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Has CNBC lost its mojo?

I really hope not.

No one has watched more hours of CNBC over the last twenty years than I have. I am a big fan. Since I also represent an important part of the investment community, my viewpoint might even count for a little more.

If you and I were socializing over coffee or a drink, I could tell you some great CNBC stories, including correspondence with many of the anchors, past and present, from many years ago.

So I write this as a friend of CNBC and with the best intentions.

But I am concerned.

What Went Wrong - - the Facts

CNBC is getting killed on the ratings. There is a death spiral as their appeal shrinks and they respond in a way that makes it worse.

CNBC Ratings Fall to 7 Year Lows
  • Squawk Box (6-9 a.m.) is supposed to prime traders before the bell. The show posted its lowest rated its time block since Q4 2006.
  • The Closing Bell (3-5 p.m.) is supposed to wrap up the day's action. The slot posted its fifth-lowest rating in total viewers and second-lowest ratings in the key 25-54 demographic since 1997.
  • Fast Money (5-6 p.m.) is focused almost specifically on swing trading stocks. That time slot showed the lowest rating for the 25-54 demo since 1997 - and lowest in total viewers since Fast Money launched in 2006.

This is merely a summary. It is actually even worse. Kudlow is losing to Lou Dobbs, etc. It is across the board. And this is before the boxing replacement for the Olympics.

Now we learn that they are laying off employees to institute reality programming.

What is Wrong -- the Analysis

Simply put, CNBC has little to offer to the average investor. There is too much emphasis on day trading (in content and commercials), and far too many stories about fear.

As someone who watches the news, the blogs, and the major communication channels, I can see the pattern. It creates a climate that actually will kill their audience.

  1. There is news.
  2. A widespread network of observers creates negative talking points. The motivations may include selling gold, selling bonds, selling a political viewpoint, but none of it has much to do with investment returns for the average person.
  3. These points are published on a website that embraces conspiracy and anonymity. Somehow, many people (including those who should know better) think this adds credibility.
  4. Traders avidly consume these viewpoints and send emails and tweets to the CNBC team.
  5. Those reporting from the floors in NY and Chicago repeat these ideas, sometimes almost word-for-word.

The reports constitute valid information but misleading information. They show what short-term traders are thinking, but that may not be very helpful. The problem for investors with a longer time frame is that there is not enough context and perspective. It scares the daylights out of people who depend upon professional journalism to provide balance.

The content of these stories has little to do with long-term investment prospects, but plenty to do with selling page views and ratings!

Examples

CNBC offers some face time to analysts with various opinions. The skepticism is apparent for anyone who even thinks about the bright side. A guest who forecasts a rally of 15-20% is making a "bold call" or suggesting something crazy.

Try this recent appearance of Tony Dwyer, who sees the S&P at 1575 by the end of the year. (CNBC is having trouble with the embedded links again, so you will have to click through to watch).

"In fact Dwyer believes his target is conservative. "15 is the lowest non-recession multiple in a sub-3% core inflation environment. The average multiple is roughly 20 times so I believe we are being overly conservative - even with our new target of 1575," he says.Looking at the fundamentals, Dwyer sees good things for the US economy.

"We've had an historic drop in interest rates as well as a huge drop in energy prices." That's good for consumers. And he adds we also have a slow recovery in housing - again bullish."

A guest who merely poses the possibility that earnings meet current expectations and the PE multiple gets to a conservative long-term average of 15, is viewed as crazy. This in spite of the low inflation and interest rates.

While you may not agree with the bullish analysis, it is mainstream thought for many of us, including big-time pension-fund managers. It is not the object of scorn. If the S&P reached 1500 to 1575, as the analysts suggest, could we really be surprised? After all, earnings are much higher now than when this level was reached in 2008.

DJIA

Today's "Maria hour" included a story asking whether we are currently in a recession. Hardly anyone believes this, but those who trumpet the recession story get on TV. Those refuting this do not get the TV gigs. I am talking about the people that I feature each week: Doug Short, The RecessionAlert team, Bob Dieli, and The Bonddad Blog. How about equal time for them?

Shortly thereafter we had (yet another) interview with Harry Dent about Dow 3000. He was just on a couple of weeks ago! Why couldn't Maria use the time to interview someone with some solid stock ideas for the average investor? She challenged in her questions, but that is not the point. Don't the CNBC producers understand the effect of the repetitive Dow 3000 and "End of Stocks" headlines?

Conclusion

CNBC faced a tipping point several years ago. They lost sight of the fact that most people are investors. They are long the market. That is their natural audience. CNBC hosts do not need to be cheerleaders, but they do need to inform this audience.

Most of the active emails and tweets they get come from traders, many of whom see this as a game between bulls and bears. The coverage reflects this. The CNBC team started saying things like "It is a bad day for those long the market."

CNBC needs to decide whether to compete for the active trader and fear market, getting ever more negative and political, or to get back to their foundation of helping regular investors.

They are not helped by images of a car going off a cliff, or stories about Congress going on vacation. Their viewers need to know what segments of the market are cheap. How to succeed in the face of these threats. How to rebuild retirement.

I really hope that they get the message in time.

Source: Has CNBC Lost Its Mojo?