grocery delivery services have put a significant dent in the sales of many of the major grocery store chains. Further, Amazon.com—which now offers extremely competitive pricing on a variety of food products and grocery items—continues to challenge the traditional retail model by offering faster delivery processes, including, in some cases, same day delivery.

Safeway is already the number two grocery store chain in the U.S., and Albertson’s bid to combine with Safeway is designed to make the newly merged larger than the largest American grocer, Kroger. Kroger, also, has seen some drop in sales recently as a result of fierce competition with Target and Costco, and from customers who have begun making grocery purchases online.

The combined announcements from Cerberus, Albertson’s and Safeway stress that the newly formed giant will have powerful cost-saving tools and greater efficiency, and they point out that customers will benefit from the economies of scale—greater buying power, more efficient distribution and reduced overhead.

A few business analysts pointed out the striking similarities between the Albertson’s announcement and Brian Robert’s recent statements about the customer benefits of the proposed Comcast, Time Warner merger. There were immediate concerns from consumer advocacy groups that the merger would ultimately mean less competition and higher prices, as well as inevitable layoffs.

Albertson’s is headquartered in Boise, Idaho, and Safeway’s current corporate offices are located in Pleasanton, California. Safeway currently operates about 1300 stores nationwide, though most of these are on the west coast. Albertson’s owns 1075 stores. Combined with Cerberus’ other grocery operations, such as Shaw’s and StarMarket, the newly combined grocery giant would have over 2500 stores nationwide.

The merger would leave the Lakeland, Florida-based Publix as the third largest grocery store chain in the U.S.

Cerberus bought Albertson’s in 2006.

Related Thursday Review articles:

Target Faces Profit Loss; Thursday Review; February 26, 2014.
Kings of Content: Why Comcast is Inevitable; R. Alan Clanton; Thursday Review; February 28, 2014.

– See more at: http://www.thursdayreview.com/AlbertsonsSafeway.html#sthash.qfmlUg1z.dpuf

Crash Landing: The 1969 Seattle Pilots

seattlepilots69

By Kevin Robbie, Thursday Review contributor

As the tumultuous decade of the 1960’s drew to a close, America had witnessed significant social upheaval and change resulting from the war in Vietnam, the Kennedy assassination, the civil rights movement and other events, including the zenith of the American space program. Against this backdrop of change and uncertainty, many people sought comfort in familiar activities and habits such as baseball.

Baseball is regarded as the major sport most rooted in tradition and the most prone to gradual, incremental change. During the early and mid-1960’s major league baseball had expanded to twenty teams from the original sixteen. In addition, the National League had returned to New York after the Dodgers and Giants moved to California and baseball’s western momentum had seen teams added in Los Angeles and Houston. The population of the western United States had grown and the interstate highway system had expanded as well. Baseball’s regular season had been increased to 162 games to reflect the greater number of teams. Otherwise, the structure and pace of the game remained largely intact and baseball was still the game which many fans had grown up enjoying.

By late 1967, the urge to expand had returned to the major leagues and was motivated, in part, by the potential legal ramifications of the move of the Kansas City Athletics to Oakland. The A’s owner, Charlie Finley, had moved the team after several seasons of futility and financial hardship in Missouri. Stuart Symington, an influential Missouri senator, threatened action in Congress to abolish baseball’s anti-trust exemption, which tied a player to an organization in the era before free agency.

Although voters approved a bond issue for a new stadium in Kansas City, Finley moved the team to Oakland, where construction of a new stadium was already underway. Senator Symington blasted Finley on the floor of the Senate and uttered his threat against the antitrust exemption. Major League Baseball responded by announcing another round of expansion, guaranteeing an American League franchise to Kansas City. American League owners selected Seattle as the second expansion franchise. The National League, not to be outdone, added Montreal and San Diego.

During the 1960’s the city of Seattle had enjoyed sustained economic growth—developing and maintain major defense contractors, avionics, and airplane manufacturing, to name but three—and the city hosted the World’s Fair in 1962. The fair turned a rare profit. The exposition left behind several cultural and sports venues, including the 605-foot Space Needle. One purpose of the fair was to provide a glimpse or gateway into the potential of the future in terms of lifestyle and technology.

Many Seattleites believed their city was ready to shed its provincial reputation. The world’s Fair was one method for doing so. Major league sports was seen as another avenue for civic pride and image-building. To that end, Seattle was awarded an NBA expansion franchise, the Supersonics, in 1966. The future appeared bright for the prospects of major league sports in Seattle.

Seattle had a rich history of minor league baseball, dating back to 1890. Seattle fielded a team, the Rainiers, in the Pacific Coast League (PCL) from 1919 to 1968. The team, in brief interludes, had also been nicknamed Indians and Angels. Seattle’s PCL team won seven league championships during those years and enjoyed impressive attendance from 1938 to 1952. They also won the league pennant in 1966. However, in the late 1950’s attendance at minor league games declined in general, due in part to increased television coverage of major league games.

Local brewery magnate Emil Sick purchased the team in 1938 and a stadium was built for the team. Sick’s popular “Rainier” beer was sold at the games which certainly did not hurt attendance at the new venue. The stadium was named “Sick’s’ Seattle Stadium” after the owner. The name “Sick’s” became highly appropriate by the time major league baseball arrived in 1969.

