The not so subtle hype inside newspapers — Wheels, Real Estate and Travel sections are money making advertorials

The curtains have dropped off newspapers. Disgruntled former reporters are exposing the unethical packaging of the news. Did you think something was funny going on?

The new car, real estate and travel sections of daily newspapers are actually fully funded by the advertisers.

The Toronto Star Wheels section is a giant advertorial for the newspaper – two or sometimes three sections each Saturday, running, on average, 26 pages of advertising and 10 pages of editorial copy. (Those two figures overlap, of course – editorial and pagecounts can be distributed over the same printed sheets.)

Wheels writers are often jetted off to exotic destinations for superexclusive new-car previews, with all expenses paid by automakers. You can safely assume everyone is flown business class, put up in four-star hotels, and plied with numerous goodie bags. The whole enterprise is flatly an unethical journalistic practice, in which corporations, many of which advertise in the paper, indirectly pay for coverage.

The Star admits it’s unethical, but also admits it is too profitable to pass up.

Is the editorial integrity of the Wheels section undermined when the newspaper agrees to accept free trips and hold back information about the cars its writers have previewed? The simple answer to the question… is yes. […]

It doesn’t stop there. Check out the Saturday and Sunday New Homes sections. No stories about a real estate bubble years ago. Instead, you read, “Now is the best time to buy a new custom home.”
Next, turn to the Travel section. Aren’t stories about cruise ships over represented? What about rip-off hotels? Never.

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33 thoughts on “The not so subtle hype inside newspapers — Wheels, Real Estate and Travel sections are money making advertorials

  1. Pingback: Real Estate/Buisness News » Blog Archive » The not so subtle hype inside newspapers — Wheels, Real Estate and …

  2. Pingback: Another Day Ruined » The not so subtle hype inside newspapers — Wheels, Real Estate and …

  3. Industry participants (aka The Real Estate and Indebtedness Mafia) such as the CMHC willfully ignore and publically downplay what is going on. The mainstream media are their paid shills (grab a weekend paper and look at the percentages of advertising which is real estate or lender related!). Instead we should all worry just a little (but not too much) about…

    a) the fact housing affordability is at its worst level since the last housing bubble burst [RBC. Housing Affordability. Mar-2009, p.1]

    b) the fact that real housing prices have increased substantially more than during the last three housing cycles dating back 40-years (all of which ended badly) [Scotiabank. Real Estate Trends, 26-Feb-2008, p.2]

    c) the fact that real housing prices in Canada have risen more from trough to peak than in the U.S., where prices and the general economy are now tanking [Scotiabank. Real Estate Trends, 26-Feb-2008, p.2]

    d) the fact that Canada’s housing prices-to-rent ratio is higher than in any other OECD country save Spain and 90% higher than the long-run trend [OECD Economic Outlook No. 82, December 2007. Data table can be found in the housing price ratio tab of http://www.oecd.org/dataoecd/6/5/2483894.xls%5D

    e) the fact that Canada’s housing prices-to-income ratio is 32% above historic trends and substantially above ratio which prevailed when the last housing boom bubble popped in the late 80’s / early 90’s [same source as (d)]

    f) the fact that the unprecedented run-up in prices have been fueled by a proliferation of risky lending practices such as (i) a decrease in the required down payment from 10% to 0%, (ii) an increase in the allowed amortization from 25-years to 40-years, (iiI) the proliferation of 7% cash back mortgages and other lending gimmicks (teaser rates, step mortgages, skip a payment, builder rate buy downs, etc.), (iv) the proliferation of home equity lines of credit, and (v) lenders not being on the hook for the vast majority of risky loans they write (CMHC guarantees low-down payment and/or extended amortizations)

    g) the fact that studies show typical consumers do not fully understand the implications and risk of low down payment, long amortization and gimmicky (e.g. 7% cash back) mortgages. How many consumers do you think have run a scenario analysis which asks, “what would happen if interest rates went to 8%, 10% or even 12%? What would happen if my partner or I lost our job? What would happen if real estate prices dropped by 10%, 20% or 30%? What impact will extending myself for this house have on my retirement plans?”

