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Does Media Herd Follow Direction of Market?

Aired July 20, 2002 - 18:30   ET


HOWARD KURTZ, HOST: The market meltdown -- are the media unfairly blaming President Bush for sinking stock prices? Are journalists obsessed with Bush and Cheney's business dealings in the oil industry, and is the press turning CEOs into black hatted villains?

Also what do Ted Williams, Allen Iverson and Rudy Giuliani have in common this summer?

Welcome to RELIABLE SOURCES where we turn a critical lens on the media. I'm Howard Kurtz and joining us now to talk about the White House corporate corruption and the media, Michael Wolff, media columnist and contributing editor for "New York" Magazine; Andy Serwer, Editor-At-Large at "Fortune" Magazine; and Gerri Willis, senior financial correspondent for "SmartMoney" Magazine.

But first a look at how the media have been covering the Wall Street meltdown in recent days. From the nation's top newspapers to the network evening news, George W. Bush has been relentlessly linked to the daily drum beat of sinking stock prices.


UNIDENTIFIED MALE: Chaos in the markets and the continuing scandals in the corporate world are major concerns, obviously, for the White House and also for the political future of President Bush.

UNIDENTIFIED MALE: There's also growing concern about the corporate connections, past and present, of both President Bush and Vice President Cheney.

UNIDENTIFIED MALE: If the stock market was seen to be rebounding in dynamic fashion, the White House could relax a little. But the market appears to be in a tailspin and there's no bottom in sight.


KURTZ: And CNN's Bill Schneider put it this way.


BILL SCHNEIDER, CNN CORRESPONDENT: President Bush speaks on Wall Street -- the market tumbles. Chairman Greenspan testifies - the market goes up.


KURTZ: Actually, the market went down soon after Alan Greenspan finished his remarks. Andy Serwer, this notion that the president speaks and the markets react instantly, is that -- let me find a precise phrase here - ridiculously simplistic?

ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE": No, it wasn't, not the first time that he spoke because at that point, Wall Street was really looking for some firm resolve from the president. They didn't get it, and I think stocks sold off because of that.

The second speech, that really didn't have anything to do with what the president was saying, the decline on that day, I don't think -- case by case.

KURTZ: When you watch it on television, in fact, the White House was ticked off because Fox and MSNBC blew up the ticker numbers so it looked like the president's words were having some kind of effect on the Dow being down 200, 300 points.

Gerri Willis, does this approach, though, reflect the kind of journalistic desire to endow the president with greater powers because it is easier to cover and keep that camera on one man than to unravel the dozens of economic factors that go into what happens everyday on Wall Street.

GERRI WILLIS, SR. FINANCIAL CORRESPONDENT, "SMARTMONEY": You bet. There's a desire to simplify this story and to turn it into a political story looking for the left side, looking for the right side, and make it easy to understand. It's just not that easy.

KURTZ: It's not a political story?

WILLIS: Well, I think the political issues are far less interesting, frankly, than the business implications, and I think there are a lot of things that need to be fixed in corporate governance and to me that's the real issue.

KURTZ: I get the impression, Michael Wolff, that there's this journalistic impulse. The market is plunging. Our 401(k)s are shrinking, there's blood on the floor, and the media have to find someone to blame.

MICHAEL WOLFF, COLUMNIST, "NEW YORK" MAGAZINE: Well, yes, without question, I think that that is the crux of the story right now. Who is to blame? Why did this happen -- not to mention what's going to happen and who's going to fix it. But I think that the president becomes a very, very potent symbol of what's going on. Whether he should be that symbol or not, I think the truth is he's just too rich of a symbol to ignore at this point.

KURTZ: OK. Well the president met with reporters this week, along with the president of Poland, but the reporters were not thinking about foreign policy. Let's take a look at some of that. (BEGIN VIDEO CLIP)

UNIDENTIFIED REPORTER: Mr. President, even while you're calling for transparency in corporate America, you refuse to ask the SEC to turn over documents from its investigation into Harken Energy Corporation, your old company.

UNIDENTIFIED REPORTER: Are you confident the SEC will find that Vice President Cheney did nothing wrong while at Halliburton?


KURTZ: Andy Serwer, Harken, Halliburton. We've all read the stories. We just saw the questions. Is this the press in Whitewater mode, determined to dig up dirt about long-ago presidential business dealings?

SERWER: Yes and no. I really don't -- I think ...


SERWER: ... the Halliburton thing is very, very relevant. Halliburton is an ongoing investigation right now and it really could have very serious implications for the vice president.

