Who Dictates The News? The Guy On The Phone

August 13, 2007

Judging by press reports over the last several months, one would believe that the covenant-lite trend falls somewhere under the category of "things that are bad."

Recently, however, another view has begun to emerge. With loan prices below par, a number of investors now say value can be found in some covenant-lite deals and, by the way, what is all this fuss about anyway?

"I think the press got it wrong," said Payson Swaffield of Eaton Vance at a sunset seminar sponsored by The Loan Syndications and Trading Association last week.

We did? What a shocker.

Pardon the sarcasm. I actually take comfort in being consistently blamed and despised; there is something to be said for knowing where one stands, and, really, no one hates us as much as we do.

But I feel I need to address the idea that the press simply "gets" stuff wrong. Sure, we can be and should be blamed for lazy reporting. However, the point everyone seems to miss is that the information we report comes from somewhere. We don't make it up. (OK, on some rare occasions that happens, but only at The New York Times.) In the overwhelming majority of cases we simply write what people tell us. Which means that when we talk to three or four unconnected people about a subject, say, covenants, and those people all say the same thing, we can only assume it is truth. Of course, we call more than three or four people, and therein lies the key. We call lots of people. But they don't always call back.

In his book Sex, Drugs and Cocoa Puffs, Chuck Klosterman makes this very same point. He explains that readers who believe journalists have some sort of agenda are horribly mistaken. What a journalist has is a deadline, a certain amount of time to turn in a story cobbled together from sources other than the journalist himself. And the sources who call back, especially the person who phones in first, mold the content of the story, even to the point that a trip to the soda machine and a missed phone call can change what hits the page forever.

So, loathe away if you will, but remember: For a point of view to be fairly represented in the press, someone has got to tell us about it.

(c) 2007 High Yield Report and SourceMedia, Inc. All Rights Reserved.

http://www.highyieldreport.com http://www.sourcemedia.com