    h) the fact that housing bubbles around the world are beginning to deflate. By way of example, the UK (admittedly a worse market then ours) mortgage lending in the first quarter is down 40% to the lowest level in 33-years and things are only beginning to get rolling there. In New Zealand housing sales are down 53% year-over-year. And we all can see what is going on in the U.S.

    i) the fact that housing construction is far in excess of household formation. CMHC data shows housing starts averaging 226,000 units per year from 2003 through 2007, 33% per year above the roughly 170,000 net new households formed each year [as estimated by TD Economics and others]. Based on housing permits and starts, this trend is expected to continue well into the future.

    j) the fact that Canadian MLS housing inventory is at record highs while at the same time the number of sales is dropping dramatically [Canadian Real Estate Association (CREA)]

    k) the fact consumer indebtedness is at record highs relative to disposable income [Vanier Institute. The Current State of Canadian Family Finances. 11-Feb-2008. p.28]

    l) the fact that savings rates are close to nil even though the baby boomers should be saving for retirement [Vanier Institute. The Current State of Canadian Family Finances. 11-Feb-2008. p.9]

    m) the fact that Canadian incomes have stagnated. Statistics Canada recently reported “that adjusted for inflation the earned income of the ‘average’ Canadian — the so-called median income – was the same in 2004 as in 1982”

    n) the fact that the economy is bordering on a recession. The high Canadian dollar has pounded exports and the U.S., which absorbs some 70% of our exports, is likely in a recession. And what would happen if the rose comes off the construction and commodity bloom? Heresy I know, but both of these sectors are well above trend and are the only real source of strength in the Canadian economy.

    o) the fact that inflationary pressures are building, raising the prospect of higher interest costs for borrowers.

    I guess it is easier to put on our rose colour glasses, look in the rearview mirror and admire how pleasant the trip has been. Never mind the cliff dead ahead.

  4. Greg in San Diego:

    What say you about this: In a sign of how difficult it is to sell new homes in Southern California right now, a San Diego developer is offering a “buy one, get one free” deal, pairing million-dollar homes with less expensive homes.

    “We thought, ‘Why does it just have to be on Pop Tarts and restaurants? Why not buy one home, get one free,'” Dawn Berry of Michael Crews Development told 10 News in San Diego.

    I have a prediction for you, you will be one of the thousands in Southern California who file for bankruptcy.
    BTW-The Houston area has a Meditaranian climate, no tornadoes, no ice, no earth quakes, 50 miles inland from Gulf of Mexico.

    You have been brainwashed.

  5. Speaking as someone who has still not yet given up on journalism, as I am still employed by a newspaper, I do find the facts about the Wheels section and travel section to be funded by the very people the stories are written about. However, I do know of newspapers and journalists who have not accepted gifts (like a four-star hotel, etc.) even when they were shoved in the journalists’ faces. Also, I would never accept any special treatment outside of what any other person could recieve without being a journalist.

  6. sorry, there was a typo, “i do find the facts…disgusting” was supposed to be at the end of that sentence. My blog is about how slanted the media is today, biased and confusing. If you care to explore it is, politicallyobjective.wordpress.com

  7. Neutralideas,

    I wonder if you think that newspapers will survive in print form past the year 2012?
    McClatchy, one of the largest newspaper companies, behind only the Tribune Co. and Gannett, will cut some 1,150 jobs and halve its quarterly dividend this year.

    The cuts of about 10 per cent of staff
    come on top of the 1,400 announced in June as part of a restructuring plan to salvage lost advertising revenue.

  8. Without revealing too much, I actually received an email stating there would be a round of layoffs made by December of 2008…and you did your research! It stated that my company (one of the two you mentioned that are bigger than McClatchy) requires a 10% staff downsize. So let’s just say I know that these are turbulent times for print media, with or without the economic crisis.
    While I am not naive to what can happen (including the obliteration of print journalism) I do believe that it is fixable. There has to be a way to revive print.
    If not, small papers and the few majors (NY Times, etc.) will remain in print. I feel there will always be an audience that will want something tangible to hold and read…plus what are you going to read in the bathroom!
    Jokes aside, if it does come down to the loss of print journalism as we know it, I believe the world will suffer, society will suffer and it will be resurrected from the grave we so ungratefully stomped it into. Thanks for the feedback, keep reading politicallyobjective.wordpress.com! Love hearing your views.

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