Seattle’s new major league team, the Pilots, was owned and operated by two brothers, Dewey and Max Soriano. The Soriano brothers were lifelong residents of Seattle and both of them had worked for the Pacific Coast League, Dewey serving as league president. The brothers had extensive experience in the business aspects of professional baseball but the Sorianos lacked one vital resource – money. Most of the money used to pay the expansion fee and to pay the team’s start-up costs was borrowed from a man named William Daley.

Dewey Soriano met William Daley in 1965. Daley was the former owner of the Cleveland Indians and had once considered moving that team to Seattle. He continued to believe that the city could be a viable market for major league baseball. The Sorianos asked Daley for a loan to pay the expansion fee and offered him a significant ownership stake in the franchise. He agreed and the Soriano brothers undertook to run the day-to-day operations of the team.

Although the fledgling franchise was initially greeted with enthusiasm it was beset with problems from the start and a dark cloud seemed to hover over it like the rain clouds prominent in the Seattle sky. The aforementioned stadium, Sicks, was at the center of the problems. The Pilots were handcuffed by an onerous lease which compelled team management to charge high ticket prices. Thus, fans paid major league ticket prices to attend games in a run-down minor league venue. Voters in Seattle and in King County had earlier approved a bond issue to construct a new, domed stadium which was supposed to open in 1972; an affirmative vote on the issue had been a prerequisite for major league approval of the franchise. In the meantime, the Seattle city government promised renovation of Sicks to bring it up to minimum major league standards, including an expansion in capacity to 25,000 fans.

The renovations began only in January, 1969, a mere three months before opening day. Work began in the midst of the worst Seattle winter in decades and the weather seemed a metaphor for the already frosty relations between team management and the city. City officials were determined to complete the work as cheaply as possible as cost overruns became apparent. As of opening day, seating capacity was only 17,000 and the stadium’s low water pressure was problematic all season and caused problems flushing the toilets. Most of the seats were either wooden benches or folding metal chairs and many of the seats had obstructed views of the playing field. In addition, the teams’ clubhouses were second-rate. The Pilots attendance reflected both the decrepit stadium and the team’s woeful on-field performance – Sicks failed to sell out even once in 1969 and saw only a few crowds in the 20,000 range.

Extensive renovations of Sicks weren’t made previously because the stadium was purchased by the city in 1965 in anticipation of the property being utilized for the new Thomson Expressway. Another problem was that baseball expansion was expected around 1971. When the planning was moved up to 1969, the issue of the condition of Seattle’s stadium became magnified. However, the city council and mayor were of the opinion that their responsibility was simply to furnish a stadium, not attract a baseball franchise. The mayor, Dorm Braman, never attended a Pilots game. Baseball was a low priority for the city government and the city frequently clashed with the main contractor responsible for stadium renovations.

As of opening day, April 11, part of the right-field fence was incomplete and some fans were watching the game, for free, through the gaps. The scoreboard installation was only completed the night before and carpenters were still installing wooden benches after the game was underway. Fans who had paid for reserve tickets ended up sitting wherever they could find a seat. The condition of the park and the huge delays in the renovations had created an atmosphere of animosity between team ownership and the city. The team claimed from day one that the city was unresponsive to complaints about the stadium and the city would accuse the team ownership of trying to renege on the lease.

Bill Sears, the Pilots public relations director, once related in an interview an example of the stadium’s issues in microcosm. He told of an incident when a drunken fan had become accidentally locked inside a portable toilet after falling asleep. Sears offered the story as symbolic of the Pilots’ season. He also stated that the condition of the stadium was a deterrent to fans attending games. The Pilots also had a very limited marketing and advertising budget. The team had secured a favorable radio contract but was unable to negotiate an equitable television deal. According to Sears, the local TV stations claimed the team’s owners wanted too much money. Also, the cost of the AT&T line was high enough that advertisers were leery of paying the fees for the broadcast lines. Thus, team revenues were to become more dependent on ticket sales. That’s a valid idea if the team performs well on the field.

The team won its inaugural opening game at home, 7-0 over the White Sox, after the Pilots had split two games with the Angels in Anaheim. As late as June 28th, the surprising Pilots were only six games out of the division lead. But then injuries hit, the team roster’s lack of depth caught up to it and the mediocre attendance dropped precipitously. The Pilots were a dismal 15-42 over July and August, including a 0-10 homestand. They finished the season with a ledger of 64-98, in sixth place, 33 games out of first.

In early September, the team’s creditors began to go public regarding money they were owed. Principal owner William Daley also went public and issued what amounted to an ultimatum – “Seattle has one more year to prove itself,” he stated to the press. Privately, he had already decided to not invest any more money into the sinking ship. His ploy with the media backfired as resentful fans continued to stay away. The issues regarding Sick’s stadium showed no sign of being solved soon and construction on the new stadium hadn’t even started. The dark clouds following the team all season had turned black.

At the conclusion of the season, Daley and the Soriano brothers decided that the only viable option was to sell the team. Initially they attempted to find a local group to keep the Pilots in Seattle. When several groups were found wanting for various reasons, the Sorianos filed bankruptcy. During the 1969 World Series, they agreed to sell the team to Milwaukee businessman Bud Selig (currently the Commissioner of Baseball) and the Seattle Pilots became the Milwaukee Brewers.

