Ex Post facto

The Washington Post Company-NBC News partnership joins a much-admired news organization with two of the richest companies on earth. But what's good for the media moguls is bad news for the rest of us.

by Dan Kennedy

Jack Welch, the autocratic chairman and CEO of General Electric, was watching the evening news on NBC, the network his company owns. It was October 19, 1987 -- Black Monday. GE's stock had been hammered along with the rest of the market. And there was Tom Brokaw, the anchorman whose generous salary was paid for by GE's shareholders, whipping viewers into a panic.

Welch was incensed. He picked up the phone and got NBC News chief Lawrence Grossman on the line. "You're killing all the stocks," Welch angrily informed him. Replied Grossman: "This is not an appropriate discussion to be having."

Within a year, Grossman was gone.

The tale is ominously instructive in light of a blockbuster announcement made on November 17. The Washington Post Company and NBC News are now partners. The deal brings together one of the most admired organizations in journalism -- the Post of Katharine Graham and Ben Bradlee and Woodward and Bernstein and All the President's Men -- with GE's Welch and Bill Gates, whose Microsoft Corporation collaborates with NBC on the MSNBC cable news network and the MSNBC.com Web site. Reporters from the Washington Post and Newsweek, which the Post Company owns, are already appearing on MSNBC's newscasts. MSNBC.com and the Post's Web site are featuring each other's content. Soon, Newsweek's Web site will be incorporated into MSNBC.com.

These collaborations are far more extensive than the ones MSNBC previously had with the New York Times, whose partnership deal was dropped last week. Yet in this Age of Synergy, the Post Company-NBC News deal was a one-day story, and not a very prominent one at that. In fact, it deserves far closer scrutiny.

Media combinations inevitably lead to diminished competition, fewer voices, a blander, more sterile type of journalism -- and a less well-informed public. Though reportedly little or no money has changed hands in the NBC News-Post Company deal, the partnership is not, at least when it comes to the public interest, all that different from a merger. The idea, after all, is for each of the partners to increase its profits -- which means that each has an interest in the other's well-being. "When someone's your partner, they're your partner. And if that partner is helping you make money, you will protect the partnership as jealously as you might protect your own interests," says Mark Crispin Miller, a professor of media studies at New York University and the director of the Project on Media Ownership.

The Post -- which dominates the Washington area but which, unlike competitors such as the New York Times and the Wall Street Journal, has scant national distribution -- is understandably eager to expand its base. In doing so, however, it has jumped into bed with the two companies whose stock-market valuations are the highest in the world: General Electric ($451.3 billion as of November 19) and Microsoft ($443.8 billion). When measured against those giants, the Post Company's market capitalization of $5.7 billion barely qualifies as a rounding error.

More important, GE and Microsoft are controversial, predatory corporations. GE is a major military contractor and nuclear-power-plant manufacturer that is often embroiled in disputes, legal and otherwise, over the way it conducts its business. Microsoft, of course, is involved in a highly publicized anti-trust case. Both companies ought to be subject to tough, independent scrutiny. But now, every Post or Newsweek journalist who covers GE or Microsoft will have to wonder what Jack Welch and Bill Gates will think. (And Welch, in particular, has never been shy about expressing his views; see "The Wages of Synergy," right.) Maybe those journalists will pull their punches; maybe they'll be a little tougher than they otherwise might, hoping to show their colleagues that they can't be intimidated. Either way, something will have been lost.

"I would like to think that these are all news organizations of great integrity, and I'm sure they are. But the whole pernicious effect that these sorts of things have is disturbing," says Thomas O'Boyle, an assistant managing editor at the Pittsburgh Post-Gazette, who reported the Welch-Grossman Black Monday confrontation in his 1998 book At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit. "Anyone who says that corporate ownership and corporate links do not have some influence in news coverage is kidding themselves."

(Synergy aside #1: in November 1998 the New York Times Book Review published a negative review of O'Boyle's book by Roger Lowenstein, who called it "fatally out of focus from the very start." Lowenstein is the author of an admiring 1996 biography of super-investor Warren Buffett, Buffett: The Making of an American Capitalist. Buffett, in turn, is a friend of Jack Welch's, which O'Boyle believes should have disqualified Lowenstein from reviewing At Any Cost. It gets worse: Buffett is also a member of the Washington Post Company's board of directors -- and a close friend of Bill Gates's as well.)

Although the deal raises significant macro questions about competition and conflicts of interest, the most immediate concern was over a micro issue: the future of Howard Kurtz, the high-profile Post media reporter who also works for CNN as the co-host of Reliable Sources. NBC and the Post Company both announced they would not force their staff members to renege on existing freelance agreements with media organizations that are now competitors, such as CNN. But Post executive editor Len Downie told the Wall Street Journal, "We will urge them to think about NBC, which is our partner now." (Synergy aside #2: the Journal is owned by Dow Jones & Company, which has a partnership deal with CNBC, a corporate cousin of NBC and MSNBC.)

