The Good, the Bad & the Ugly
'Evening News' segment praises oil company for $50 million tuition gift; CBS blames corn prices on floods, but ignores ethanol mandates; CNBC hypes Californian gay marriage as economic salvation.

June 18, 2008

The Good
     On June 16, “CBS Evening News” finally gave viewers a break from bashing oil companies for high gas prices and showed one that was having a positive effect on its community.

     CBS correspondent Richard Schlesinger opened up the segment at a first grade class, asking one of the school children what she wanted to be when she grew up. She replied, “A half veterinarian, half artist.”

     “But unlike most first graders outside El Dorado, [Ark.,] when it comes time to pick a college that teaches half veterinarians, half artists, Allison’s tuition will be paid for by the oil company just down the road, Murphy Oil (NYSE:MUR) – a Fortune 200 company whose CEO, Claiborne Deming, decided the kids needed help,” Schlesinger said.

     Murphy Oil Corporation put aside $50 million for the high school graduates of the town of just more than 20,000 that is north of Arkansas’ border with Louisiana.

     “And dadgum it if he didn’t find $50 million to make a promise to the people of this small town,” Schlesinger said. “So every kid who goes through the El Dorado School System and graduates from the high school will be given $6,000 a year for up to five years to help pay for college.”

     According to the report, the $6,000 annually is enough for tuition at Arkansas’ public universities. And Murphy Oil’s investment is having a positive effect on the community by encouraging people to move to El Dorado. Between 2000 and 2005, the community lost 5.5 percent of its population, but now El Dorado is getting people back. And at a time when housing values are declining nationally, El Dorado’s are on the rise.

The Bad
     U.S. corn futures topped out at record highs on June 11 on the news that the impact of flooding in the Midwest would hurt this year's corn crop, but the June 11 "CBS Evening News" left out one significant detail in its reporting about the crisis.

     "[A]gricultural disaster aid has been requested for Iowa, Illinois, Wisconsin and Michigan," CBS correspondent Cynthia Bowers said on the June 11 "Evening News." "The federal government estimates that this year's corn crop will be 10 percent lower than last year's. That's down 1.4 billion bushels, and it's too late to do much about it."

     According to a Reuters story, corn prices on the Chicago Board of Trade have shot up 80 percent in the last 12 months, with almost 17 percent of that just this month. But Bowers didn't explain how the prices got so high before the floods, which put consumers of corn products in this vulnerable position. Corn futures were already priced high because of a heightened demand - artificially stimulated by federal government subsidies for ethanol produced from corn.

     "As a result [of the flooding], corn is trading at all-time highs – up 52 percent for the year, topping $7 a bushel," Bowers said. "And analysts say it's headed for $8 [a bushel] – costs that will soon be passed on again at the grocery store where consumers are already paying more for anything with the word ‘corn' in it."

     One futures analyst predicting corn at $8 a bushel directly blames ethanol mandates from the U.S. government and the recent moves of the price of crude oil into record territory.

     "I believe a reasonable target for corn by the end of this year is $8, which would largely be dictated by price movements of the U.S. dollar and crude oil," Carol Hurley, a senior market strategist with Lind-Waldock, a futures brokerage service, wrote for Insidefutures.com on June 11. "If crude oil continues to rally, that will naturally push corn higher because of ethanol mandates by the U.S. government."

The Ugly
     Pushing a liberal social agenda is the last thing you'd expect to see on CNBC's "Squawk on the Street." But the network's June 16 mid-morning show featured a segment praising the California Supreme Court for legalizing same-sex marriage because of a predicted economic benefit.

     "This time around, one study expects over 100,000 gay couples will tie the knot, providing a boost to California's ailing economy hit hard by the real estate foreclosure meltdown," CNBC Silicon Valley Bureau Chief Jim Goldman said.

     Goldman cited data from the pro-gay Williams Institute, a division of the University of California Los Angeles School of Law. According to its Web site, the Williams Institute "advances sexual orientation law and public policy through rigorous, independent research and scholarship, and disseminates it to judges, legislators, policymakers, media and the public."

     "Overall, they'll have about a $684-million boost to the economy over the next three years," Williams Institute Research Director Lee Badgett told CNBC.

     California's gross domestic product was $1.55 trillion in 2007. The potential "boost" - an average of $228 million annually - would add a little over 1/100th of 1 percent (0.0147 percent) to the California economy.

     "New partnerships, new revenue - as California prepares to say ‘I do' to a flood of same-sex weddings," Goldman added.

     Still, Goldman warned the state could miss out on this economic impact if Californians decide to amend the state constitution on November 4 to reverse the court's decision and limit marriage to a union between one man and one woman.

     "And indeed, the celebrations and ceremonies will begin later today, but all of this could come to a screeching halt come November when a ballot measure seeks to reverse all this," Goldman warned. "But, in between now and then – we're talking big-time bucks – lots of money for a lot of vendors looking for a host of new ways, well, to generate some cash."

The Good, the Bad & the Ugly tracks the best and worst media coverage of business and economics. Readers are invited to submit suggestions or news tips to Staff Writer Jeff Poor at jpoor@mediaresearch.org.