The Pilots are an obvious example of how not to operate a baseball franchise. They are the only team in the modern baseball era to move after its inaugural season. Ultimately, they were grounded by a series of blunders, bad decisions and misfortune. The owners were seriously over-leveraged, under-capitalized and could never catch up due to bad attendance and a roster in continual transition. The city failed to properly renovate Sick’s Stadium which led to a contentious relationship with Pilots ownership and motivated the fans to stay away. In addition, the team was never adequately marketed. Finally, Seattle had experienced an economic downturn in 1969 which combined with the high ticket prices to further impede attendance.

In spite of a legacy of mismanagement and shattered expectations, the Seattle Pilots retain an odd mystique. The ephemeral quality of the team is certainly a factor. Pilots uniforms and caps are popular with collectors. Many former players recall fond memories of their time in Pilot’s blue and gold. Jim Bouton’s book “Ball Four” has also contributed to the team’s legacy. Former Pilots outfielder Mike Hegan, recently deceased, once said “it’s like the Pilots have a cult following or something…” Outfielder Steve Whitaker once stated “We were the orphans of the league, the mutts.” Jim Gosger added “The Pilots were quite a collection of guys, very laid back and very likeable. There was no pressure because we knew the team wasn’t very good.”

1969 was the season on the fly for the Seattle Pilots. The ultimate reason for the demise of the Pilots was baseball’s rush to expand for the ’69 season. If the original plan for expansion in 1971 had held, the franchise might have begun its life on a more secure foundation. Assembled in slap-dash fashion to be ready in 1969, the Pilots were undermanned, underfunded and, perhaps, underappreciated.

– See more at: http://www.thursdayreview.com/SeattlePilots1969.html#sthash.Plqde2YC.dpuf

Kings of Content

Comcast image

By R. Alan Clanton Thursday Review editor

(Originally published February 28, 2014) When Comcast’s CEO Brian Roberts announced weeks ago that the cable company he captains has entered into an agreement to merge with the massive cable, internet and phone provider Time Warner, there was an explosion of business reporting and mainstream press discussion about what this would mean for cable television customers across the United States.

After all, Comcast is already the nation’s largest cable and internet provider, and Time Warner—the number two player—was its only real competition among the big boys. Roberts and those around him spoke of improvements to infrastructure, technological advances, a beneficial merger of internet access, new compatibilities and better leverage when it comes to its entertainment and programming. All fine and good—and certainly in keeping with common sense business notions of vertical integration, especially in a fast-changing world.

Roberts hopes that the public sees it his way, and he figures that his long view of the advantages of this merger will prevail among members of Congress and the several regulatory agencies which might have concerns.

But, predictably, consumer advocates screamed. They saw an already non-responsive cable giant merging with an equally intransigent cable company to create what amounts to a de facto monopoly for as many as 35 million Americans. To make matters worse, the proposed merger will bind the two companies whose customer service ratings are among the most dismal anywhere. Some analysts predicted longer on-hold waits, slower response time to service calls, longer and more frequent outages, and unbridled price increases.

A few pragmatic and even cynical business reporters resigned themselves to the view that, in fact, nothing would change. In this view, prices will creep upwards as they always have, with little interference from state or local governments, and customer service will remain approximately static—save for a few cases where customer support centers and operations functions are folded into one another. If the two companies are already ranked at the bottom in terms of customer satisfaction, then they can’t get any worse because of a merger.

In other words, neither the rosy scenario drafted by marketing and lobbying wordsmiths, nor the gloom and doom Earth-asteroid collision view will prevail.

Brian Roberts, however, is almost certainly looking beyond these distractions. For Roberts, who ascended as a young man under the tutelage of his father, Ralph Roberts, Comcast’s vision has always been about finding—and correctly using—the longest possible lens. Where cable companies in the 1990s spoke glowingly of “convergence,” they now speak of divergence as content migrates toward Google, Apple, Amazon and Microsoft. Indeed, with new threats emerging almost weekly on his flanks as newer technologies siphon cable customers away—especially younger customers who do not share a loyalty to the idea of a fixed TV screen or computer monitor sitting in a room—from the traditional model, Roberts wants to follow the money. And in this context, that means content.

For Brian Roberts and company, content is king.

Comcast has been savvy about content from the early days of cable. For old-timers like me, who remember an age when there were 16 cable channels, plus one HBO, and who can correctly identify what things like “CATV” and “headend” mean, there was never a time when Comcast was not looking forward. (Disclosure: I worked for Comcast for 11 ½ years, from early 1991 to late 2002; my 401k contains Comcast stock).

0Comcast always had its eye on content, and the management of its value and flow.
As we pointed out in previous articles about the proposed merger between Comcast and Time Warner, the Philly-based Comcast has an impressive track record of eyeing potentially advantageous mergers and acquisitions, and the examples are big. Its mega-buyouts of AT&T Broadband in 2002, and, later, NBC-Universal in 2011 are two historical examples of mergers that reflect Comcast’s intention to place itself squarely in the center of an increasingly content-rich environment.

Comcast is also flexible and dynamic in its thinking, which meant that its business model was never pinned solely on that braided copper wire coming into your home.

Ever since the elder Roberts saw opportunity when, for about $500,000, he bought fledgling cable television operations in Tupelo and Meridian, Mississippi back in the early 1960s—about as avant garde an investment as one could imagine in those days—Comcast has shown a predisposition toward a savvy understanding of the possibilities of new technologies. In those early days, when most folks had three networks plus educational TV (lucky souls in big cities might have an “independent” station), the coming fragmentation of television entertainment was sci-fi. Atlanta’s Ted Turner was still regarded, at best, as a crank, for his insistence that there was a wider marketplace for additional streams of TV entertainment beyond the rigid, calcified formats constructed by CBS, NBC and ABC.

