Financial Secrets Revealed! (Just Don’t Ask Where They Came From)

Starved for scoops, many don’t bother to check the veracity of revenue and profitability numbers for non-public and pre-IPO entities before printing them.

I’m noticing more numbers no one checked reported as “breaking news” or adding spice to puff pieces with potentially hidden insider agendas. Maybe some journalists are intoxicated by access to the non-public numbers some would pay a lot to know for sure. Maybe it’s just too hard. Worst case scenario journalists can be used as cogs in the equity market pump and dump machine.

Summary level revenue and profitability numbers for public companies, those listed on U.S. stock exchanges, are easily verified. Go to the SEC filings —10-K annual reports, 10-Q quarterly filings, 14A annual proxies, 8-K filings of other legally required to be reported events — to see if what an executive says matches what he or she told regulators and markets in the filed financial statements. Even earnings calls and earnings releases should match what’s eventually filed or executives must later must explain why not.

Readers may think that online or in print, whether in a magazine or a newspaper, writers have to check the truthfulness of what politicians and business executives say before they print it. More and more they don’t. Intensely partisan rhetoric during the last election cycle led to complaints on both sides that major media allowed politicians and their operatives to make claims about each other in debates, in print and online that weren’t true. Lies took on a life of their own. “Unspilling the milk” was almost impossible. A cottage industry of political fact-checkers —, Politifact, and media-watching bloggers and journalists — scoured public statements and news and magazine articles for blatant, and not-so-blatant, examples of lies and fibs that slipped into campaign season reports.

There’s no such service dedicated to checking non-public and pre-IPO financial puffery and blustering. The hype before the Facebook IPO is an example of unverified financial information gone wild. When the New York Times broke the story of Goldman Sachs’ investment in Facebook on January 2, 2011 it was obvious a certain segment of the investing population willingly ignored the lack of audited, verifiable, complete financial information when offered a “hot and exclusive” opportunity. The media was more than willing to repeat unaudited, unverified, and often incomplete information in its stories, true or not. Reuters eventually reported that disclosures provided to Goldman Sachs’ chickens, I mean clients, intended to entice them to make a $1 million minimum investment, weren’t even audited results.

A casual attitude by business journalists towards verification of not-ready-for-prime-time financial “leaks” has spread to reporting on “new” media business models. Merely repeating positive results seems to be enough to make them so. Maybe that’s why so many accepted “at his word” the recent claims of “profitability” by BuzzFeed founder and CEO Jonah Peretti.

Mathew Ingram’s piece at carries the unequivocal title, “BuzzFeed is the media industry’s worst nightmare — profitable, growing and investing in news”. Ingram attributes much of Peretti’s success to BuzzFeed’s use of sponsored posts. That’s what is all about.

Peter Kafka, the media reporter for Dow Jones & Co’s All ThingsD site, says Peretti’s public-private memo to employees is

full of boast-worthy boasts: A ton of page views, a lot of employees, and a profit, to boot.

Peretti, according to Kafka,leaves out the specifics. But then Kafka makes some unattributed boasts of his own about the numbers.

…from what I hear, those numbers are boast-worthy, too.

The column goes on to cite, quite confidently, opinions from “a person familiar with BuzzFeed’s operations” and then “a different person familiar with BuzzFeed’s operations” to substantiate some specific numbers.

Peretti also claims BuzzFeed had 85 million unique page views in August. That’s non-financial but very important data used to estimate ad revenue. TechCrunch’s Anthony Ha gets credit for checking that assertion with comScore. While comScore’s data has its shortcomings, its methods are transparent and thus it’s one of the only sources that provide apples to apples comparisons across different sites. comScore says BuzzFeed had 31.9 million global unique visitors on desktop in July versus Peretti’s 85 million page views the following month. That’s quite a stretch from one month to the next, if Peretti is to be believed.

Peretti did not respond to my offer, via Twitter, to review the actual financial statements, audited I hope, to verify his claims of profitability.

So who can you trust to fact-check anymore, especially those tough-to-get private company or non-public segment-level numbers? Even the venerable New Yorker magazine will throw a provocative piece of quantitative data into an article with no attribution. In a recent piece that chiefly focuses on a qualitative assessment of whether or not cable news channel MSNBC has figured out “what liberals really want”, Kelefa Sanneh’s “Twenty-Four-Hour Party People” sticks a fact-like statement about the station’s revenues and profitability near the end of a ten-page piece without saying where it came from.

Still MSNBC earned more than $200 million in profits last year, on revenues of $442.5 million.

Sanneh lays down the very specific revenue and profitability figures after talking a bit about how cheap it is to run the opinion-driven cable news business model. Apparently, it’s almost costless except for the salaries of on-camera hosts. And subscription fees from cable bundling, where MSNBC gets a piece of every viewer’s request for ESPN and HBO, are like free money.

James Ledbetter, OpEd Editor at Reuters, is as skeptical as I am that MSNBC is so profitable, but he’s more apt to believe the New Yorker wouldn’t print the numbers if they weren’t truly so.

Comcast is the publicly traded conglomerate that now owns 100% of NBCUniversal. NBCUniversal assets are now spread amongst more than one reporting segment in Comcast’s latest annual report. One of those reporting segments, cable networks, covers 15 national cable networks, 11 regional sports and news networks, various international channels, a cable television production studio, and related digital media properties. One of the cable networks is MSNBC. There is no break out of revenue and profitability figures for MSNBC in the Comcast public filings.

I called Sanneh to find out where he got the MSNBC revenue and profitability numbers in his story. He told me the estimates, not actual numbers, were previously published along with estimates of Fox News and CNN revenues and profits in the 2013 Pew Research Center State of the Media Report. Pew’s source is a firm called SNL Kagan but where does SNL Kagan get the non-public data?

SNL Kagan’s insider knowledge and perspective is what makes our proprietary data so unique and so essential. We provide detailed operational information and exclusive insight that simply isn’t available from any other source.

Sannah said he checked the SNL Kagan estimates with MSNBC sources who “didn’t try to stop the magazine from publishing them”. In fact, MSNBC sources suggested MSNBC profitability may be higher than the estimates. Sanneh went with the research firm numbers since higher company estimates could not be corroborated.

Sanneh and the New Yorker did not identify the numbers as estimates nor did they say where they came from because, according to Sanneh, they had been widely disseminated in the industry. The focus of the article was MSNBC’s editorial philosophy not its financial success.

New Yorker magazine is widely considered by journalists, and the schools that produce them, as the gold standard in fact-checking. In September of 2012, Columbia Journalism Review Books and Columbia University Press released The Art of Making Magazines: On Being an Editor and Other Views from the Industry. Chapter five, “Fact-Checking at the New Yorker,” is taken from a lecture delivered by New Yorker fact-checking director Peter Canby on February 28, 2002.

To start checking a nonfiction piece, you begin by consulting the writer about how the piece was put together and using the writer’s sources as well as our own departmental sources. We then essentially take the piece apart and put it back together again. You make sure that the names and dates are right, but then if it is a John McPhee piece, you make sure that the USGS report that he read, he read correctly; or if it is a John le Carré piece, when he says his con man father ran for Parliament in 1950, you make sure that it wasn’t 1949 or 1951…

Business journalists are asking readers to trust they’ve done some due diligence before printing non-public financial information. I think those journalists, and their readers, should be more skeptical in the future of what they hear and what they read.

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