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CNN RELIABLE SOURCES

Rebekah Brooks Arrested in London; Budget Talks Spin

Aired July 17, 2011 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


HOWARD KURTZ, HOST: That headline-grabbing word "scandal" no longer quite captures what is happening to Rupert Murdoch's empire. As the disclosure of sleazy tactics has spread beyond "News of the World," with targets as high as the prime minister and the queen and with one of Murdoch's top lieutenants arrested in London today, this is a moment of reckoning for journalism.

But is there really any evidence of misconduct by the company here in the U.S.? Are Murdoch's critics using this crisis as an excuse to vilify him?

Our guests include the editor of "The Guardian," which broke much of the story.

Plus, reporters scrambled to cover the closed-door White House talks to avoid a government default. How much is the press being spun by the president and the Republicans?

I'm Howard Kurtz, and this is RELIABLE SOURCES.

The Murdoch media empire is in all-out damage control mode this morning as the scandal at its British papers continues to spread. On this side of the Atlantic, the FBI has opened a preliminary investigation of whether phone hacking or other illegal conduct took place in the U.S. And the dizzying pace of developments has made headlines around the world.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: MPs finally forced Murdoch to withdraw his BSkyB bid. His empire has cracked, but is it broken?

UNIDENTIFIED FEMALE: We're following also breaking news in London, as well, this morning, where the embattled chief executive of Murdoch's British newspapers has resigned.

UNIDENTIFIED MALE: News International will issue a statement shortly to say that Rebekah Brooks has indeed resigned as the chief executive of News International.

UNIDENTIFIED MALE: More damaging details are emerging in Rupert Murdoch's phone hacking scandal. For the first time, other News Corp. properties are being implicated in the growing scandal.

UNIDENTIFIED MALE: The "queen of Wapping," Rebekah Brooks, resigned, leaving the fight for News International's future to James and Rupert Murdoch.

(END VIDEO CLIP)

KURTZ: Well, Rebekah Brooks has done more than just resign. This breaking news on Sunday morning -- she was forced out on Friday, of course, as the head of Rupert Murdoch's British newspapers, arrested today by police in London in connection with the scandal. Her predecessor, Les Hinton, who ran "The Wall Street Journal's" parent company, Dow Jones, resigned also on Friday.

Meanwhile, Murdoch was forced to drop his $12 billion bid to buy British Sky Broadcasting. And yesterday, the company took out full- page ads in rival British papers with a simple headline, "We are sorry."

But in an interview with "The Journal," Murdoch says the company has made only minor mistakes in handling this debacle. Really?

Joining us now to talk about the world-wide fall-out, in New York, Michael Wolff, the editor of "Ad Week" and author of a biography of Rupert Murdoch, David Folkenflik, media correspondent for National Public Radio, who's just back from London, and here in Washington, Sarah Smith, the Washington correspondent for the UK's Channel 4 News.

And Sarah Smith, this extraordinary development on a Sunday, Rebekah Brooks being arrested by the police -- how much does this further the damage to Murdoch's media company?

SARAH SMITH, WASHINGTON CORRESPONDENT, U.K.'S CHANNEL 4 NEWS: Well, it's interesting. On the face of it, it looks very, very bad and it means that we're probably one step closer to James Murdoch being questioned or arrested over this, which really would damage both the company and the family very, very much.

But there's probably something quite clever going on here. She was arrested by appointment, if you've ever heard of such a thing, which is remarkable, given those accusations the police are too close to News International anyway. And she's due to give evidence, of course, along with Rupert and James Murdoch, to a parliamentary committee on Tuesday.

Now she's been arrested. She may very well say she can't answer these questions because it would interfere with the police inquiry.

KURTZ: I will not be surprised if she says that. And David Folkenflik, having just been in Britain, is there a sense that this is not just a "News of the World" problem anymore but a fundamental problem with the way that Murdoch's company does business?

DAVID FOLKENFLIK, MEDIA CORRESPONDENT, NPR: Oh, I think it's absolutely the case. I mean, you've seen this reach into the executive suites, not just "The News of the World." We now have had the last two previous editors of "The News of the World," Rebekah Brooks, her predecessor, Andrew Coulson, who had been a close aide and adviser to Prime Minister David Cameron, have both been arrested in this matter. And I think it's worth pointing out that this is a scandal that encompasses both the question of hacking into voicemail messages of the targets of stories -- royals, celebrities, politicians and now we know victims of terror attacks, as well, are also alleged -- but also, that this is a police corruption scandal in which police appear to have been routinely paid for information that had been supposed to be secret and confidential, databases accessed, other matters like that.

And senior officials, a question whether their relationships were too cozy, both on a personal and in terms of payments, questions where they soft-peddled investigations four years ago. So this really seeps into the law enforcement institutions, and also, it calls into question the proximity of those relationships between top executives, people like Rebekah Brooks, also James Murdoch, the son of Rupert Murdoch...

KURTZ: It's a very incestuous world.

FOLKENFLIK: ... a very senior News Corp. executive...

KURTZ: Let me bring in Michael Wolff. It seemed that Rupert Murdoch was trying to protect Rebekah Brooks. He was resisting her resignation for more than a week. Now is he down to protecting his son, James, and himself, now that these other people have either quit or have been taken into custody?

