ANALYSIS: Media Watch - Media marvels at speed and magnitude ofEnron's collapse

The business world has watched in awe as Houston-based Enron has

collapsed under the weight of its financial indiscretions, which

included years of false earnings and hidden debt. In telling the tale of

how Enron fell from grace, the media drew attention to the company's

magnitude in order to give the public the context of just how big and

influential the company had been up until a short time ago. As the

Atlanta Journal-Constitution succinctly wrote, "It is the largest and

fastest corporate collapse in US history."



Several articles traced the road to Enron's past success and described

the company as a pioneer in the field of trading energy as a

commodity.



The New York Times (December 2) explained, Enron was "not only the

world's largest trader of electricity and natural gas, but also a

telecommunications company, an investment firm, a paper and lumber

producer, and an insurer.



It was, with more than $100 billion in revenue last year, the

nation's seventh-largest company."



All of this made its bankruptcy filing, the largest in US history, all

the more shocking. To further drive home the point, many newspapers

pointed out that the company's stock, which had been as high as $90 per share recently, closed at 26 cents.



A number of publications viewed Enron's unraveling from the point of

view of the competition, and observed that many of the energy traders

who had used Enron as a market maker had now left and were doing

business elsewhere.



In the eyes of The Wall Street Journal (December 3), Enron's loss was

its competitors' gain: "A half dozen of Enron's biggest rivals are

gearing up to grab chunks of the dominant share the energy concern held

in the natural gas and power-trading market." Competitors singled out

for being best positioned to gain in the long term included American

Electric Power, Duke Energy, Williams, El Paso, Dynegy, and Reliant.



However, several papers pointed out that in the short term, Enron's

collapse could bring trouble to the industry and its wide assortment of

creditors in the form of billions of dollars in unpaid debts and trades.

The media conveyed the notion that, in being such a large player in so

many industries, Enron was going to create a domino effect to hurt a

variety of companies as it imploded.



Enron's $10 billion lawsuit against one-time suitor Dynegy also

made headlines. The New York Times' (December 3) interpretation of the

lawsuit was that it "essentially accuses Dynegy of using the merger as a

ploy to weaken Enron even further."



The media did not tend to judge whether or not that specific lawsuit had

any merit, but a number of reports suggested that "Enron's rapid

unraveling was largely of its own making" (San Francisco Chronicle,

December 3).



The media is implying that there is plenty of blame to go around for the

Enron case: Enron's management, its board of directors, the company's

auditors (Arthur Andersen, who are now also being investigated), the

Securities and Exchange Commission, and the financial analyst community.

While Enron is taking steps to resurrect its trading platform in the

form of a joint venture with one or more banks, the future Enron will

likely be a shell of its former self.



Evaluation and analysis by CARMA International. Media Watch can be found

at www.carma.com.



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