The feud between Jon Stewart and Jim Cramer has been interesting to watch for its entertainment value, but Stewart’s case that Cramer and business media in general could and should have done more to expose the increasing dangers in the market may also be an important step toward rebuilding an investing environment that “regular” investors can trust. The question is; will Cramer and CNBC be a part of that environment?

Stewart’s assertion that the business media was misleadingly optimistic about the markets reminded me of a report that we ran late last year looking at the use of “emotionally charged” language in the media’s discussion of the economy. What we found then was that in each quarter of 2008, the use of emotionally charged language such as “catastrophe”, “meltdown” and “collapse” decreased within top-tier (national and international) media , while increasing within second-tier (regional and local) and social media.

These findings led us to ask what might influence top-tier media differently from these other outlets. Three considerations came to mind, and all of them might be relevant to explain what was happening with Cramer and the business media in the lead-up to the banks’ collapse.
One concern that major media outlets have is a financial concern. As they command much more in advertising revenue, often from the firms that they report on, their editorial take on financial performance of these firms and the economy in general may be biased toward giving the “benefit of the doubt”.

The second concern that may influence top-tier media’s “optimism” (or at least lack of pessimism) is an interest in maintaining access. Clearly, business leaders would not respond to having their perspectives presented in a tone of criticism, hyperbole or fatalism. Giving firms, markets and banks the benefit of the doubt in reporting on the economy ensured that media outlets would be perceived as “reasonable” enough to continue to carry important talking points and have access to the occasional interview. Surely Cramer and CNBC were motivated by an effort to maintain friendly relations with important sources.

The third concern is that top-tier media actually understands the influence they have over behavior, and may choose to use less emotionally charged language in a spirit of responsibility. I am certainly not capable of determining Cramer’s motivations, but he very well may have felt some responsibility for keeping people from panicking.

Cramer himself admitted that Stewart was right in his assertion that Cramer and the business media bear some responsibility for the losses in personal investments and retirement funds that are the casualties of this market. This is because Cramer knows that despite his own and others’ observations that Cramer is truly more entertainment than advisor (and that smart people should understand that and discount his advice accordingly), in his position as the host of an investment program on a financial channel, he also had the undeniable appearance of an authority and credibility, and accordingly, people trusted him and took his advice seriously. Will they still, or will Cramer and his ilk now be understood as clowns, and thus fade from relevance in a new media environment?