By: Todd Shields United, US Air Deal Highlights Practice
WASHINGTON - News that United Airlines was buying US Airways
appeared on many front pages last month. Something more also slipped into view
- an instance of what critics call an increasingly common, but unsavory,
arrangement.
The day before the proposed merger was to be announced, a publicist offered
details of the takeover on the condition that reporters not post the news on the
Internet until midnight or speak to outsiders.
The New York Times, The Washington Post, and The Wall
Street Journal all accepted the deal. A source close to the airlines said another
newspaper and two wire services also signed up. But the embargo dissolved when
the Financial Times of London, not party to the deal, put news of the
takeover on its Web site around 6:30 p.m. May 23.
That freed the others to report for the next day's editions, and The New York
Times revealed the embargo in the 26th and 27th paragraphs of its main story
about the takeover.
The mention drew attention to a practice some say has increased as competition
heightens in business journalism. The field, once a sleepy outpost prone to
rewritten press releases, has evolved into a 24-hour, technology-driven arena
watched avidly by millions of investors. No reporter or editor wants to miss the
next big markets story - something corporations know very well.
In such an environment, embargoes with reporting restrictions offer clear upsides
to both parties: Journalists know they won't miss the story, and corporations can
get first-day articles ('stories,' as publicists call them) that lack comments from
potential critics.
The downside falls to the third party in the transaction - the reading public.
After word emerged of the airlines' news embargo, critics assembled lists of those
whose views may have been relevant, including passenger and consumer groups,
unions, and federal regulators who still must approve the takeover.
Without these types of different viewpoints, an article 'really is almost an ad for
whatever corporation is placing the story,' said Gary Ruskin, director of the
Washington-based Commercial Alert, a nonprofit group founded by Ralph Nader.
His group sent letters critical of what it called 'secret exclusion agreements' to
the Post, New York Times, and Journal.
Some critics said journalists should simply refuse to sit on merger news.
'Who are we to say we'll hold information back?' asked Chicago Tribune
financial markets columnist Bill Barnhart. 'I'm very uncomfortable with that.'
The airlines declined to comment. Richard Tofel, spokesman for the
Journal, called Commercial Alert's objections 'silly.' Tofel said the
Journal works to avoid embargoes, but some unavoidably come with
reporting restrictions. In such cases, he said, 'our editors make the judgment
[that] our readers are better off if we can share some of the news today and some
tomorrow.'
Glenn Kramon, business editor of the Times, called criticism of the
arrangement 'ludicrous.'
'They didn't say, 'You don't call critics,' ' Kramon said. 'They just said 'You've
got to keep it in the building.' This sort of thing happens all the time.'
Kramon said the extra hours afforded by the early tipoff let reporters and editors
craft comprehensive stories. 'Just read our coverage and see if it didn't raise
questions that would be perceived as critical,' Kramon said.
Post Managing Editor Steve Coll called embargoes 'unfortunate but pervasive.
We realize we have to deal with them and manage them on a case-by-case basis.'
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