After all, he was the CEO when alleged malfeasance occurred. I mean it doesn't get any more real than that, Howie. As far as Harken, you know this is a very controversial thing with the press. Obviously it happened 12 years ago. There were stories in "Harpers," stories in "Talk" magazine, stories in "The Wall Street Journal" back in the early '90s about this. So the question then becomes, are we just rehashing?

Is it being used by the Democrats as a political tool, and you know, I hate to say this, but I'm kind of a little mixed there. I do think the questions about the president trying to get all the documents released from the SEC is a legitimate one. However, you know, if it didn't carry weight 10 years ago, 12 years ago, why does it carry weight today?

KURTZ: Because 10, 12 years ago we didn't care all that much ...

SERWER: We didn't care.

KURTZ: ... about George Bush and obviously today he's in the White House.

SERWER: Well, we didn't care about malfeasance as much either, did we?

KURTZ: That's the point I want to come back...

WOLFF: Also we didn't have a market that was falling through the floor. I mean we are looking for answers. We're trying to understand how this happened and one of the reasons -- one reason why it happened is that there was a culture that created George Bush. KURTZ: On the point, Michael Wolff, politicians -- in talking about the culture, politicians used to boast about having once been in the private sector, having run companies, I've met a payroll, not like these other government hacks, and I'm wondering has the press now turned this into a bad thing?

WOLFF: Yes, well right now, of course, it's a terrible thing. I mean we're looking -- I mean every -- it's not just the press, it's the entire country or a good part of the country that feels that something has gone terribly, terribly wrong here, and they're looking at their retirement accounts and saying, you know, I got screwed. Who screwed me?

WILLIS: Exactly. But I don't think the media in Washington is actually putting a spotlight on these issues. They're more interested in talking about the political head butting that's going on rather than exploring the things that really need to be changed here.

WOLFF: Well, I think it's actually coming from -- it's -- an interesting thing, it is not the Washington media that is driving the political story now; it's functionally the business media.


KURTZ: But Gerri Willis ...

SERWER: Yes, there is this sort of schism between the business press that Michael just talked about and the Washington press. And you know, I think in the 1990s business people, and maybe the business press thought, you know, with all the spotlights on us we're kind of doing all the right things. The economy's great, and Washington sort of became a bit of a backwater. I hope you don't mind me saying that, Howie.

KURTZ: Go ahead. I can deal with it.

SERWER: But you know now the tables have turned and as Michael was saying, you know, being a businessperson, I mean Bush -- that was such a great thing, a first president with an MBA. Well gee, you don't want to bandy that about anymore, do you?

KURTZ: Well, so politics is what drives the media business and so when Enron was just a spectacular collapse bankruptcy of a big company, it was still largely a business page story. When the calls from Enron executives to the White House were revealed last January, that's when it started really, this whole intense focus on corporate corruption.

WOLFF: I disagree with that, Howie.


WOLFF: I mean I think the Enron story happened and it swept across -- it essentially swept across the markets and then it became a situation at Washington, which is completely uninterested in business and also knows nothing about business, but finally they couldn't ignore it.


WOLFF: And also then they woke up and they said oh, George Bush, wasn't he in business?

WILLIS: Well ...

KURTZ: You know what's -- go ahead Gerri. I'm sorry.

WILLIS: I do think there's enough blame here to go around. You know if Washington journalists are most interested in the political debate, I think that business journalists were most interested in celebrating these CEOs as gods. I mean all you have to do is go back and look at the covers on the major business magazines and you see these guys celebrated as heroes.

KURTZ: Would that include "SmartMoney?"

WILLIS: Well, we have a different format. We put stocks on the cover, not people generally. But ...


WILLIS: ... you know we were involved as well. I mean I think everybody's sort of culpable here and the stories that, you know, the stories you see now day after day, you know, these are sort of -- this is sort of penance journalism now coming from the business journalists. You know they ...


WOLFF: Yes ...

KURTZ: Michael ...


KURTZ: ... go ahead.

WOLFF: ... but in the defense of business journalists, it's not necessarily the penance. It's the story. The story used to be that everybody was getting rich. Now the story is everyone's getting poor. We are on the story. We're reflecting exactly what's happening.

KURTZ: But that strikes me as a little bit of a copout, Michael Wolff, because there were accounting problems and scandals at places like Sunbeam and Waste Management during the late '90s when the rest of the market seemed to be going up and some journalists wrote about it, but you seem to be suggesting that as long as the arrows are green and headed north, that journalism shouldn't be digging the way they're digging now.

