Do Financial TV Networks Market Warren Buffet For Their Gain And Then Ignore His Wisdom?

Every Financial Television Network lauds Warren Buffet and invites him as a guest on its shows. This enables the Network to bask in the reflected glory of Mr. Buffet. As the most trusted name in Financial Markets, Mr. Buffet is also a  huge ratings draw. So a Buffet appearance is a high revenue event for Financial TV.

The last Buffet event we saw on CNBC was on Tuesday, February 9, 2010. That was the day Warren Buffet interviewed Hank Paulson, the Treasury Secretary in the Bush Administration. That day Warren Buffet showed by example how a Financial TV Anchor should interview an expert guest. Mr. Buffet asked:

  • Hank, you have got a great investment background, you have seen how government operates here, abroad, nobody has had a better perch from which to view the economy and to make judgments…As I understand it, when you were the Treasury Secretary, you had to have your money in a blind trust. Now the blind trust presumably is over. I don’t want you to give us the names of stocks, but if you want to do it, you are free to do it, but give us an idea of the composition, in terms of bonds, stocks whatever of the portfolio you have had to establish in the recent months. (emphasis ours)

This was a great question, a question we think every Financial TV Anchor must ask of every expert guest that appears on the anchor’s show.

We were reminded of Warren Buffet when we watched the interviews of Sallie Krawcheck on CNBC and Bloomberg TV on April 20.

Sallie Krawcheck is as much of an expert on personal investing as there is on Wall Street. Ms. Krawcheck was a respected analyst at Sanford Bernstein. She was invited to join Citibank to manage Smith Barney, then the brokerage arm of Citibank that served individual investors. Today, Ms. Krawcheck is the President of Merrill Lynch Global Wealth Management, the largest and perhaps the most successful wealth management group on Wall Street.

As its President, Ms. Krawcheck has unrestricted access to every single Strategist, Analyst and Product of Merrill Lynch. No client of Merrill Lynch can hope to have the access that Ms. Krawcheck has. With her long tenure at the highest echelon on Wall Street, Ms. Krawcheck is surely a very wealthy woman.

So the first, foremost and most natural question we would have is how has Ms. Krawcheck invested her own wealth? How much of her portfolio is in Stocks and how much of it is in Bonds? Does she own US Stocks, European Stocks or Emerging Market Stocks? Does she own Municipal Bonds, Corporate Bonds, High Yield Bonds or Treasuries and in what maturities? Does she own commodities?

We would love to know the answers to these simple questions and so would every individual investor viewer of CNBC and Bloomberg. These answers would help us individual investors far far more than any canned product infomercial about Merrill Lynch. After all, it is much safer to do what wall street experts do with their own money rather than do as they say in public.

But to our utter dismay neither the CNBC triumvirate of Joe Kernen, Becky Quick, Carl Quintannia nor Margaret Brennan of Bloomberg asked this question. Warren Buffet is not a professional anchor on Financial TV. But he instinctively figured out the most important question he could ask of Hank Paulson. In contrast to Buffet’s clarity, CNBC & Bloomberg anchors engaged in a conversation that was mostly theoretical.

It may be because none of these anchors seem to be investors themselves. They are merely journalists who tend to do their job by rote. It seems to us that they really don’t care about adding any value to their individual investor viewers because they themselves do not appear have any personal interest in investing. Or is there something more to it?

We have often wondered whether Financial TV is just a game that anchors and guests play for their mutual commercial benefit. Ms. Krawcheck is an important draw for ratings. Viewers like us watch the interview in the hope that we might learn something from the President of Merrill Lynch Wealth Management. So by Ms. Krawcheck’s appearance, CNBC & Bloomberg get free content and high ratings. What a Business? High revenues with Zero cost of goods. No wonder we hear that CNBC enjoys a high profit margin.

In exchange, Ms. Krawcheck and her employer BAC-Merrill Lynch get free nationwide advertising by her appearance on CNBC & Bloomberg. Ms. Krawcheck is personable and very good at delivering her pitch for Merrill Lynch. Viewers like us might tune out Merrill Lynch commercials but we listen intently when Ms. Krawcheck speaks on TV. How much would BAC-Merrill Lynch have to spend for such highly effective advertising?

In this context, asking a tough question of Ms. Krawcheck would be like committing a flagrant foul in this wonderful win-win game between anchors & guests. Think for a moment. If say CNBC’s Joe Kernen asks probing questions about Ms.Krawcheck’s portfolio and viewers get disappointed with her portfolio, then that would reflect pretty badly on Merrill Lynch.

Such a bad reflection might tarnish the image Ms. Krawcheck and Merrill Lynch are trying to create from the interview. If so embarrassed, Ms. Krawcheck might not want to appear again on the offending network and that would hurt the network’s ratings. 

If this is indeed the game, then we understand the compulsions of Financial TV anchors like Joe Kernen, Becky Quick, Carl Quintannia & Margaret Brennan. But understanding it does not take away the hurt of being played for a sucker.

Financial Networks get their revenue from ratings and ratings come from viewership, not professional hedge fund viewership but viewership of average, trusting Americans. These individual viewers tune in to Financial TV to get much needed help in managing their own assets, their retirement funds, education funds for their kids and other monies.

Unfortunately, these viewers rarely get what they need from Financial Television. In our opinion, this is because individual viewers end up getting gamed in this mutually rewarding commercial barter transaction between TV anchors and their expert guests.

The interview with Sallie Krawcheck is but one example. Witness, for example, the interview of Catherine Smith , CEO of ING Retirement Services, on CNBC’s Power Lunch on April 13, 2010. Ms. Smith is an expert in investing for retirement. Yet, none of the three Power Lunch anchors asked her a single question about how Ms. Smith has invested her own retirement plan.

If Warren Buffet becomes an Anchor of a Financial Show, we have no doubt that he would ask every expert guest how that guest has invested his or her personal portfolio. But that is because Warren Buffet does not need to game his viewers. He asks honest, tough questions and he gives honest answers. That is why he is trusted by individual investor viewers.

Are Financial TV anchors trusted? Not so much, we think. Do they care? That may be the most important question!

Editor’s Note: A few days ago, we asked CNBC if we could speak with their Managing Editor. Our objective was to learn about his vision & plans for CNBC and to share a few of our views as long term viewers of CNBC. We are still waiting to hear back from CNBC.  

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