MICHAEL WOLFF, AUTHOR, "THE MAN WHO OWNS THE NEWS": Of course he is. And I think that there's another interesting point to make here about the way that this -- about the entire company because there are really two companies. There is the perfectly reasonable, ordinary entertainment company, which provides most of the revenue, most of the News Corporation revenue. And then there is this newspaper company, which is sort of a vestigial company. It exists because Rupert Murdoch himself wants it to exist.

And that's really where the issue is, where the contagion is. It's within the newspaper -- it affects two things. It affects the newspaper, the newspaper company, and it affects people named Murdoch who run the newspaper company.

KURTZ: Right.

WOLFF: So I think more and more, we're going to begin to see that split. I mean, in fact, you know, there really is a simple solution for the company as a whole, which is to get rid of the newspapers...

KURTZ: Except...

WOLFF: ... and get rid of the Murdochs and then...

KURTZ: ... Rupert doesn't want to do that because he loves newspapers. Sarah Smith, Democratic senator Dick Durbin on "Meet the Press" this morning -- he wants congressional hearings into the Murdoch empire, and there's a preliminary FBI investigation, although there's no evidence, at this point, of any wrongdoing by any of the U.S. properties of News Corp. But is this now turning into a two- front war for the company, on both sides of the Atlantic?

SMITH: You can see they're absolutely terrified of having to fight this war in the U.S., as well. The evidence is very thin to nonexistent, at the moment, that there was any phone hacking done in America. Certainly, nobody has uncovered any evidence that 9/11 victims were hacked.

Jude Law has just brought a lawsuit against one of the Murdoch papers in Britain, "The Sun," alleging that whilst he was at JFK Airport, he knew his voicemails were being listened to. He could tell from the story that appeared in the paper the next day. That would be criminal activity in the U.S. if it had happened.

But what the Murdochs really have to do is make sure it doesn't go near any of their titles here, "The Wall Street Journal" or "The New York Post" or any of their properties here.

KURTZ: David Folkenflik, I wonder if you think the U.S. part of this story is somewhat hype. We have a lot of people -- members of Congress and certain liberal media types jumping on and saying, We must investigate. But you know, the locus of the story is still very much in Britain.

FOLKENFLIK: Well, look, there's no shortage of people in the American media establishment and the American liberal political establishment who have taken issue with the way in which Murdoch's properties, Fox News and "The New York Post," have done business.

That said, you know, it -- we got to be careful. You know, usually, you don't want to get ahead of yourselves. In this one, the story has each time surpassed your wildest expectations in the past two weeks.

KURTZ: It happened again this morning.

FOLKENFLIK: Absolutely right. I would say in terms of the American implications, there's the question of whether British journalists for News Corp. did -- you know, broke the law here in 9/11. As you say, the evidence is scant. But there are also laws on the books that if the attorney general were to instigate a wider- ranging investigation, or the SEC (ph), even actions that were illegal taken by News Corp. employees abroad, in, for example, Great Britain, could reflect on the ability of News Corp. to hold onto American broadcasting licenses here.

So you could see some repercussions under the question of, if they interpreted it as foreign officials being bribed...

KURTZ: Right.

FOLKENFLIK: ... as has been widespreadly alleged, and with some substance, it appears...

KURTZ: Once you start an investigation, you don't know what kind of rocks are going to be turned over. Michael Wolff, let's talk about Murdoch's role himself. He, you know, has the full-page ads showing the apology. He went to the family of the murdered girl whose phone was hacked into, one of the most horrifying abuses of this whole thing. But then he talks to "The Wall Street Journal," and here he is defending James. "I think he acted as fast as he could, the moment he could." It doesn't seem like he's doing the full contrition route yet.

WOLFF: One of the curious things about Rupert Murdoch is that when he gives an interview, he only gives it to news outlets he owns. And those are always very funny interviews because he is essentially telling his reporters what questions to ask and how to cast his response.

KURTZ: Well, wait. How do you know he's telling his reporters what questions to ask? That's not entirely fair. "The Wall Street Journal" is a pretty good paper.

WOLFF: Because I've sat with him in the -- when he's done this. I know who calls before. It is absolutely the Murdoch playbook. You call ahead. You set it up. You tell them what questions to ask. In the middle of the interview, he often does this. Actually...

KURTZ: So what does all this get him? If he does an interview with an outlet that he controls...

WOLFF: I don't know what it gets him. It gets him further into a deeper hole. I mean, in that interview, he sounds -- I mean, it sounds -- first thing, his answers are peculiar. His view of the world is peculiar. It is the Murdoch -- what we see is the Murdoch who believes that he is in control. And so he believes he's in control, and yet to the rest of the world, what is obviously happening is that -- is that he is -- we see him losing control. In a way, we see him out of control.

KURTZ: And Sarah, he also said in that "Journal" interview that News Corp. has handled this crisis extremely well in every way possible, just some minor mistakes.

SMITH: Which is ludicrous because you just watched the way they've had to reverse themselves all through the course of the week. First of all, they weren't going to appear in front of a committee of MPs. Then hours later, they were. He wasn't going to accept Rebekah Brooks's resignation. Now he's had to, and as you mentioned, earlier, take these adverts in British papers saying that "We're sorry."