WOLFF: Well, I think that that's absolutely the way that it works. We follow the arrows. Whether we should be or we shouldn't be is almost -- I mean I think it is a separate question. Right now the structure of the business journalism business, and actually the political journalism business is you follow the story. You follow what's happening. Are there some people who are off on the margin saying you know those AOL guys are bad guys, be careful? Yes, there are always some people like that, but that is never the focus of the story. We want the story to be -- the real story was that everyone was getting rich.

KURTZ: Follow the ...

SERWER: Yes ...


KURTZ: ... follow the arrows is certainly an updated version of the old Watergate, still going to follow the money. Andy Serwer, you wanted in?

SERWER: Yes, I just wanted to weigh in there. I mean, as you yourself suggest, Howie, people were writing about Sunbeam. I mean Chainsaw Al (ph), those were great stories. But the bigger story and maybe I'm just reiterating, but the bigger story was the incredible prosperity we were going through and the stock market boom. And you know, it's -- also you have to really sort of carefully sort through this. A lot of the people that we were putting on the cover aren't the crooks that we were -- we are attacking today.

In other words, you know, while GE has gone down, it's not like Jack Welch has been indicted, although his story is kind of interesting too ...

KURTZ: Right.

SERWER: ... isn't it?

KURTZ: Let me just ...

SERWER: Um ...

KURTZ: ... let me just ...

WILLIS: I think Bernie Edwards (ph) ...

KURTZ: ... go ahead Gerri.

WILLIS: ... made a couple of covers himself. I just ...

SERWER: Not us, thank goodness.

KURTZ: Let me ...

SERWER: We checked.

KURTZ: Before we go to break, Andy, let me just ask you -- I wrote this week about "Washington Post", "New York Times", "Chicago Tribune" and other newspapers, railing on their editorial pages about this practice of companies not counting as a regular business expense stock options to executives. The "Washington Post" said this week it's going to change that practice.

SERWER: Right.

KURTZ: I think -- but these companies all do it themselves. The media companies awarding millions of dollars in stock options to their CEOs and top executives. Do you detect anything ...

SERWER: Well, the problem there is, Howie, I mean I work for this company called AOL-Time Warner, right, and the parent company of everything, I think. And if I could change their stock option policy to make them expense stock options, I would.

KURTZ: We need to take a break so I can check out my portfolio, but before we do, last week we asked our viewers if the press should be dredging up President Bush's 1989 stock dealings.

Eloise from Orland Park, Illinois wrote, "Foaming at the mouth is not an attractive thing to watch. That's what the media are doing over the 13-year-old George Bush case that was investigated."

But John from Alton, Illinois disagrees. "Absolutely this story deserves coverage. The press has the responsibility to get to the bottom of this business practices, as well as the vice president's."

We'll be right back.


KURTZ: Welcome back to RELIABLE SOURCES. I want to put up a "Time" magazine poll this week on moral and ethical standards, and those getting a fair to poor rating. Members of the Bush administration, 51 percent; the news media, 66 percent; CEOs, 72 percent.

Gerri Willis, how can CEOs be rated lower than even widely reviled journalists?

WILLIS: It's amazing, isn't it? I haven't had a chance to see that poll, but you know, I've got to tell you, I think people out there instead of having 401(k)s now, they've got 201(k)s and there's a lot of anger out there. I think, you know, the media, everybody needs to sit back and think about how we've been covering these companies, and some of the coverage we're seeing now I think is much deserved.

KURTZ: Michael Wolff, you're a former businessman. You ran an Internet company. Does it seem to you that the press is turning businessmen, good and bad, into the new enemy -- America's al Qaeda?

WOLFF: Without question. I mean there is the sheep effect here that's going on and it's the herd effect. Everybody goes ...

KURTZ: Are we going too far?

WOLFF: ... are we going too far? No, probably not. Matter of fact I'd probably argue that we're not going far enough. But the interesting thing and to some extent, the disturbing thing is that we all go in the same direction at the same time.

And that in itself indicates that, at the very least, there are lots and lots of lost subtleties.

KURTZ: How has the tone of coverage toward business changed at "Fortune", Andy Serwer, say from the late '90s until the last year or so?

SERWER: It's changed dramatically. It's so interesting. It's very difficult to write a positive story these days. You look at the magazine and it's filled with one negative story after another; one scandal story after another. That's because they're out there. That's because that's what the story is, but people's appetite is also geared towards reading these right now. It's also very difficult to sort of stick your neck out in a sense.

