The Truth vs. The Dollar

Business realities are at odds with reporters' ideals

Time Inc.'s (TWX ) decision to turn over notes from reporter Matthew Cooper to a federal grand jury seeking a confidential source makes brutally clear the gulf between the craft of journalism and the business of media. What's bad for journalism is not necessarily bad for companies that produce it. Time Inc.'s disclosure compromises the sanctity of a reporter's promise of anonymity. Executives and media lawyers warn that the move could embolden hostile corporations or government entities fishing for confidential sources via subpoena. (At press time, Cooper had agreed to testify with his source's O.K. The New York Times' Judith Miller refused and was jailed.)

But here's another journalistic reality: Virtually all top-tier media outlets are owned by conglomerates that face business and legal complexities. Had Time Inc. held out and been cited for contempt, some legal experts say, it may have faced complications in any of Time Warner's myriad dealings with government and regulatory agencies. The company might have exposed board members to shareholder suits. "This is a tough one," says Charles Elson, director of the University of Delaware's John L. Weinberg Center for Corporate Governance. "But you have to comply with the law." The New York Times Co., which stood by Miller, was not subject to a contempt citation; Time Inc. was.

The deeply dispiriting realization -- at least for a journalist -- is how hard it is to overcome these arguments and yoke economic value to the social value of good investigative journalism. What wins Pulitzers and the envy of peers does not necessarily drive huge sales or increase franchise value. (It's market position, not front-page exposés, that makes The New York Times more valuable than the New York Post.) As Cosmopolitan and Dancing with the Stars demonstrate, there are easier ways to sell copies and score ratings. And ask the owners of publications such as The Atlantic Monthly and The New Yorker how profitable it has been to build a business around serious long-form journalism.

TIME EDITOR-IN-CHIEF NORMAN PEARLSTINE, who made the decision to turn over Cooper's notes, is among those who worry about a potential chilling effect on journalism. But such an effect is hard to translate into bottom-line concerns. There is a huge social cost if, say, a source who has documents proving a corporation is fouling the water supply decides to stay silent because her anonymity can't be guaranteed. It costs media companies nothing if that story is never written.

But determined foes can drive up costs for stories that do appear. Time magazine spent almost $10 million, an executive familiar with the matter says, winning a protracted legal battle with the Church of Scientology last decade over a superbly reported (and ultimately blameless) story. In today's limping media business, the potential price tag of several million dollars for hard-hitting investigative work -- even the most scrupulous -- would give almost any owner pause. "The reporter and company often have divergent interests," says David A. Anderson, who teaches media law at the University of Texas at Austin. All Time Inc. did was "make that a little more starkly clear."

If what a newspaper produces is an asset, suggests Phil Bronstein, editor of Hearst Newspapers' San Francisco Chronicle, then "the asset is threatened" if its credibility with sources is threatened. The Chronicle itself may face subpoenas stemming from reports on steroid use in baseball. Bronstein says Hearst has assured him the company will back up his reporters. But Time Inc. once did the same. That company's latest move is a reminder that journalistic outlets' ideals have diverged from corporate realities. If an ironclad business case can be made for why those ideals should trump all else, no one has made it yet.

By Jon Fine

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