Roberts and his partners understood instinctively that with technological advances and potential bandwidth growth, divergence would be inevitable, and content would one day be king. This meant that Ralph Roberts, who once sold golf clubs and putters, would have the vision and moxie years later to buy a controlling stake in the Golf Channel, among other content acquisitions over time—Sci-Fi Channel (later rechristened SyFy); E! Entertainment; a controlling percentage of QVC (later complete ownership); Outdoor Life; Speedvision.

Comcast’s growth, which included purchases like Group W Cable in the 1980s and MacLean-Hunter Cable in the early 1990s, put it on a path to becoming one of the dominant forces in cable during the same period that Mom & Pop cable operations were in rapid decline. When acquiring new cable properties, Comcast bought wisely, and always with its footprint in mind—carefully developing a dual revenue model which included not just cable customers, but also advertising sales.

Throughout that period, the elder and junior Roberts’ also kept a keen out on emerging technologies, entering into partnerships with Sprint, TCI and others to provide cellular phone service (which they correctly identified as early as 1991 as having the potential for explosive growth in the consumer markets), and identifying the broadband highway as being superior to phone lines and dial-up when it came to the toddling internet. Comcast’s 1993 annual report makes clear their intention to play a part in the growth of the web. “Online computer services represent an exciting new potential revenue source for Comcast,” the report says, “Our cable television infrastructure is capable of transmitting data 1000 times faster than existing phone lines, accommodating several applications simultaneously without interruption.” The report references services like AOL and Prodigy, and takes a prescient view of the potential for online shopping and web-based banking as the wave of the future.

In 1993 there were plenty of skeptics when it came to the farfetched notion of computer-based shopping, but not among those close to Brian Roberts who envisioned millions of consumers—in the comfort of their home—making simple online click choices for blinds, dinnerware and books. Talk about prescience. Fast-forward exactly 20 years: for the holiday quarter just ended, Amazon reported sales of $17 billion dollars; on “Cyber Monday” alone, Amazon sold 36.8 million items—or an eye-popping 426 items per second.

Comcast was also at the leading edge of the inevitable all-digital future, and its earliest forays into Pay-Per-View (it owned and developed Viewer’s Choice in the 1990s), fiber optics and high-definition are documented in its annual reports as far back as the early 1990s. Its earliest adventures with digital transmission came with its partnership with—and partial ownership of—Primestar, a satellite dish division which it eventually divested its interest in as broadband capacity grew more robust. Later, after its huge buyout of TCI and AT&T Broadband, Comcast would be instrumental in developing and expanding HITS (Headend-in-the-Sky) which it now owns and operates in Colorado, a technological and data convergence center which operates as a kind of one-stop-shop for content providers—receiving, processing and distributing television and movie content along a variety of platforms and pipelines.

The potential for a perfect storm of content, capacity, technology and diverse spending habits was tempered with an eye for its overall footprint.

When Comcast made a friendly (some would say generous) offer of $60 billion to buy Media One in the spring of 1999, the proposed merger made for big headlines in the business and media press. The merger looked like a done deal to many observers, and the move would have placed Comcast in a position of preeminence in terms of national subscribers. But AT&T, hoping to outflank others on content convergence, outbid Comcast by $2 billion more. Not wanting to get suckered into a bidding war, Comcast deferred.

The Media One deal would ultimately prove to be a stink bomb for AT&T, which was not prepared for the steep learning curve involved with the rapidly expanding and increasingly complex cable business. In many of the new AT&T Broadband markets customer service sank to levels which could only be described as abysmal as Media One’s already poor customer service reputation and slow response times melded with AT&T’s misunderstandings and faulty business model. Comcast bided its time as stockholders in the newly enlarged AT&T saw their earnings plummet. In some AT&T markets, customers were complaining to their local government and regulatory bodies: what had been uncomfortable 20 minute on-hold waits had now inflated to 45 minutes. Lines in retail payment centers could entail a one hour wait, and service response time in the field could take up to three days.

Comcast would eventually buy up the entirety of the AT&T Broadband unit for $44 billion in 2001, at which point Comcast had no major rivals save for Time Warner (then known as AOL Time Warner). Comcast had gone from being a second-tier, small town cable operator to the number one provider of cable TV in the span of only two decades.

Along the way, Comcast never lost its eye for valuable content. In an audacious 2004 move, it proposed a $54 billion buyout of Walt Disney Company (along with the absorption of $12 billion of Disney’s debt), in what was then the biggest media deal ever floated. Comcast’s endgame was to acquire Disney’s prized ESPN, by then a cash machine of highly rated sports content and versatility, by then already spinning off into three or four networks. Disney politely rejected the offer, and Comcast set about finding other avenues to harvest a bigger share of the sports market, developing (or buying) Comcast SportsNet, SportsNet New York, the MLB Network and Comcast Sports Southeast.

Less than a year after the Disney/ESPN bid, Comcast entered into a deal with Sony to acquire MGM and all of its affiliate studios, which at the time included United Artists, in an effort to aggressively channel motion picture content into its growing war chest of content. This gave Comcast distinct advantages in practically every cable market where competition existed: an offering of direct content that the smaller players did not have.