"I've had no discussions with anybody," Kurtz told the Phoenix when asked if he would be forced to switch networks. "As of now, I have no plans to change my current arrangements."

Kurtz makes it clear he's less than pleased that the Post is now partnering with companies the paper also covers. "For my beat, I need this like I need a hole in the head," he says. "Readers will inevitably be skeptical, even though I've been very tough in writing about the Post and certainly will continue to be tough on NBC. There is a fair amount of uneasiness in the newsroom about the perception problem created by this deal, although I don't believe there will be any pressure to change our reporting on these other companies. But, you know, perception is important in the media age, and it's something we'll have to deal with."

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The wages of synergy Fortunately, The Washington Post Company is merely collaborating with NBC News; it remains an independent company. Good thing, too, because the Graham family's new best friend, General Electric chairman and NBC overlord Jack Welch, has earned a reputation as a fearsome media bully. Not only did Welch all but order NBC News chief Lawrence Grossman to tone down coverage of the 1987 stock-market crash (see "Ex Post Facto," page 16), but he has reportedly inspired numerous acts of self-censorship and abject surrender as well. Katharine Graham, who chairs the Post Company's executive committee, and her son, Donald, the chairman and CEO of the company, made their reputations by standing up to Richard Nixon. They may find that Welch is more than a match for the Trickster. Some lowlights: * November 1989. NBC's Today show reportedly deletes references to General Electric in a story on defective bolts used in airplanes and other equipment. * November 1991. In an article in the magazine Electronic Media, Grossman -- at this point the former chief of NBC News -- reveals that Welch once warned him, "Don't bend over backwards to go after us just because we own you." Grossman also wrote that Welch told him to allow Today show weatherman Willard Scott to keep plugging GE light bulbs on the air. * March 1992. Deadly Deception, a film about environmental contamination at nuclear power plants (some owned and operated by GE), wins an Oscar for best short-subject documentary. Filmmaker Debra Chasnoff uses her speech to blast GE and Jack Welch, and to urge viewers to join an ongoing boycott of the company that "falsely claims it brings good things to life." During the following morning's Oscar round-up on the Today show, host Bryant Gumbel asks movie critic Gene Shalit about "the unusual social speeches" -- and Shalit, in his response, fails to make any mention of Chasnoff's speech. * August 1994. SuperChannel, an NBC-owned cable channel in Europe, cancels the human-rights show Rights & Wrongs after it examines poor working conditions at GE plants in Mexico. * August 1996. During the Olympics, sportscaster Bob Costas makes an accurate reference to China's revolting record on human rights. Within days, an NBC spokesman issues an apology, saying, "We wanted to make it clear that we didn't intend to hurt their feelings." Observes the New Yorker's Ken Auletta at a Columbia Journalism Review seminar: "Now, presumably, NBC also didn't want to hurt the business interests of the corporate parent, General Electric, which is bidding for business in China." * May 1999. NBC creates an outcry when it's revealed that it redubbed a two-part miniseries, Atomic Train, about a runaway train carrying nuclear waste across the United States. All references to "nuclear waste" were changed to "hazardous waste," leading to accusations -- denied by the network -- that it had acted at the behest of GE. Sources: At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit, by Thomas O'Boyle (Knopf, 1998); Fairness & Accuracy in Reporting; the Columbia Journalism Review; and the New York Times.

The collaboration comes at a time when media concentration is under increased scrutiny. About a half-dozen corporations control most of the broadcast and cable networks, television and radio stations, newspapers, magazines, book publishers, and film and music studios. Media concentration is on the cover of the current Brill's Content, although the story inside is decidedly measured -- as befits a magazine whose owner, Steven Brill, counts a smattering of media moguls among his softball buddies. It's the cover story, too, of this week's Nation, which has been railing against the media oligopolies for years. And the new Columbia Journalism Review features a piece by Mark Crispin Miller on the tangled interests of Viacom-CBS, the TV/radio/cable/film/book behemoth created earlier this year.

At the heart of these deals is a dirty little secret: for many media executives, the term "synergy" is just an excuse to hide the fact that they really don't want to compete. Competition, you see, costs money and drives down profits. The New Yorker's legendary media critic A.J. Liebling, in his book The Press (1964), put it this way: "The function of the press in society is to inform, but its role is to make money. The monopoly publisher's reaction, on being told that he ought to spend money on reporting distant events, is therefore exactly that of the proprietor of a large, fat cow, who is told that he ought to enter her in a horse race."