Can you imagine what circumstances in the last 50 years Rupert Murdoch must have ever said sorry to anybody? And he's been going around London saying it to as many people as he can find this week, which must be one of the most humiliating experiences of his life.

KURTZ: Clearly, he's getting some high-level PR advice. David Folkenflik, we have a short time before break. "The National Review" on line says that you are treating this as the second coming of Watergate and suggests -- I guess Geraldo Rivera once said that you were a weak-kneed, backstabbing, sweaty-palm reporter. So I'm giving you a chance to defend your...

FOLKENFLIK: My palms are relatively dry. Other than that, you know, people can decide for themselves. I think it's an incredible story with political, law enforcement, journalistic implications. And I think it really is going to determine the fate of this major media company based here in the United States. So I plead guilty to thinking it's a real story.

KURTZ: I think we can all agree it's a real story, and a story that seems to get more incredible every day.

Let me go to break. And on the other side, we will talk about the kind of journalism practiced by Rupert Murdoch's company here in the States and whether or not, even if it's not illegal, even if there's no hacking involved, it's something that we now should shine a little bit brighter spotlight on. Stay with us.

(COMMERCIAL BREAK)

KURTZ: Back talking about the Murdoch media scandal. And Michael Wolff, I talked to a couple of former reporters for "The New York Post's" gossipy "Page 6," which had its own brush with scandal a few years ago. They talked about a culture of thuggishness, where reporters would play favorites and where they would go after people that Murdoch or the company don't like and they had stories killed when they went after somebody the company did like.

Could this whole mess, this whole debacle, morph into a debate over Murdoch's media ethics or his company's media ethics here in the U.S.?

WOLFF: Well, of course, it could. As a matter of fact, I think it already has. What we're -- what we're really dealing with is a portrait of this -- an ethical portrait of this company. And I think the crucial thing is, and the thing that has happened to the company is that -- is that they've gotten behind -- behind -- the temperament of the times has changed, and they haven't realized this.

So I think we're going to look at -- you know, "The New York Post" is a good example. They probably haven't hacked phones themselves. Actually, their staff is too small. Hacking requires too many resources. But nevertheless, "The New York Post" is part of the Murdoch method of reward and punishment. That's how he has built his power base. He likes you, he rewards you. He doesn't like you, he uses his newspapers to punish you.

KURTZ: Right. Right. We do have to be careful, I think, about some of these allegations. For example, a British blogger reported that CNN's Piers Morgan, who used to be editor of "The Mirror," may have known about illegal conduct that took place at that newspaper some years ago. Piers Morgan has absolutely denied knowing about any such conduct, and I haven't seen any evidence. If that changes, I'll let you know.

David Folkenflik, when people -- when I'm...

(CROSSTALK)

FOLKENFLIK: That sounded like an official company denial.

KURTZ: The official denial is all we have because Piers Morgan hasn't talked about it extensively. I'd be happy to talk to him about it.

David Folkenflik, when I'm interviewed, people ask me about, What about Fox News? What about "The New York Post"? And I wonder if you think those questions are unfair at this point, since the scandal is essentially in London.

FOLKENFLIK: Well, the scandal is in London. I think one of the things to remember about Mr. Murdoch is that a lot of his DNA, sort of an Australian Anglo-American institution, has come through the London newspapers that he oversaw to great success there. And particularly, you know, you've got -- if you look at the fellow who is the editor- in-chief of "The News of the World" just before it was shuttered last week, it was the guy who was the number two editor here at...

KURTZ: At "The Post," yes.

FOLKENFLIK: ... at -- excuse me -- at "The New York Post." There's closely linked and enmeshed DNA, which is not to say in any way that the allegations there are the same ones here.

KURTZ: Sure. Sure. But some of the people...

FOLKENFLIK: In terms of fairness...

KURTZ: I've got to -- I've got to cut you off because we have to go to break and I want to get Sarah Smith in. This story is going to continue to get bigger before the crisis passes, in your view?

SMITH: Oh, absolutely. In Britain, certainly. And people will carry on looking for tentacles of it here, as Britain's going to have to start examining everything about its relationship with the press, not just the kind of stories they cover, but were the politicians too close to the press, were the police too close to the press? This is going to take a very long time to unravel.

KURTZ: Very incestuous culture. And the answer preliminarily seem to be yes. Sarah Smith, Michael Wolff, David Folkenflik, thanks very much for joining us.

And coming up in the second part of RELIABLE SOURCES, the newspaper that spent two lonely years pursuing the phone hacking scandal is London's "Guardian." We'll ask its editor, Alan Rusbridger, why most of the British press looked the other way and about his paper's apology for a serious mistake.

Then with Murdoch on the defensive, are some of his liberal critics using the crisis to pile on?

Plus, the battle to keep America solvent. With President Obama and the Republicans arguing inside the White House, are journalists getting the real scoop or just spin?

(COMMERCIAL BREAK)

KURTZ: Two years ago, the initial reports of a phone hacking scandal at "News of the World" had faded from the headlines, the mess being blamed on a single rogue reporter. But one British newspaper, "The Guardian," stayed on the case, breaking exclusives that eventually helped lead to the appalling revelations that prompted Rupert Murdoch to shutter the tabloid.