Comcast improved its footprint once more when the bankrupt Adelphia Cable went on the auction block. Comcast and Time Warner each took over 50% of Adelphia’s components, solidifying Comcast as number one and Time Warner as number two.

Comcast’s biggest coup came in the form of a slow-moving deal, begun in late 2009 and formally approved and completed in 2011, to purchase a controlling interest in NBC Universal from GE. Despite a chorus of concerns in the business press and among consumer groups, the FCC and other regulatory bodies approved the deal. This gave Comcast the lion’s share of access to the NBC family of content, including USA Network, MSNBC and CNBC, along with that of Universal Pictures and Universal’s television studios (not to mention Universal Studios theme park in Orlando, Florida). The NBC Universal deal cemented Comcast’s intention to remain a crucial manager—some would say gatekeeper and key-master—of content.

Comcast bought the remaining shares of NBC Universal between 2012 and early 2013, at which point it had become arguably the largest entertainment and electronic communications company in North America, with rivals among only Verizon, Microsoft, Google, News Corp (Fox) and the aforementioned Time Warner. Add to the mix Comcast’s recent deal with Netflix—a largely undisclosed arrangement whereby Netflix will deliver content directly through Comcast in exchange for uninhibited speeds and streaming. Netflix will pay Comcast for this faster access for its approximately 55 million subscribers. This may be a win for Netflix, but the arrangement will be a win/win/win for Comcast: it creates a solid revenue stream; it puts Comcast’s fingers on the pulse of content preferences; and it creates another tollbooth operation for the cable giant.

Thus the conventional view that the Time Warner buyout may be too big for the regulators in Washington to ignore.

But this is where Comcast still maintains an edge. Its lobbying efforts, as well as its capacity to understand every nuance and every fine print clause of communications law, has given it the clout to make extremely competent strategic decisions. If Comcast makes an announcement to the public and the business press, of say an acquisition or merger, you can bet the farm that their top attorneys, lobbyists and policy wonks have thought the matter through. And as Bloomberg recently reported, Comcast’s top lobbyists are now embedded in, and intertwined among, the offices and halls of Washington. The cable giant maintains a seamless overlap between elected officials and their own lobbying efforts, including one Comcast lobbyist who was until recently a member of the FCC’s top governing board. According to Bloomberg, Comcast is the second biggest spender on U.S. lobbying efforts, behind only Northrop Grumman.

Comcast has also been adaptable and magnanimous about politics, smartly avoiding picking a partisan side in the increasingly bitter and gridlocked Washington battles. Instead, Comcast takes care to massage the sensibilities of players on both sides of the aisle. This conciliatory approach wins friends, but also avoids making enemies—which is just as important. Comcast also likes to co-opt politics as theater, as in its decision to be instrumental in convincing the Republican Party to let Philadelphia serve as host to the GOP convention in 2000. The effort paid off as Comcast gained valuable exposure and goodwill, hosting the event in a sports arena and convention center which bears their name. Years later, Comcast execs raised money for President Obama, and Brian Roberts has been known to donate to candidates of both parties, though in recent years he has been a bigger contributor to Democrats than Republicans.

Comcast also counts among its legal advocates and lobbyists several former elected officials, including former U.S. Senators Don Nickles (a Republican) and Blanche Lincoln (a Democrat).
Still, you can bet the pressure from consumer advocates and some politicians will be fierce.

What complicates the Comcast Timer Warner merger is the reality of a recent decade of poor service and price increases. Comcast and Time Warner have each traded the dubious distinction of being the least-liked companies in the U.S., and often, if one is at the top (bottom!) of that sad list, the other places second. This may become the driving factor in resistance to the merger, at least as it is currently packaged.

Some business analysts suggest that even if Comcast’s superior lobbying efforts win the day and the FCC approves the deal, both companies may be forced to accept heavy concessions—selloffs of certain properties or geographic footprints, or divestiture of certain business components. Some in Washington have also suggested that even if the deal maintains momentum among the key decision-makers, the newly formed company may have to agree to measurably expand its customer service and tech support operations in order to mitigate further mass customer complaints, and this may be coupled with a concession that there be demonstrable evidence of improvement.

Acting independently of Washington, some state and local governments may feel the heat from residents to open up areas to competition, especially in those towns where only one cable company will remain standing once the deal is complete. But even if cities, counties and communities open that door—inviting and encouraging second-tier players into their markets—two things would have to happen: competitors would have to take the bait, which means spending millions on construction and facilities; and, that “competitor” would still have to negotiate on a more-or-less continuing basis with Comcast for content, and its extensive technology footprint of Pay-Per-View and bandwidth. The return of the Mom & Pop cable company is not likely.

And in a world in which content remains king—growing more emperor-like with each passing month—few competitors would have the moxie or the clout to challenge Comcast’s preeminence when it comes to technology and content.

Related Thursday Review articles:

The Big Merger: Comcast and Time Warner; R. Alan Clanton; Thursday Review; February 14, 2014.

Mega Cable, Mega Merger; R. Alan Clanton; Thursday Review; February 13, 2014.