The networks are, in many ways, the modern equivalent of those Liebling-era newspaper publishers. ABC has downsized and replaced much of its foreign coverage with footage from CNN. (Synergy aside #3: this partnership joins the two biggest media companies in the world. ABC is owned by Disney, and CNN by Time Warner.) And NBC can now replace its own correspondents with talking heads from the Washington Post and Newsweek. Indeed, the New Yorker's current media reporter, Ken Auletta, speculates that NBC and MSNBC might actually improve, since they'll have access to journalists the network is too cheap to hire itself. The trend in foreign reportage in recent years, Auletta notes, is to obtain video from, say, the Balkans, and to have a London-based correspondent do a voice-over. "It's not reporting, it's coverage. The networks have done much too much of that," Auletta says. "If this [putting Post and Newsweek reporters on the air] replaces that, it's not as good as if they hired their own reporters, but it's better than the coverage they often do."

If the urge to merge and to form partnerships is driven by sloth and greed, so, too, is it driven by fear. Cable television and, especially, the Internet have created a plethora of choices that didn't exist 10 or even five years ago. The number of people who read daily newspapers and watch network newscasts has fallen sharply. Fear is certainly a motivating factor for the Washington Post Company: the Post's circulation is in decline, and since it has one of the highest local-penetration rates in the country, the only way it can grow is to go national.

"They have this very powerful brand, but no way to reach out with it. For them to be creating alliances makes sense to me," says David Carr, editor of the Washington City Paper and a veteran Post watcher. "What the Post is trying to do is get a national p.m. edition of their paper out there. They want their news on the desktops of Americans during peak Web-use hours, which is after lunch, when we start zooming around and getting a lot of our news consumption before we even go home for the day." Nevertheless, Carr, like other critics, is concerned about the conflicts the Post Company is embracing. "When you have a company of this size partnering with a company of Microsoft's size, it creates adjacencies, and I mean personal ones," Carr says. "Don Graham [the Post Company's chairman and CEO] and Bill Gates will become familiars. They will have the kind of conversations that people who run the world have."

The result of such mergers and partnerships is that the Web -- where a new independent, grassroots media should be able to grow and prosper -- is instead being colonized by the same big companies that dominate other forms of media. Indeed, according to Media Metrix, most of the top 15 news-information-and-entertainment sites on the Web are owned by corporate giants such as AOL (which buys most of its journalism from traditional content providers), GE and Microsoft (MSNBC), Time Warner (CNN and Pathfinder), and Disney (Disney Online and ESPN).

Unlike the broadcast and cable models, the Web represents a theoretically infinite capacity, which means that independent projects can coexist with corporate media -- and, indeed, there are a number of excellent small news and opinion sites. But as big media come to dominate the Web, it will become increasingly difficult for the average user to find these independent sites. NYU's Miller, for instance, predicts that the all-important portal sites will increasingly be modeled after chain bookstores, in which big companies pay for advantageous positioning, and important books from small publishers are buried somewhere in back.

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Not everyone is so pessimistic. John Perry Barlow, a founder of the Electronic Frontier Foundation and a respected Internet visionary, sees the Post Company-NBC News deal as a desperate act by doomed Industrial Age "dinosaurs" that fail to understand the Information Age. "The whole point of cyberspace is not about broadcasting information, it's about conversation," Barlow says. "As soon as something's going on in the world that I actually want to know about, I find out how to get in touch with people who are on the ground." During the war in Kosovo, for instance, Barlow tracked down organizations in Serbia and Kosovo and corresponded with them. "I could learn a hell of a lot more from direct interaction with those folks than I possibly could from the news," he says.

Unfortunately, Barlow's example demonstrates not just the promise of the Net, but its limits as well. For a hyperengaged citizen such as Barlow, media concentration is irrelevant, because the Internet provides a means for skipping the mediator and going right to the source. For the average citizen who merely wants some reliable way of keeping up with the world, media concentration means fewer sources of information, less competition, and more conflicts of interest that viewers and readers may or may not be told about.

Perhaps the Post-NBC-MSNBC-GE-Microsoft partnership, Disney-ABC, Time Warner-CNN, Viacom-CBS, and the other media giants are indeed the dinosaurs Barlow thinks they are, although that's by no means certain.

But dinosaurs, even in their death throes, can thrash around -- and cause a lot of damage -- before they finally breathe their last.

Dan Kennedy can be reached at dkennedy[a]phx.com.

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Dan Kennedy's work can be accessed from his Web site: http://www.shore.net/~dkennedy

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Dan Kennedy can be reached at dkennedy[a]phx.com

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Articles from July 24, 1997 & before can be accessed here

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