I spoke earlier with Alan Rusbridger, "The Guardian's" editor, from London.

(BEGIN VIDEOTAPE)

KURTZ: Alan Rusbridger, welcome.

ALAN RUSBRIDGER, EDITOR, "THE GUARDIAN": I'm happy to join you.

KURTZ: Now, you started digging into this story at "The Guardian" two years ago, really digging into it. The police said there was nothing else to it. Murdoch's people said there was nothing else to it. Did you have any doubts at any point that this wouldn't really lead anywhere?

RUSBRIDGER: There was a moment in -- around the end of 2009, when nobody was biting. The police had really put the story to bed by coming out and denying it all. News International denied it. They said we were deliberately misleading the British public. The regulator -- we have these quaint things called regulators -- press regulators in Britain. They said there was nothing in it. And no other papers were following it up.

So 'round about the end of 2009, early 2010, it was looking as though it was only us. But Nick Davis, our reporter, was very determined, and I knew he was never going to give up.

KURTZ: On that point, your deputy editor, Ian Katz, was quoted the other day as saying that you were and the paper were slightly obsessive about this story. How do you plead?

RUSBRIDGER: Well, I think you have to be, especially a story in which you don't get a sort of clean win (ph) to begin with. So I think the lesson of this story all around is if everybody had come out and paid attention to the story that we wrote exactly two years ago, in July 2009, "The News of the World" would still be alive and I think Rebekah Brooks would probably still be in her job, and we wouldn't have this giant crisis.

KURTZ: Why do you think, Alan, that with a few exceptions, almost nobody in the British media did aggressively follow up your story? Were some of these organizations perhaps afraid that their own techniques might be looked at?

RUSBRIDGER: Well, that's what people say. I don't know. I mean, there was -- again, there was a moment when just before the British election, the -- there was an employment tribunal which found that Andy Coulson had presided over a culture of bullying at "The News of the World" and a former reporter was awarded a million dollars in damages.

I mean, that's just a staggering finding against a man who's just about to walk into Number 10 Downing Street, and not a single paper reported it. And I just can't understand why there was a kind of sort of "omerta" in which nobody wanted, at that point, to take on anything to do with News International.

KURTZ: It all seems so incestuous in terms of people from Murdoch's company later being hired by others. You mentioned the police, and of course, Andy Coulson, the former editor of "News of the World," being hired as the top communications adviser to David Cameron.

You had a conversation with the incoming prime minister about that. Can you recount that for us?

RUSBRIDGER: Well, we tried to warn all the party leaders of something that we couldn't write in February 2010. So this -- again, you have to understand the quaint British laws that we have that you can't write about people who are charged with things and waiting for the trial.

And we knew there was a private investigator, another private investigator, who was charged with an axe murder. And he had -- he had been in prison earlier for planting cocaine on someone. So he was a bad man. And he'd been hired by Andy Coulson's "News of the World" straight from prison in 2005.

So that was a story we couldn't write, but I thought the prime minister -- or the future prime minister should know that. And I thought Nick Clegg and Gordon Brown should know that. So I got a message to Cameron's office via my deputy to that effect. And we now know that it got to his chief of staff, but his chief of staff didn't think that was worth passing on.

KURTZ: But did that put you in the position -- perhaps the uncomfortable position of offering advice to David Cameron and other politicians about who they should or should not hire?

RUSBRIDGER: It wasn't advice. I mean, he was free to do what he wanted. And I went to see Gordon Brown and e-mailed Nick Clegg. So I was doing it's equally with all the parties.

I just thought -- particularly as this was a story that was being ignored, I thought people ought to know that there was going to be a story at some point that everybody would be writing. And haven't we seen that this week? And you know, just because we couldn't write it and blow it open then didn't mean that there wasn't serious mud coming down the slipway.

KURTZ: You caused a huge stir at "The Guardian" when you reported roughly a week ago that former prime minister Gordon Brown -- that his family medical records had been accessed by "The Sun," another Murdoch tabloid. And that was -- of course, led to the story that the 5-month-old baby at that time had cystic fibrosis, created a huge international uproar. Brown was outraged.

On Friday, "The Guardian" apologized and said that -- you retracted that story and said you did not have evidence that the medical records were, in fact, obtained by "The Sun." That's a pretty bad mistake, isn't it?

RUSBRIDGER: Well, the difference is between the medical information and the medical records. So "The Sun" say that they didn't have access to the medical records. And Gordon Brown -- his recollection, as he told us, was that they did say that they had the medical records.

But "The Sun" -- so that's the difference. But I don't think if you spoke to Gordon Brown tonight, he wouldn't say that he was happy about "The Sun" ringing him up and saying that they were going to publish information about his medical condition. So I don't think it makes it much better for "The Sun," but "The Guardian," unlike the News International titles, corrects things or clarifies things when we get things wrong.

KURTZ: So there's a difference between making that kind of mistake, which you did, of course, correct, and all the allegations that are -- have swirled around "News of the World." You don't see them as in any way comparable.