– See more at: http://www.thursdayreview.com/ComcastTimeWarner2-28-14.html#sthash.yNirjLSY.dpuf

Battling Giants

Malcolm Gladwell

By Lisa K. Whitten Thursday Review contributor

David and Goliath: Underdogs, Misfits and the Art of Battling Giants; Malcolm Gladwell: I picked this book to read thinking it might be focused on David and Goliath. They are part of the book but they do not dominate. The book has several stories which highlight underdogs and how they overcame their giants. In the case of David and Goliath, the author explains that Goliath may have had several medical issues which could have played a part in his demise at the hands of David. He also says that David fought by what to Goliath’s knowledge was unconventional fighting. A boy? No armor? Goliath did not know how to fight back. However you look at this famous event it is the underdog that wins.

One of Gladwell’s modern day stories is that of the father from Mumbai, Vivek Ranadivé, that had never played basketball, nor even new how it was played. He became the coach for his daughter’s basketball team. These girls were more intellectual than athletic, but were willing to try their skills at basketball nevertheless. After watching and studying basketball he had them utilize a seldom used play that is known as a full-court press. Unconventional, but, legal by basketball rules. The result of their unconventionality? They became National Champions.

The book continues to go through real life scenarios of Davids overcoming their Goliaths. As is the case of the dyslexic that jumped into a cab unknown to the passenger of Wall Street and he rose to a top notch position, or the lowly construction worker that went to law school and became a well-known litigator in California. Gladwell explains that they learned to focus on areas they excelled in. They were forced to excel in other areas to overcome the Dyslexia. They have nothing to lose. The giants are unused to their method of “fighting” and the David’s overcame.

Can angry unarmed women subdue the British army? You bet. Trouble began in 1969 between Catholics and Protestants in Northern Ireland. In 1970, a curfew was placed and food supplies were low. The Brits made the mistake in believing that had the upper hand because they were well armed and experienced. The women’s weapons? Banging pot lids together, pushing prams, and speaking into bullhorns! Imagine the combat ready British army resorting to hair pulling and beating. They lost.

Gladwell explains how these unassuming David’s overcome long odds, but he also explains how they can go beyond the tipping point. The case of the father of a daughter that was murdered in broad daylight is an example. The Three Strikes Law came into existence as a result of a father trying to prevent more senseless murders. Did it really decrease crime in the long run? Gladwell’s inverted curve answers this question. He also covers the way students pick colleges and how their choice determines if they will excel or just give up. How the size of classrooms determines if it will excel or not.

At 332 pages this book is a medium-length read, but it also jam-packed with stories, charts, results of studies and illuminating references. It is also hard to put down. And the book is uplifting for the “Davids” of the world. This is one book I will most likely read again.

– See more at: http://www.thursdayreview.com/DavidGoliath.html#sthash.lvr3BMyL.dpuf

The Cost of Stolen Cargo

Image courtesy of Microsoft

Image courtesy of Microsoft

By Earl H. Perkins, Thursday Review associate editor

(Originally posted February 25, 2014) Between the severe drought in California and the extreme winter everywhere else in North America, we can all expect to pay more for nearly everything this year—from groceries to milk, from home energy costs to the price at the pump. Now we have to also factor in theft.

If you watch any recent news reports worldwide, evidently you just can’t trust anybody anymore. Right when I was almost getting over computer hackers stealing your identity and all your money, now I see they want your cheese and ice cream.

Thieves posing as truckers are loading huge shipments of valuable freight onto tractor-trailers and hauling it away, according to the Associated Press. In fact, con men posing as legitimate truckers are stealing so much cargo that experts say this will soon be the most common way that freight is stolen. Food and beverages are two of the top items stolen, so you can only imagine what problems that might cause for the economy, prices and your stomach.

In the good old days, thieves and wiseguys just jacked loaded trucks from parking lots or anywhere else they found them. However, with the advent of high-technology locks, GPS devices and other security measures, criminals have had to become more resourceful. They’re using technology, the internet and online databases to assume identities of freight haulers, allowing them to seek out specific commodities. They can also generate authentic-looking paperwork and print their own seemingly genuine IDs.

The nation’s over-the-road trucking industry moves more than 68 percent of US domestic shipments, and losses always trickle down to consumers. Prices go straight up, and you might be buying unsafe food and drugs.

No section of the country is safe, and thieves also have widely varied tastes: 80,000 pounds of California walnuts worth $300,000, and 25,000 pounds of king crab worth $400,000 in California, along with $200,000 worth of Wisconsin Muenster cheese and $82,000 in Texas rib-eye steaks.

The Hughson Nut Co. said “aw, nuts” twice last year, losing $189,000 worth of almonds. Both times someone showed up with proper paperwork, complete with legitimate looking logos and IDs, and had no trouble making off with the merchandise. Shortly after the second theft, an Arizona customer called complaining the almonds never arrived, according to Raquel Andrade, the company’s quality assurance manager. “Uh-oh,” she said. “I think it happened again.”

Victimized companies are certainly not discussing the massive woes being visited upon commercial trucking, but law enforcement and industry leaders are attempting to stem the flow.

“In the end, the consumer winds up paying the toll on this,” said Keith Lewis, vice president of CargoNet. His company runs a theft-prevention network which helps provide information to insurance companies.

The consequential damages can far exceed the value of lost shipments. For example, to ensure that stolen pharmaceuticals don’t reach the market, each drug with a specific lot number may be recalled worldwide. Stolen food shipments pose a similar risk, because nobody knows how products were handled after they were stolen (i.e. re-frozen chicken or tampered merchandise).