Gee, this stock is, you know, beaten down, this company's beaten down, but I think it's a winner, and I think the people are honest. You pour through the financial statements, and then a week later you find out they're all crooks and they're lying through their teeth in the 10-K, so it's actually sort of dangerous as a journalist now, and I think that's being reflected.

WOLFF: There's this other thing that's clearly going on too, and that it's -- you know, all of us or at least most of us were caught on the other side and so, it's an effort to restore our own credibility...

KURTZ: I think that's an important point. Now let's take a look, Gerri Willis, at AOL-Time Warner, parent company of CNN, parent company of "Fortune" and a bunch of other media organizations, magazines, HBO and so forth.

Its stock went down five percent on Thursday after a lengthy "Washington Post" reported about what it called "unconventional accounting practices," certainly not in the, you know, WorldCom or Enron category.

Didn't the press weigh ...

WOLFF: Well, not yet in that category, but there were suggestions that it may well get there.

KURTZ: Well, I want to be careful and just deal with the evidence that we have now. But Gerri Willis, didn't the press in 2000 way oversell all the wonderful benefits of the AOL-Time Warner merger and how this was going to change the universe as we know it?

WILLIS: Well, I think everybody was in love with the synergies that they thought AOL-Time Warner, Vivendi, all of these big media conglomerates we're going to get, and now it looks like it's going to be the tiny little companies that do well.

You know, we swallowed the story whole, and we needed to be just a little more critical in our thinking, and I think that's really the lesson for journalists. I agree with Michael Wolff that you know we made some mistakes in the past, and I think it's time that, you know, the fact that we're changing what we're doing now is good.

KURTZ: Every big corporate merger gets -- tends to get ...

WOLFF: But ...

KURTZ: ... all (UNINTELLIGIBLE) coverage at the beginning and then six months to a year later, it's like you're (ph) all the mistakes that are being made.

WILLIS: Well, it takes a while for them to play out. You don't see them right away.


WILLIS: And so you write about what the executives are saying can happen, will what they want to see happen, and it takes six months to a year to see well, you know, maybe it's not working out.


WOLFF: But that's the important point. It's coming from the executives. You know, really doing our job as journalists, part of that job is merely to report what the central players are doing, and in many instances what we're learning now is the central players were just telling lies.

KURTZ: Andy Serwer, is it hard for "Fortune" magazine to cover those sagging fortunes of AOL-Time Warner?

SERWER: It's challenging, but I will hold up our coverage compared to anyone else, Howie. I mean, we've done a great job. Carol Loomis, our senior writer here, has written some very scathing stories about the company.

I won't say it's easy all the time, but I'll tell you, they -- sometimes they deny us access just like they'd deny anyone else access, and actually, interestingly enough, working here, of course, provides some very insightful perspective when it comes to how the company did not work. I will just leave it at that.

KURTZ: OK, we have about a half a minute. Gerri Willis, you seem to be suggesting in some of your comments that the media kind of fell down on the job during the "great bubble" as we now call it, and are having to be sent off to reeducation camp.

WILLIS: Well it wasn't just us. It was the SEC. It was the regulators ...

KURTZ: The Wall Street analysts ...

WILLIS: ... it was Wall Street.

KURTZ: ... who the media ...

WILLIS: It was the analysts ...

KURTZ: ... turned into celebrities.

WILLIS: ... everybody. All of us -- all of us wanted to see the stock market go up at the end of the day.

KURTZ: OK. Obviously that's not happening now and obviously this story is going to play out for a long period of time. Gerri Willis, Michael Wolff, and Andy Serwer, thanks very much for a fascinating discussion.

You know, the media seemed particularly fickle this summer as some people's stock plummets faster than the Nasdaq. It's a topsy- turvy world where yesterday's heroes become today's zeroes.

Let's take a look at "The Spin Cycle".


KURTZ (voice-over): Baseball was once the national pastime, the boys of summer and all that. But now there's talk of another debilitating strike of dropping a couple of teams, and questions whether some big sluggers are using steroids. All of which has made once popular commissioner Bud Selig a buffoonish figure, especially after he called off the All-Star game while both teams were tied.

Ted Williams was the greatest hitter of all time, but in the end he struck out with a feuding family that fought over his body and in a bizarre twist has literally put him on ice, not that baseball has a monopoly on bad press.