RUSBRIDGER: Well, we haven't used illegal techniques. We haven't been going around on an industrial scale hacking into people's phones. And we haven't denied for two years, as News International did, that there was anything wrong. You know, within two days, "The Sun" said that's not quite right, and we corrected it.

KURTZ: Were there whispers or perhaps more than whispers during this time, when you were sort of out there on a limb, somewhat lonely, continuing to write stories about this matter, the rest of the British media establishment not following you -- that you were doing this for competitive reasons, that this was some kind of anti-Murdoch campaign?

RUSBRIDGER: Oh, yes, of course, people said that. They said that we were, you know, a left-wing title, that we hated Murdoch, that we were doing it because we were in competition with "The Times." They said all these things. And you know, my answer to that is, If you stopped trying to think about our motives and just read the stories, you'd be in a better place today.

KURTZ: Alan Rusbridger, thanks very much for joining us.

RUSBRIDGER: Happy to be with you.

(END VIDEOTAPE)

KURTZ: You can see the full version of that interview on our Web site, ReliableSources.blogs.cnn.com.

When we come back: Is Fox News playing down the scandal that has rocked its parent company?

(COMMERCIAL BREAK)

KURTZ: Fox News loves a good scandal. But when it involves the parent company, not so much. The network owned by Rupert Murdoch has tread lightly when it comes to the phone hacking debacle at Murdoch's British paper.

According to the liberal group Media Matters from July 4th through July 13th, CNN ran 109 segments on the Murdoch mess, MSNBC ran 71, Fox News just 30. CNN has even reported on Fox's lack of reporting.

(BEGIN VIDEO CLIP)

WOLF BLITZER, CNN ANCHOR: The British media scandal involving Rupert Murdoch's News Corporation has put Fox News in a bit of a bind. The network has apparently gone out of its way to avoid a lot of reporting on its parent company's troubles.

(END VIDEO CLIP)

KURTZ: Not a word about this international story last week on Fox's media show Fox News Watch which the panelists joked about off the air.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE; Anybody want to bring up the subject we're not talking about today for the streamers?

UNIDENTIFIED MALE; Sure, go ahead.

UNIDENTIFIED MALE: I'm not going to touch it.

UNIDENTIFIED FEMALE: With a ten-foot turbine.

(END VIDEO CLIP)

KURTZ: The program did tackle the Murdoch scandal yesterday.

Joining now us to talk about how news organizations cover bad news about themselves James Fallows, national correspondent for The Atlantic, and Erik Wemple who blogs about the media for The Washington Post.

Jim, is it realistic to expect Fox news to devote plenty of coverage to this scandal?

JAMES FALLOWS, THE ATLANTIC: No, but it's realistic to expect them to devote some coverage. And there was an astonishing clip just on Friday I think which Erik put on his blog and I was also having on The Atlantic site where Fox's had -- Fox and Friends had an expert talking about how terrible it was to have all this hacking. Citibank was hacked, the Pentagon was hacked, the News of the World was hacked, you know, acting as if this was why are we paying more attention to the News of the World as the victim of the hacking as opposed to the one that didn't do anything?

KURTZ: The perpetrator would be the correct term. Erik Wemple, how much responsibility does a news organization to have to cover itself when there is trouble?

ERIK WEMPLE, WASHINGTON POST: I think there's a difference between responsibility and expecting them to be sort of be on the forefront.

One of the things I pointed out is that News Corp doesn't cover this at all, that it will hurt them in the ratings. I think that's a powerful check. If there's any company that cares about ratings, it's News Corp.

KURTZ: And this happens to be a great and juicy story.

WEMPLE: Yes it does. And so if they totally ignore it, well then they'll push people elsewhere.

And my only point is that you can cajole, you can shame, you can run numbers, and stuff but you can never expect the final word from an appendage of the parent company. You have to have watchdogs deliver the final word.

KURTZ: Right, the final word. Look, I think Murdoch's Wall Street Journal has done a good job, not a great job. But is there suspicion if you cover it a lot that you're putting out a sanitized version or pulling your punches?

FALLOWS: Well, certainly the clip I was mentioning on Fox News did feed that suspicion. I think it's important to distinguish the two main U.S. Murdoch properties, The Wall Street Journal on one hand and Fox News on the other. They each are facing a kind of challenge I think.

You know, The Wall Street Journal is one of the great journalistic institutions in American history. But even they have been light on the subject. Joe Nocera had a very tough column yesterday in The New York Times pointing out this, in Friday's front section of the Wall Street Journal there was no news about this whatsoever. It was on the front page of other publications.

Fox I think is a different question, which is whether they're going to present themselves as a real news organization at all if they so badly mishandle this story.

KURTZ: I feel very strongly about this. I mean, we do it on this program all the time when CNN has controversy, I always cover it. And otherwise, what you're signaling to viewers is there's a double standard. We're only aggressive when some other organization is in trouble. And I think that can undermine your credibility.

But you said it's unnatural and stupid to expect an organization.

WEMPLE: Well, I think it's unnatural and stupid to say, gees, if you listen carefully to what Wolf Blitzer says, it seems as though Fox News is going out of its way not to give a lot of coverage to its own parent company. It's like, well, duh. You know, that's what I would expect.

FALLOWS: That doesn't deserve a breaking news logo?

WEMPLE: That does not deserve a breaking news logo.

