Live From the Economy’s Frontline

"Tyler Durden" at ZeroHedge has posted data showing that CNBC's audience fell 28 percent between July 2008 and July 2009. What gives? Is the decline a consequence of the network's rightward, anti-Obama tilt? Has the public, angered by the failure of the gurus and stock pickers featured on CNBC's airwaves to foresee the traumatic events of last fall, turned the dial? Or is CNBC a casualty of the return to something like normalcy in the economy and the markets?

In this past year, we've witnessed the most fundamental failure of capitalism since the Great Depression and important new deals between Washington and Wall Street. But while many anchors and reporters play it straight down the middle, CNBC has embraced a surprisingly politicized view of these developments. Many of the network's most prominent personalities are quite far to the right. (Disclosure: I appear on CNBC occasionally, and the network's on-air and off-air staff has been kind to me.) As the stock market fell in January and February, a reaction to the sharp plunge in the global economy and failure of the world's credit system, CNBC hosts and analysts warned of an Obama bear market. A parade of guests touted the virtues of supply-side economics, the inevitable failure of any stimulus that involves government spending, and the bizarre notion that we shouldn't regulate the bankers who blew up the world. They trumpeted the historical falsehood that the New Deal prolonged the Great Depression. And who can forget Rick Santelli's bile-filled anti-bailout rant in mid-February? I recall sitting on the set when one anchor argued that we should never have had the Securities and Exchange Commission in the first place. The consensus on CNBC seemed to be that President Obama was half Joseph Stalin, half Jimmy Carter.

Viewers could have been excused for thinking that the network was throwing itself in with the Republican Party, which has become politically invested in the failure of the Obama economic program. Assuming it was planned, this oppositional strategy would make sense. Opinion journalists always prosper when the forces in Washington are arrayed against them. The Nation floundered during the 1990s but got a boost during the Bush years. The National Review and Weekly Standard have more bite during this period of one-party Democratic rule than they did during the period of one-party Republican rule. Without the Bush administration as her foil, Rachel Maddow has lost some of her juice. Sean Hannity will pull in a larger audience attacking President Obama than he did kissing President Bush's rear. Alternatively, General Electric could simply be segmenting the market: MSNBC for the center and left, CNBC for the center and right.

But a concerted, planned tilt to the right would put CNBC in a strange situation. If the market improved, if there were signs that the government programs were working, that would clearly be good for America, for investors, and for CNBC's advertisers—but not so good for the credibility of the network.

So why have CNBC's viewers clicked the remote? It's possible that viewers have left because the story broadcast on CNBC in the early months of 2009 proved to be wrong. There hasn't been an Obama bear market. The show whose ratings have fallen most precipitously is the most overtly political one. Ratings for The Kudlow Report, presided over by Larry Kudlow, who proves you can be both a supply-sider and a gracious guy, are down more than 40 percent.

But I think something else is at work. Just as most people don't buy Playboy to read the articles, most people don't watch CNBC to listen to analysis. In fact, in many places—corporate offices, health clubs, bars, trading floors—the volume is generally muted. People keep CNBC on to see what stocks and bonds are doing and to see whether there's any news—especially to see whether there's any bad news. Standard business news such as quarterly earnings reports and Federal Reserve testimony isn't particularly exciting. CNBC gets its best ratings when the markets are tanking. Last fall, during the cataclysmic week in which Lehman Bros. failed, CNBC scored high ratings that rivaled the really high ratings when Wall Street staggered after the 9/11 attacks. Imagine if cable news had a major celebrity train wreck—an Octomom, a Michael Jackson death, a Jon and Kate breakup—every week, for several months in a row. That's what the summer and fall of 2008 were like for the financial media complex, from CNBC to Newsweek.
But the train wrecks had largely stopped by February, when Rick Santelli ranted. The stock market bottomed on March 9 and began to rally strongly (though we've yet to hear any talk on CNBC of an Obama bull market). Volatility, as measured by the VIX index, has plummeted. As the fear of wholesale failure subsided, CNBC began to lose some of its must-see appeal.