Many times thieves reactivate a dormant Department of Transportation carrier number from a government website. This allows them to assume the identity of a firm with a good safety record, and falsify insurance policies, driver’s licenses and the remaining necessary documents. Their low bids are almost always accepted by freight brokers, and they haul off whatever they want.

Food and beverages are targeted because they’re easily sold on the black market and almost impossible to trace. Some items reach small grocery stores, but last August law enforcement raided a North Hollywood, California, distribution warehouse containing stolen steaks, shrimp, energy drinks, ice cream and other frozen goods.

One cable television company in the south lost thousands of dollars worth of construction material when a seemingly legitimate “delivery” of copper and other materials turned out, in fact, to be a pick-up. While the trusting (and lax) cable employees weren’t watching, the truck drivers quickly used their own forklift to steal dozens of reels of copper, steel strand and fiber optic cable right in broad daylight, loading them onto their “delivery” truck.

More than $30 billion in cargo is stolen each year, with no end in sight, according to CargoNet.

Thefts of unattended trailers in parking lots and truck stops are the most common, but the new trucking scams are growing at 6 percent each quarter. An average of three to five truckloads are stolen each day in the US, with at least one involving fraudulent or fictitious pickups, according to JJ Coughlin, vice president for law enforcement services at LoJack SCI, a supply chain protection company.

This new form of theft has exploded in the last three or four years, with numbers approximately doubling last year. LoJack studied 947 cargo thefts last year, identifying 45 as fictitious pickups, with each loss averaging $170,000.

The biggest losses are located at shipping ports and rail hubs. California is No. 1 in the nation, followed by Texas, Florida, New Jersey, Michigan, Illinois, Georgia, Pennsylvania and Tennessee. Savvy thieves know where major manufacturers are located, targeting specific brands of electronics or appliances by bidding online.

Food and beverages are the most common items stolen, although they’re not the most expensive. They accounted for 23 percent of thefts last year, with metals in second place with 16 percent, trailed by electronics and household good at 12 percent each. Electronics and pharmaceuticals are the most heavily guarded shipments.

Few stolen shipments are ever recovered, because the product has been sold on the black market before anyone realizes it’s missing.

Those in the distribution business are urged to be wary of temporary name placards—often magnetic logos or signs—or identification numbers on trucks, abrupt or unannounced changes in pickup times, and trucks lacking GPS tracking systems. It’s also suggested those in charge insist on getting a driver’s thumbprint before he pulls.

“This is growing at such a rapid, scary rate,” said Sam Rizzitelli, national director for transportation at Travelers (insurance) Inland Marine Division. “It warrants a lot of attention.”

– See more at: http://www.thursdayreview.com/CostStolenCargo.html#sthash.dx4SJzKP.dpuf

In Search of a More Secure Credit Card

Photo by Alan Clanton

Photo by Alan Clanton

By R. Alan Clanton Thursday Review editor

(Originally posted February 19, 2014) The pre-holiday security breaches at Target, Neiman-Marcus, Michael’s and other retailers exposed the vulnerabilities of credit card use and data security in a digital age. Between November and December of last year as many as 110 thousand U.S. credit card users may have had their most personal information stolen, and the suspect is a 17-year-old Russian hacker who developed a backdoor application to gain entry to credit card machines at thousands of retail locations.

The eventual cost of that data breach remains unknown, but will likely cost consumers as retailers, banks and credit card vendors pass those cost overruns, fees and penalties along to customers. Target has again apologized, most recently in the form of a bill insert mailed to every one of its current credit customers, and has vowed to take steps to insure no such catastrophic breach occurs. Michael’s and Neiman-Marcus has also announced new procedures to reduce the risk of hacking.

But some security analysts and credit card experts say that the whole series of fiascos could have been easily avoided had the U.S. proceeded in a timely fashion years ago toward more secure, encrypted credit cards.

Most Americans use credit cards which contain a magnetic strip on the back. That strip contains the essential data about your account—your name, account number, home address, and other critical information. And that means that any time a customer swipes that card through a standard card reader, the information being transferred is at risk of being grabbed by increasingly smart hackers and tech-savvy criminals.

Testifying in Washington in front of the special committee investigating security problems, Target executives suggested that the direction retailers should be looking is toward cards which contain tiny embedded microchips—chips which are encrypted and cannot be easily hacked.

Sounds exotic and cutting-edge, right?

Well, they’re not. Encrypted cards have been in widespread use in many other countries for several years, and in the United Kingdom and Canada, the newer cards have been widely credited with a dramatic reduction in hacking, criminal misuse and fraudulent charges.

But the U.S. banking, credit card and retail business is sluggish—some would say downright glacial—when it comes to major changes in the point-of-sale technologies (think of the upcoming deadline for ATM conversion and Microsoft’s plans to cease support for Windows XP). And there has been little in the way of public or political pressure to bring about those changes, which can be costly because of the complex mosaic of American banking, retail and card technologies.

That cost, it seems, had been the major factor all along for those retailers and financial institutions who see a myriad of things which have to happen, more or less, all at once: new, expensive card readers in tens of thousands of locations, new uniform standards of data management and storage, possibly new account numbers, and then brand new cards for millions of Americans, to the tune of as many as one billion cards (think about how many cards you have in your wallet or purse right now).