And so that's my only point. That's why we have what the British call media plurality. That's why we have other organizations that can burrow in and figure out.

I personally -- that's fine if you, Howard, believe you cover CNN -- the troubles of CNN. However, if you're walking down the hall and you figure something out, I wouldn't expect you to be the first to come out and break it and to tell the whole world.

FALLOWS: I'll just make a slightly contrary point, one reason that The New York Times has special standing is after the Jason Blair scandal, after the Iraq WMD scandal, they themselves launched big project to say how did this happen? What can we do about it?

CBS with the Dan Rather situation had their own investigator come in. If the Fox properties do something like that, that will be more impressive than if they don't. It's what we expect of news organizations.

KURTZ: Right, The New York Times didn't break the Jason Blair story. I mention that because I did. But certainly they put all kinds of reporters onto the major project.

Now Fox News Watch, after that embarrassment of not covering it at all, did as I mentioned, talk about this yesterday. Here are comments from columnist Cal Thomas.

(BEGIN VIDEO CLIP)

CAL THOMAS, COLUMNIST: This is the biggest case of piling on since the last rugby game I saw. The left has been out to get News Corp, especially Fox News Channel and the Murdoch family for years.

(END VIDEO CLIP)

KURTZ: Isn't there something to that? The liberal critics of Rupert Murdoch are having a field day. CNN is covering it a lot. Maybe CNN is covering it too much.

WEMPLE: There's no excessive coverage. The coverage I think is just about right. The reason why there might be that appearance is because you have two really far-flung time zones. You have Rebecca Brooks who resigns at our time 5:25 basically in the morning. Les Hinton resigns our time like 5:00 in the afternoon.

KURTZ: Ahead of Dow Jones.

WEMPLE: Yes, right. So you have two resignations at the end of the day. You know, how -- what other perception can you have other than the media is playing it up? No.

News Corp is playing this up because everybody is going down.

FALLOWS: And to emphasize why this matter, this is as big a crisis as happened in Britain in a generation plus. It's the police, it's the political establishment, it's media establishment and the most important -- the most powerful single media person in the U.S. too which is Rupert Murdoch.

So, not to cover this would be journalistic malfeasance.

KURTZ: But you wouldn't concede that -- I mean, you have for example, the Democratic Senatorial Campaign Committee putting out a petition, stand with Democrats, demand that Murdoch come clean on spying. You wouldn't concede that liberals who don't like Rupert Murdoch are just milking this for all it's worth?

FALLOWS: If this had no connection whatsoever to the nature of the operations, especially through Fox News, then you might say they're reaching. But since the basic accusation that, as Michael Wolff was saying, that Murdoch is using his media power for political ends is similar in the U.K. and the U.S., I think it's natural the Democrats would say this.

KURTZ: On your media blog at the Washington Post, you took on a Washington Post story which was about the difference between British and American journalism. I'm happy to point that out. You said basically we should just come out and say, British journalism standards are sleazy and destructive. And you think that we're kind of dancing around that because we Americans don't want to look superior?

WEMPLE: I thought in this particular iteration, I couldn't keep quiet. I am not -- again, I don't take relish in outing my own employer. But I thought in this particular instance, he said, none of this is to say that, you know, American journalistic standards are superior to British. Nonsense! They are! OK, they are vastly superior. And one of the points I was trying to make is, one of the great embarrassments on our media landscape, as you pointed out in the story this week, is the New York Post, which, you know, pays for coverage -- hey, pay me, I'll keep you out of the paper. Pay me, I'll put you in the paper. It goes both ways. Oh, Murdoch now feels good about the Clintons. Let's write good things about the Clintons. You know, and so that's the point I was trying to make was that, yes, I do feel that American standards are superior.

KURTZ: Which is not to say the American media are perfect.

(CROSSTALK)

FALLOWS: I think the range from high to low in the British press is broader than in the U.S. It's no accident that most great American tabloid editors are Brits. Or at least Fleet Street veterans. Australians have gone through there too.

KURTZ: That's why they're brought over here, and that's why this story is not going to go away.

If you're just tuning in, Rebekah Brooks, the former Murdoch lieutenant who resigned Friday, arrested today in London. This story is not going away. Erik Wemple, James Fallows, thanks very much for joining us.

After the break, high-stakes spin as President Obama and congressional leaders race the clock to avoid a government default. How do reporters find out what's going on behind closed doors?

(COMMERCIAL BREAK)

KURTZ: The country now about two weeks away from a possible government default. There is no bigger story in Washington. But in some ways, there's no story harder to cover with President Obama and congressional leaders negotiating behind closed White House doors. So reporters are often reduced to relying on leaks, such as this account of a testy exchange this week between the president and the House majority leader.

(BEGIN VIDEOTAPE)

JAKE TAPPER, ABC NEWS: The president again threatened to veto a short-term solution, telling Republican leaders "don't call my bluff."

MICHELLE MALKIN, FOX NEWS: All accounts, it seems like the president had a, well, hissy fit.

UNIDENTIFIED MALE: Mr. Cantor had a tax tantrum and he's now reduced to smearing and deriding the president's behavior and conduct. It's a cheap and disingenuous shot.

