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Where Did All the Reporters Go?

The press is now all over Enron like flies on a dead cow. Which raises the question: What the hell were they doing before Enron went bankrupt?
 
 
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Like our congressional leaders, the business press is finally waking up to Enron’s dirty-dealings, and is now making a great show of going over the carcass. But this just prompts the question: What the hell was the business press doing before Enron went bankrupt? How come it took so long to break the story?

Much has been made recently of a story by Bethany McLean, a journalist at Fortune magazine, who stuck her head out to ask "Is Enron overpriced?" back in March 2001. But in truth, at the time, the press largely ignored McLean and hardly deviated from the universally favorable coverage they have given the company since it was founded 15 years ago. Fortune, for example, has named Enron "America's Most Innovative Company" for six years running, and ranked it 22nd in its 100 Best Companies to "Work for in America" in the year 2000. Like the analysts who covered the company on Wall Street, journalists continued to rave about the company right up until its bankruptcy last December.

To be sure, Enron was a special case – a company that was so secretive about its affairs, and so good at playing the PR game, that it was difficult for journalists to cover Enron accurately. As TomPaine.com reported recently, Enron even lavished money on a group of influential journalists - including William Kristol, editor of the Weekly Standard, and economist Paul Krugman, a New York Times columnist - to be sure of receiving good coverage.

But the business press could and should have done more. There were ample signs that the media could have picked up, according to Helene Laube, a San Francisco correspondent with the German Financial Times. She says the press should have cottoned onto Enron back in 1999, when a German utility company called VEBA pulled out of a merger deal with Enron, citing a troubling picture of the company’s finances. Since the bankruptcy, the New York Times has reported on VEBA. But no one in the American press investigated beforehand.

"I think that most journalists get caught up in the hype, have little means and time to dig into the finances of these conglomerates," Ms Laube says. "The executives of the companies have had so much media training that they say a lot of things without ever revealing anything except what they want to say. It's basically a PR stint - very little substantial information can be gleaned from interviews with CEOs and other high ranking execs."

Of course, the European press, which noted the VEBA event, didn't investigate either. But Europe has its own companies to worry about, as Hugo Dixon, editor of Breaking Views, a financial commentary site based in London, points out.

Bill Barnhart, a financial columnist with the Chicago Tribune, and president of the Society of American Business Editors and Writers (SABEW), says it isn’t fair to say that the business press missed the story, but that the media should have been more balanced in its coverage. "Several national business magazines wrote glowingly about Enron before The Fall. This is not ‘missing’ the Enron story but simply engaging in lazy journalism. In my view, the pressure on journalists to provide stock tips to readers is the overarching problem here. Journalists should be journalists, not financial advisers," he says.

David Bowen, a columnist with the Financial Times in London, says many US newspapers don’t have the incentive to go after tough business stories because they enjoy "regional monopolies" and there is little competition. He adds: "Most business journalists concentrate on share prices and City and Wall St issues, which means they rely heavily on slick PR machines and analysts. Analysts have come in for masses of stick for failing to be objective in the way at least some of them used to be. So the great majority of business journalists are stretched too thin to be really investigative or they’re being fed by spin machines."

Bill Bernhart says it is up to business journalists "to upgrade their skills in reading financial statements and understanding complex financial issues, such as derivatives and off-balance-sheet partnerships," so that when the next Enron comes along – and preferably before it goes bankrupt – the business press is ready and waiting. In response to Enron, SABEW is planning a number of new seminars for its members to help them with these skills.

But for proper reporting to happen, newspapers will need to want to get the stories. The Houston Chronicle, the fifth largest newspaper in the nation, "hasn’t got to grips with the Enron disaster", according to the Houston Press, the city’s news weekly. "Making the shift from being a house-organ cheerleader to an aggressive investigator has been as easy as getting a supertanker to make a U-turn," it said in a late January issue.

We can only hope the Chronicle and other big newspapers have permanently rediscovered the value of real reporting. After all, if the analysts, accountants and lawmakers can't hold companies like Enron to account, who else but journalists will?

The irony is that it's not just puff pieces and stock tips that readers want. Investigative journalism does sell newspapers. In his TomPaine piece, Richard Blow suggested that it’s hard for journalists to cover the rich while not being rich themselves. But surely, misguided journalists who enter the profession in hopes of getting rich are few and far between (only columnists, top editors and people who appear as talking heads on TV really make any significant income anyway). Perhaps some jealousy was inevitable when every headline during the boom of the last few years seemed to announce yet another instant millionaire. Now that the bubble has burst, perhaps journalists will return to their scrappy, skeptical roots. The idea is to follow the money, not to flak for it.

Ben Schiller is a freelance journalist living in San Francisco.