Plus, the cost of the high tech embedded cards can run up to six times the cost of traditional cards. Magnetic strip cards cost roughly fifty cents to manufacture. The new cards may cost as much as $2.50.

But the Target breach—and those of the other major retailers caught up in last fall’s colossal hacking—has pushed the issue to the forefront.

Billions of dollars are at stake as a result of the mishap, and now some in Congress are asking why something wasn’t done sooner to make the process more secure. Now there is a push underway to convert American card activity into the chip technology by late fall of 2015, roughly 22 months from now. Both Visa and Master Card have signed on to the deadline, and say that they will be ready. Banks, too, will feel the pressure to comply.

And now the driving issue will be liability: none of the major players want to be the one left standing when the music stops, for the industry component with the weakest technology after the transition will be the one most likely responsible for the cost of fraud.

The new encrypted credit cards, which are in use by a very small percentage of Americans, have the distinct advantage (for now, at least) of airtight security. The Chase Bank website says “the embedded microchip makes the card extremely difficult to copy, which ensures enhanced security if it is lost or stolen, and makes a card much more difficult to counterfeit.”

Furthermore, some of the major banks and credit card providers will, as part of this migration, soon require customers to enter a unique PIN with each transaction, essentially making the new credit cards similar to a debit card. Most believe that this will reintroduce a more stringent level of security similar to that quaint age—in the not-too-distant-past—when we had to sign an actual piece of paper and a clerk or retail associate would ask for our identification. The widespread use of card readers killed the notion that we were required to show a driver’s license or other ID, but opened the door to other problems.

By some estimates, the new encrypted cards will reduce credit card fraud in the U.S. by as much as 60%, a rate comparable to the lower rates of fraud in Canada and Britain after the transition. (After the major conversions in Europe and other countries, opportunistic hackers and criminals, who once preyed upon those overseas markets most vulnerable to attack, shifted their efforts to the U.S. where the magnetic strip made stealing data easy).

But there are a lot of moving parts to this transition, and not everyone is on board. And there are hundreds of questions about costs, PINs, customers who travel, compatibility, and the dizzying array of complex, interlocking technologies which must all work in harmony once the shift begins.

One friend in banking said to me, “think of the Obamacare rollout, and then multiple that times twenty!”

Related Thursday Review articles:
Can You Protect Yourself From Credit Card Fraud?; Thursday Review; Saturday, January 18, 2014.
Who Pays for the Target Breach?; R. Alan Clanton; Thursday Review; Thursday, January 16, 2014.

– See more at: http://www.thursdayreview.com/SecureCreditCard.html#sthash.PLj7WCQ5.dpuf

Moroccan Hospitality

Photo courtesy of Moroccan National Tourism  Office

Photo courtesy of Moroccan National Tourism Office

By Krista Tani, Thursday Review contributor

(Originally published February 25, 2014) The upbeat music blasted through the door to the family room and Fatima grabbed my hand as she tried, in vain, to teach my companions and me how to dance. The contrast between her quick, perfectly timed shoulder shimmies and our clumsy ones was comical. As the night wore on, we ended up laughing together more than dancing. As the final song ended, we at last made our way to the room where we would eat a late dinner.

We made ourselves comfortable on the soft blankets covering the floor and Fatima entered the room carrying a teapot and a basin of water. One by one, she poured warm water over our hands, rinsing off the dust that had accumulated in the dry mountain air. She then set a tray in front of our host and he began the long process of preparing the traditional Amazigh tea. Many Moroccans with Amazigh heritage take pride in their culture, particularly their language, Tashelhit, which is distinct from the official Darija (a dialect of Arabic) of Morocco. Their unique process of preparing green tea was no different, and our host proudly declared that this was “Berber” tea as he added mint leaves and three large cones of sugar to the worn silver teapot.

After several rounds of tea, Fatima brought in our main course: chicken tagine. Tagine refers to a special ceramic dish used to cook a variety of dishes, but primarily includes some sort of meat topped with vegetables. In Morocco, meals are served on a central dish and each person uses bread to scoop up the food directly in front of them. Our host tore fresh bread into large chunks and distributed them around the table and we dug in.

First, we had to accomplish the daunting task of eating all of the vegetables if we were to reach the meat underneath. If we started losing steam, our host would say, “Eash!” (Eat!) and gesture to the tagine. Once this first step was complete, our host put the chicken into a separate bowl and tore it into more manageable pieces. He placed it back into the tagine, making sure to place the most desirable pieces of meat in front of us, his guests.

Once the empty tagine and leftover bread was cleared from the table, we socialized for a bit longer and then headed off to bed. Fatima and her cousin Hannen brought us blanket after blanket, wanting to make sure we would be warm enough during the night. Fatima jumped into one of our sleeping bags and laughed hysterically as she wiggled around in the slick polyester. We finally got all settled in and the two girls came and tucked each of us in and said goodnight.

This is only a glimpse of one experience in one home, but we backpacked for a week through the Atlas Mountains and encountered the incredible hospitality of the Moroccan people again and again. One woman, whom our guide had never met before, stood on her porch and insisted that we come in for tea and snacks. Another man yelled at us from across the valley and asked if we would spend the night in his family’s small house. Our hosts always went above and beyond to make sure we felt at home. By the end of the week, we had never felt so full (we often swore we would never eat again) or so welcomed. Hospitality looks a bit different in every society, but I am glad I was able to experience this beautiful dimension of Moroccan culture.

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