(END VIDEO CLIP)

KURTZ: So how is the press covering these complicated talks and the spin from both times? Joining us now, Jonathan Karl, senior political correspondent for ABC News, and Julie Mason, White House correspondent for Politico.

Jonathan Karl, that began as a leak. Eric Cantor later confirmed don't call my bluff. How hard is it for you on a day-to-day basis to find out what's happening in these closed door talks?

JONATHAN KARL, ABC NEWS: On the one hand, you do get the leaks that are, like, the leaks to everybody. I mean, it's kind of interesting. Some of the players in this, I won't tell you who, but some of the players in this actually send out e-mails to everybody.

(CROSSTALK)

KARL: Everybody who is covering this thing with a kind of blow- by-blow. And some of it reads like a bad episode of "The West Wing." The pushed out his chair and said, I don't care if this costs my presidency. But you know, but the harder thing is to actually get some ground truth and get beyond the spin and try to, you know, try to assess what's actually happening, and then make it interesting for TV. KURTZ: Yes, I'm going to come back to that. But do you worry about being spun by one side or the other when you get these partial accounts?

KARL: You do. But there is a way to deal with that, which is you just make sure it's corroborated by somebody else in the room. And you try to -- you know, but that's always the case.

KURTZ: It was -- looked like a Republican leak where House Speaker John Boehner after some exchange with the president said, "excuse us for trying to lead." I wonder who put that out?

JULIE MASON, POLITICO: Exactly. You have to constantly assess who is speaking to you anonymously, which is often everyone, and what their motivations are, and you just assume everyone is coming out with self-interest and warring agendas and kind of a grain of truth. And like Jon said, you have to get and you have to corroborate it and try to figure out what's the closest version of reality.

KURTZ: Now we get to the making it good TV part. With so many competing plans, you know, Mitch McConnell comes out with a plan to let President Obama lift the debt ceiling unilaterally as long as he proposes some spending cuts, which then have to be approved or not approved by a supermajority in the Congress. How do you translate this for viewers in a way that they can understand?

KARL: Well, it's really difficult. But the first thing you have to understand, it is probably the most important story we're going to cover this year. So you start with that. And you try not to underestimate your viewers. They understand how high the stakes are, how important this stuff is. And then you try to present it in a clear and interesting way. But it is a challenge, especially when you have got a minute 45 on television to tell what's going on.

MASON: Well, and isn't this a perfect example of a story that we're all completely obsessed with, but you feel like Americans really haven't latched on to the importance of it, they are not paying attention yet. They are aware of it, but maybe they don't quite understand it.

KURTZ: But is that in part because despite Moody's threatening to downgrade U.S. debt, there is actually even a debate about what happens on August 2nd. That's of course the deadline to raise the debt ceiling. You have some Republicans say, well, nothing really happens if we go past August 2nd, and others saying there's going to be huge consequences to the U.S. economy. So we can't even agree, or at least the players can't even agree on the stakes. How do you cover that?

MASON: That's true. And you have to think that Americans at this point have fiscal drama fatigue. It's just one thing after another, and it's always a crisis and then it always gets resolved, so they're like, you know, call me when there's a meltdown.

KURTZ: Right. We had that with the possible government shutdown in April, which was resolved at the last minute. But I mean, this is much more than a government shutdown, if it were to happen.

MASON: Yes.

KURTZ: How about dealing with the delicate question of who is to blame? I mean, on the one hand you could argue that President Obama, who wanted a big deal, Boehner also wanted a big deal, you know, came up with as much as $3 trillion in spending cuts, wanted several hundred billion in revenue increases or tax hikes to balance that. And yet you had the Republicans led by House Majority Leader Eric Cantor saying, you know, not one dollar in tax hikes. Is it hard to assess whether you have one strong faction of the Republican Party holding up a deal?

KARL: Yes, well, remember when the story first broke, there were leaks in the New York Times and the Washington Post that Boehner and Obama were working on a big, grand compromise.

KURTZ: Right.

KARL: The New York Times talked about the tax hike part of it. The Washington Post talked about the possible cuts to Social Security and Medicare that Obama was willing to go along with.

And the first stories were all about Democrats screaming bloody murder about, you know, no way are they going to go along, congressional Democrats, go along with cuts to Medicare and Social Security even if the president wants to do it.

And then, you know, Boehner walked out on -- you know, on the big deal and said no, we're not going to do it. And the story has become Republicans stopping this.

My point is there is clearly blame on both sides, and much of the focus right now has been the blame on the Republican side.

KURTZ: In a way that you think is unfair?

KARL: At least not fully -- not a full picture, not really accurate. Because Democrats in the House, I tell you, were not going to go along with any kind of a grand compromise that included real cuts to Medicare and Social Security.

KURTZ: But let me make sure I understand you. On the one hand, you have the president of the United States saying I'm going to propose some things that I don't like, that my side doesn't like, because I think a grand deal is important here, and I want some tax increases -- and he talks about the corporate jet owners and the hedge fund managers and the millionaires and billionaires -- but I'm going to propose serious cutbacks in Medicare, which of course is a (inaudible) Democratic program, and I'm going to propose other -- I'm going to propose big spending cuts that my base won't like.