Allen Iverson was a basketball hero in Philadelphia, but he's given the sport a big black eye since being charged with breaking into his cousin's apartment and threatening two men with a gun.

Speaking of obscenely wealthy folks, CEOs were once lionized by the media. Remember Jeff Bezos, "Time's" Man of the Year? But now they're denounced daily as book-cooking, corner cutting, stock option obsessed greed heads. Even domestic diva Martha Stewart can't chop her way out of the negative headlines.

MARTHA STEWART: I will be exonerated ...


STEWART: ... of any ridiculousness.

KURTZ: One of the heroes of 9/11, America's mayor, got the tabloid treatment when he had to fork over nearly seven million bucks in a very messy divorce. But some reputations are on the rise. Even thick greasy artery-clogging fat is getting a second look from the "New York Times."

And remember when David Letterman was portrayed as the heavy for threatening to bump Ted Koppel's "Nightline" off the air? Now it's kiss and make up time.

TED KOPPEL: Your public loves you. Your colleagues love you. You make a lot of money. You're very successful by any objective standard.

DAVID LETTERMAN: I guess I have a very low threshold of embarrassment.


KURTZ: You know, if we wait long enough, the reputation of the press might make a dramatic comeback to the status of fiercely ethical, widely admired watchdogs, but probably not in our lifetimes.

When we come back, an old familiar face returns to the talkshow wars, a reporter is held captive temporarily at the State Department, and the "Seeds of Peace", a vision for peace in the Middle East, remembering John Wallach, the journalist, in Bernard Kalb's "Back Page".


KURTZ: And checking now on the latest from the media world, the white-haired grandfather of daytime talk is back. Phil Donahue returned the airwaves this week after a six-year absence with a new MSNBC chat show.

Donahue is that rarest of TV creatures, an unabashed liberal with his own prime time show. Donahue's debut featured a high decibel debate with former presidential candidate Pat Buchanan, who's also joined MSNBC.

And two members of Congress have asked Colin Powell to explain why the State Department detained a journalist for questioning last week. "National Review" reporter Joel Mowbray was held for nearly half an hour after asking at the daily press briefing about a classified cable on problems with the U.S. visa program in Saudi Arabia.

Standard procedure, says the State Department, but Mowbray says he was questioned about his source for the cable. "National Review" editor Rich Lowry has accused department officials of "thuggish" behavior.

And time now for "The Back Page". Here's Bernard Kalb.


BERNARD KALB, CNN CORRESPONDENT (on camera): It's no secret that journalism is one of the great jobs ever invented. You get a ringside seat to what's happening in the world, report what you see, hear, maybe overhear, and actually get paid for that. But sometimes just being an eyewitness is not enough.

(voice-over): All of this comes to mind with the death the other day of John Wallach. But the Obit headlines portrayed John as someone who fought hatred with a youth camp known as the "Seeds of Peace" and the Obits gave just a paragraph or two to John's almost 30 years as a working journalist, joining the Hearst (ph) newspaper chain in 1968, eventually becoming foreign editor and diplomatic correspondent. But his focus increasingly was on the Middle East. His writings include a book with his wife, Janet (ph), and one of the key players of the area. Violence and hatred was what John saw when he first visited that part of the world, but he looked beyond that and pierced the future. His idea was to get teenagers before they are irretrievably poisoned by hatred, to get teenagers to know each other so that one day they can try to solve the conflict their parents could not.

That's how "Seeds of Peace" began, founded by John in 1993, bringing together youngsters from the Middle East to spend a few weeks in Maine, to get to know the face of the enemy. That very first year John got his first "Seeds", Israelis, Palestinians, and Egyptians onto the White House lawn for this historic event.

John gave up journalism in 1995 to commit himself full time to "Seeds of Peace," which has sent reached out to invite teenagers from India and Pakistan, from the Balkans, also Greeks and Turks from Cyprus, and this year from Afghanistan -- altogether some 20 countries and 2,000 "Seeds" over the past decade.

(on camera): Looking back you can see that journalism was the incubator for John's remarkable idea. But it was John's vision and enthusiasm that turned "Seeds of Peace" into a reality, trying to get kids to discover the humanity in each other. John himself, I might add, was only a kid, just 59.


KURTZ: Bernard Kalb. Well that's it for this edition of RELIABLE SOURCES. I'm Howard Kurtz. You can catch our program again tomorrow morning at 9:30 Eastern.

"CAPITAL GANG" is up next. Mark Shields has a preview.






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