But you're saying it's a mistake for reporters to focus too much on that because, just as Boehner couldn't bring his House along, Obama would have trouble bringing the Democrats along? KARL: I'm saying right now you have the president saying that's a very big deal. It's something we've never heard before from a Democratic president.

But Democrats in Congress were not going to go along with that. So it's one thing to be out there talking about it when you know it's not going to come up because Republicans are blocking it, but Democrats made it clear before Boehner walked out on that big deal that they were not going to go along with that.

KURTZ: And Eric Cantor and other Republicans say they're standing on principle, that they ran last year on no new taxes; they're going to stick to no new taxes, and yet they're being portrayed as intransigent.

MASON: Right. I think what -- part of what we're seeing is a maturation of the White House spin machine. They have gotten so much better at outplaying and outflanking the other side and not getting rolled, and you're seeing it reflected in the coverage. They've just gotten much better at spinning it.

KURTZ: Well, suddenly, Barack Obama really likes reporters because he's had three news conferences in two weeks--

MASON: I know--

(LAUGHTER)

(CROSSTALK)

KURTZ: --after months of nothing.

MASON: I know. He was -- he wouldn't take questions. He was evasive. He was invisible. And now he's all the time. We, kind of, love it.

KURTZ: One other question for the media, John, is, you know, who speaks for the Republicans?

We all know Obama has that big megaphone, but is it Eric Cantor or John Boehner? Is it Eric Cantor or Mitch McConnell, who has his own ideas for a short-term fix?

KARL: You know, during -- right before one of these big White House meetings, you had the ultimate absurdity. You had Eric Cantor holding a press conference off camera, pen and pad, and then a half an hour later, you had John Boehner holding a press conference, both of them by themselves, not with each other. And then they went immediately from there to the White House.

So, I mean, it's like, exactly, who is your voice of the Republican Party? It's very confusing.

(CROSSTALK)

KARL: It's great for Politico. MASON: Right, it's great...

(LAUGHTER)

MASON: God bless them.

KURTZ: How much does Politico love this story?

MASON: Politico loves it. We love it so much.

(LAUGHTER)

KURTZ: You don't want it to end?

(CROSSTALK)

MASON: Well, yeah, we want what's best for the nation, Howie, but this is a good story for Politico.

KURTZ: You want what's best for the country, which is not necessarily what's best for Politico.

(LAUGHTER)

MASON: We're not at cross-purposes with America. We are not.

(LAUGHTER)

KURTZ: Well, I think we can all agree that, with a lot of this going on behind closed doors and with very, very complicated but very important negotiations going on, this is a hard story to cover.

Jonathan Karl, Julie Mason, thanks for stopping by this morning.

Still to come, a White House aide calls a Fox anchor a lunatic. An author catches the president stretching the truth about his mom. And why would the press identify the CIA official who led the hunt for bin Laden. Our "Media Monitor" is coming up next.

(COMMERCIAL BREAK)

KURTZ: Time now for the "Media Monitor," our weekly look at the hits and errors in the news business.

And here's what I liked. Author Janny Scott, in her new book, "A Singular Woman," discovered that Barack Obama was wrong when he said during the campaign that his mother had a deathbed dispute with her insurance company over a pre-existing condition.

In fact, Scott found correspondence showing this was a dispute about disability and that her health insurer paid most of her bills without an argument. The White House does not dispute Scott's digging.

And the White House, its turns out, wasn't being entirely candid a couple of years ago, back when it was openly at war with Fox News. The Treasury Department had excluded Fox from a series of network interviews with a top official, which the administration tried to blame on a SNAFU.

But in e-mails obtained by the group Judicial Watch, one White House press aide wrote, "We'd prefer if you skip Fox, please."

Another said, "I am putting some dead fish in the Fox cubby -- just cause."

And after Fox anchor Bret Baier aired a report on the dispute, the aide said Baier, quote, "just did a stupid piece on it, but he is a lunatic."

Now Fox doesn't look so crazy for saying the channel was being treated unfairly.

Here's what I didn't like. If there's one thing I hope we can all agree on, it's that the CIA analyst who tracked down Osama bin Laden is a hero who helped bring a mass murderer to justice. And I bet most Americans would say the media should protect his privacy so he isn't exposed to possible retaliation from Islamic extremists.

But that's not what happened. The Associated Press reported earlier this month that the analyst was just outside the frame of that famous photo of President Obama and his team monitoring events in the Situation Room.

The AP withheld certain details but not others. "Call him John, his middle name," the story said. It described his work history and how he played on a Division I basketball team in college.

This week the New York Observer advanced the story. Now, the piece was cast as an examination of the AP report, the CIA's cooperation, the White House's use of digital media and the state of cyber-sleuthing.

The Observer asked, "Was it really up to a small weekly newspaper to protect the life of a top terrorist hunter? The newspaper talked to CIA John's friends off the record and withheld his name, but it also mentioned which part of which state the analyst lives in and published his college yearbook photo.

That's called having it both ways, touting a scoop under the guise of showing restraint. I think this was unfair to a man who was doing his job and I hope there are no consequences.

Well, that's it for this edition of "Reliable Sources." I'm Howard Kurtz. Join us again next Sunday morning 11:00 a.m. Eastern for another critical look at the media.